Vietnamese rubber growers plan sell-offs as prices crash

A farmer collects latex at a rubber plantation in Buon Ma Thuot City, in Vietnam's Central Highlands April 2, 2010. Photo by Reuters/Kham

The crisis has delievered a major blow to not only small tappers but even some of the big plantation owners.

Plummeting rubber prices are not only making it hard for smallholder farmers to eke out a living but also push a number of big agricultural businesses out of the business.

Steady declines in prices and production activities have forced many to stop tapping, abandon their plantations, or switch to other cash crops.

A plantation owner, who grows rubber trees in the southern province of Binh Phuoc and in Cambodia, told VnExpress that he has sharply scaled down rubber areas in his agricultural-land portfolio by more than 1,000 hectares.

Despite his willingness to sell his rubber estate at a significant loss, it is difficult to find buyers.

He said prospective buyers prefer strategically located rubber plantations which have access to major roads and are close to waterways.

Potential investors also prefer mature plantations with moderate yields. They can either continue the farming business or acquire the estate as a long-term investment as rubber trees can be felled down for the hardwood timber, he added.

Rubber prices have hit the lowest level since 2009 as significant stockpiles and falling demand in China constantly dragged the rates down.

According to the state-owned giant Vietnam Rubber Group, rubber has become one of the most vulnerable commodities. It said producers have not been able to control their output in recent years.

Prices have dropped to as low as VND26 million ($1,164) per ton while it costs VND25 million to collect and process the latex, it said.

The group, which also invests in a wide range of sectors including electricity, livestock and hotels, has downsized production by clearing rubber trees on a 3,000 hectare area.

Rubber production only accounted for 4 percent of the group’s total profit in the first six months, the group said in its financial statement.

Experts forecast rubber prices could fall further in the final months of the year since stocks remain high while the total production by a group of 11 countries that produces around 92 percent of the world’s natural rubber edged up as of July 31.

By Hong Chau / VnExpress