Story in Vietnam natural rubber industry: “white gold” or bankruptcy?

Rubber is a key plant incenting farmers’ investment due to its high profit over the past decades. As a result, recent years have seen a great upsurge in Vietnam’s natural rubber output. Ranking at the fourth position globally, Vietnam is gaining a firm foothold in the world market in terms of natural rubber industry.

The price of rubber latex constantly set new records in the period 2005-2011. In May 2011 the price of rubber latex hit a peak of 36,000 VND for one liter of fresh sap and 43,000 VND for one kilogram of mixed sap. Consequently, farmers in Southeast Vietnam rushed to working on rubber plantations and harbored their dreams of “white gold”. Desiring reaping super profits of rubber plantation, farmers in the North also grew rubber on trial (2005) although scientists showed that cold climate and incompatible breed of rubber would hamper rubber trees’ growth.

However, latex prices have tumbled so sharply since February 2011 because of supply surplus and strong dependence upon international market. The price that steeply sank pushed farmers against the wall. The price recorded a high at 50000VND/kg, but saw a dramatic drop at 18000VND/kg. The sale of rubber latex was still in the downturn trend that slipped to 5000-7000 VND/kg,  sinking to its lowest level that three to four times lower than that in the last period. Facing the rubber price slump, farmers seemed to plunge into inevitable bankruptcy. 

Solving the rubber price slump, farmers chop down rubber trees for wood

Over the 10 year-period testing in the North (planting rubber on 3000hectares on trial since 2006), rubber showed no economic efficiency whereas thousands of households in the South confronted difficult dilemma owing to their heavily investment in “white gold”.

However, the price of rubber witnessed a noticeable 30 to 42% increase in the first quarter of 2017 on average, comparing to the fourth of 2016. Many experts optimistically forecast that the price of rubber will show an upward trend from 2017 as a result of world economic recovery and even surplus demand. This is good signal for rubber industry and perhaps the long-term outlook for the rubber price seems still to be promising. Nevertheless, rubber industry still faces lots of challenges.

 

Although Vietnam exports millions of rubber year-on-year, they are mainly in form of raw material, and then 300,000 tons is imported to satisfy the demand of processing. Many enterprises claimed that even domestic rubber price remains at low level; they still have to seek for material in foreign countries due to weak quality of domestic rubber.

Taking situations into consideration, the State should enact wise polices, set a comprehensive and longer term vision which can facilitate rubber industry to fix problems, generate its potentials and hold the key role in Vietnam’s industry.