Rubber News – July 2010

It’s been awhile since I last reported on this subject. So for all those people interested in this aspect of the Cambodian economy here is another take.

Despite my expectations to the opposite, prices have held steady this year, hovering around the $3,500 mark on the Malaysian Rubber Exchange. Since Cambodia still lags behind with their pricing, traders here pay around $3,100/mt for the top-grade CSK5L crepe rubber. The reason is still the industry’s reliance on Vietnamese buyers. On the one hand this is good for the processing plants as these buyers come with cash in hand. They don’t have to deal with letter of credits and banks, and all the paperwork that is involved when shipping their products. On the other hand they lose quite a bit of money because of that. If they were a little more educated in modern business techniques they could reap a higher profit. The next economic crisis may be just around the corner, that is if the Chinese cannot dampen their overheated real-estate market, then that extra income could be put in the piggy bank for a rainy day.

Rubber plantations get about $2.20 per kg of dried latex which is lower than it should be but since pricing is pretty much uniform throughout the country you can’t do much about it. Prices should be $2.90/kg. So the lack of a heterogeneous market deprives both farmers and processing plants of sorely needed income; income to build reserves for market fluctuations and re-investment for planting new trees, which, after all, take 6 – 7 years to mature, for acquiring updated machinery/ovens, new trucks, etc.

So there is still a lot to be done. In the past 4 – 5 years the industry expanded considerably in terms of added acreage but not too much in the field of technology.

Despite the relative profitability of rubber plantations and processing plants there a number of privately held plantations which are up for sale. They are 4,000 ha, 5,000 ha, or 6,000 ha respectively; tapping areas vary, as do areas with immature trees. They all come with their own processing plant, all machinery, trucks, etc, and all staff that are well-trained in their fields. I am actively involved in the divestiture of these plantations and currently in talks with one large foreign company. Nevertheless, should there be someone else interested in either one or more of these businesses, please contact me by email and I will be in touch right away. I have all necessary documents on hand and can provide any information required. But please, only serious, qualified parties should contact me.