KUALA LUMPUR (Oct 7): Amid a fall in rubber prices to a low this year of RM5.16 a kg on Oct 4, the Malaysian Rubber Board (LGM) assured smallholders that their welfare will not be affected under the government’s Rubber Production Incentive (IPG).
"The IPG will ensure that rubber prices received by smallholders, at estate level, are not affected by the decline in the world market," LGM said in a statement. "At the international level, Malaysia continues to cooperate with the major rubber producing countries, namely Thailand and Indonesia, under the framework of the International Tripartite Rubber Council (ITRC) to address the long-term decline in rubber prices through measures such as the Supply Management Scheme, the Demand Promotion Scheme and the Agreed Export Tonnage Scheme."
LGM said that rubber prices began to slide in the third quarter when SMR 20 decreased by 10% to RM5.59 a kg compared to the second quarter of 2019 because of slow demand, the result of ongoing trade tensions between the US and China.
Early this month, this was made worse by an incident in China, the world's largest natural rubber consumer. "As reported by the international media recently, a major trading company in China which imports 1.6 million tonnes of rubber a year from major rubber-producing countries, has halted rubber purchases and also terminated all remaining rubber trade contracts,” the LGM said, adding this had pushed SMR 20 rubber prices to its lowest this year of RM5.16 a kg.
Rubber prices had started the first half on an upward trend when SMR 20 increased by 9.5% to RM6.21 per kg in the second quarter, compared with RM5.67 a kg in the preceding quarter.
The increase, according to LGM, was contributed by the shortage of rubber supplies due to seasonal factor, fungal disease (Pestalotiopsis disease) in some key areas of Indonesia and the implementation of rubber export cuts by Thailand, Indonesia and Malaysia under the ITRC.