The director-general of the rubber department in the Ministry of Agriculture, Ly Phalla, said Thursday that Cambodia has been officially recognized as an accredited member of the International Rubber Association, a measure that experts say will promote Cambodian efforts to increase production and boost exports.
Cambodia’s heightened status follows a meeting last week in Singapore between rubber association officials and representatives from the Ministry of Agriculture, who discussed the terms under which Cambodia would fulfill its promoted status.
“Normally we primarily export to Vietnam,” Ly Phalla said. “We now have the accreditation to export better quality rubber to Thailand and China.”
Ly Phalla added that his department would be working alongside plantation managers to teach workers modern-day farming techniques, increasing the country’s yield.
But with limited government funding for equipment and supplementary land for planting rubber trees, experts say the improvements needed to meet the standards required by the International Rubber Association could be difficult to meet.
“We still haven’t received any money from the government,” said Ly Phalla, adding that his department had no plans to ask the government for financial help, and that funds coming from the Groupe Agriculturel Francais de Developpement had run out at the end of 2008.
Philippe Monnin, technical adviser at the Groupe Agriculturel Francais de Developpement, said that the gravest downfall in the Cambodian rubber industry was a lack of discipline in honoring contracts.
“If for example traders sell a contract for delivery in September for $1,000, and the market value has gone up to say $2,000 by the time September comes along, the Cambodian trader will very often cancel the original amount and use the one that earns him the most money,” he said.
Monnin explained that this kind of deceptive behavior was affecting the confidence that buyers have in Cambodia’s traders.
“The issue is almost a philosophical one,” he said. “If you don’t respect market rules you will never install confidence in your product.”
The lack of funds and the dramatic fall in rubber prices since mid-2008 is having an adverse effect on Cambodia’s ability to increase its stock and trade using futures contracts, said Ly Hong Sin, the owner of the Tai Seng Rubber Company in Ratanakriri Province.
“We need to sell the rubber as soon as it is harvested in order to cover the expenditure for workers in the factory,” he said.
He did admit, however, that Cambodia’s new status within the rubber association would increase its market share, as higher standards are required.
Rubber hit a record high of $3,500 per ton in July last year before falling to $900 in early 2009. It currently sits at about $1,500, according to the Ministry of Agriculture.
Rubber producers say that as long as the price stays low they will be unable to increase their stock or invest in improving their quality.
“With $1,500 per ton we earn very little profit,” said Monk Kim Hong, president of the Cambodia Rubber Association and director general of the Chub Rubber Plantation. “If it drops below $1,200 again, factories will risk closing their doors.”
