RMK-12: Create cooperatives to deliver equity to rubber farmers

The issue around rubber farmers is not new. Despite rubber being a significant export earner for the country, rubber farmers are still wollowing in poverty. The low returns from the persistently low rubber prices are basically to blame. But at the same time, manufacturers of rubber products are enjoying almost shameful earnings compared to the farmers who supply them with the raw material. During the pandemic, the makers of rubber gloves earn big money. It is embarassing compared to the pittance that the rubber farmers get. The 12th Malaysia Plan must include some workable solutions to deliver equity to the rubber farmers. Without rubber farming, the supply of raw materials may one day come to a halt. That will be bad news for the nation as another source of income generation is erased. The implications are not just economic but also social. The rural economy which features highly in the country’s stable political equation will be in ruin. The fact is rubber is still very much needed by the world. Recently, concern was raised about a supply shortage in the West, as the pandemic disrupts world’s logistics and supply chain. Container shortage to transport rubber has become common. Some have raised the red flag on inventory shortfall. The world look to the countries of ASEAN for their natural rubber supply. Almost 90% of the world’s natural rubber come from the ASEAN nations, where Thailand is the leading producer. Malaysia, once a leading producer, is now at number 8, behind even Africa’s Ivory Coast. There are many reasons why the buyers have raised the red flag. Apart from the logistics difficulties, production in the producing countries has also suffered setbacks. Rubber smallholders which comprise almost 90% of the producers have shunned tapping rubber. Because of the persistently low prices, farmers cut on fertilisers and other agronomic inputs. Such action not only reduced the yield but also created the right conditions for the onset of diseases. In the past two years, a serious leaf disease, PESTALOTIOPSIS, had spread through the rubber growing countries. The disease had a role in bringing down the yield of rubber. The three issues of price, labour and disease are to blame for the supply dry up. The buyers are worried because natural rubber is indispensable in many consumer products. Tyre makers use almost 70 percent of world natural rubber. Aviation tyres use 100 percent natural rubber. Tyre makers are under pressure to produce green tyres. And the growing clamour for green and renewable tyres is positive for natural rubber. As long as tyres are still in use, the world demand for rubber will continue to grow. Sustaining the interest of farmers is the issue. The 12th Malaysia Plan must introduce a new business model for farmers. One where farmers will enjoy a decent share of the value potential of the downstream business. Rubber cooperatives have been proposed as one model. This should not be like the current GLCs of FELCRA and FELDA or RISDA. A system should be created where farmers themselves are empowered to run the cooperatives. This article is written by Prof Dr Ahmad Ibrahim Tan Sri Omar Centre for STI Policy UCSI University