5 January 2009

The year 2008 is past and gone. It was exciting but brutal. The joys and miseries, the ups and downs, achievements and disasters - they were all there. Enough ingredients for the novelists to chose an exciting background for their next novels.

The most significant and most brutal was the collapse of Wall Street on the second week of September. People woke up on that fateful Monday morning to their worst of nightmares. Wealth was more than halved overnight. Markets and currencies tumbled.

The global economic slowdown headed for a bottomless abyss despite bail-outs and stimulus packages being dished out throughout the major economies. Populist, flimsy policies and half measures may undermine many a stimulus package. What's needed are definite policies and measures that can and should be implemented immediately and that are sustainable.

A very clear and full understanding of all the factors that influenced any sector of the economy is therefore very important for formulating measures to arrest the tide and finally turn it around.

The natural rubber industry, like any other sector of the economy, was not spared by the global financial and economic crisis.

A sharp mismatch in global production and consumption is expected this year. The world rubber market will see an excess production of about one million tons. Add a carry-over stock of around 200,000 tons, the excess supply in 2009 is estimated to be 1.2 million tons. This estimate can be translated into a low price for natural rubber for 2009 too.

Revival of rubber prices from its current lows will therefore call for rigorous supply side management.

The 3 top natural rubber producers, namely Thailand, Indonesia which formed the International Tripartite Rubber Council, had agreed to withdraw, under their Supply Management Scheme (SMS) and Agreed Export Tonnage Scheme (AETS), a total of 915,000 tons of natural rubber from the market in 2009. Of which 270,000 tons will be effected in the first quarter.

Vietnam, the world's fourth largest natural rubber exporter, has now joined the fray, announcing just a couple of days before the new year that it will curb its natural rubber output by 100,000 - 200,000 tons.

All in all a maximum total of 1.115 million tons of natural rubber is expected to be withdrawn from the market in 2009, just about equating supply with the expected demand.

What's most important and what matters in times like now is discipline among the 3 ITRC member countries and Vietnam to see through their programs both in volume of tapping and exports.

Individual natural rubber producing countries may have their very own measures or programs to assist their natural rubber smallholders to tide out these trying times. These, however, need to be well thought off, for them to be in tandem with the other concerted efforts.

This is the acid test in the year of reckoning. Let's walk the talk and prove the skeptics wrong.

Vietnam should be lauded for its unsolicited efforts. Whilst other natural rubber producers have been tacit but sad to say there were some who were critical and skeptical. This is the time that all natural rubber producers should join hands, if not in efforts, at least in moral support. Whether one join the fray or not, the benefits derived will be for all.

The pundits said 2009 could not be any worse. Let’s hope and pray so! Let's put a brake on the price tumble, consolidate our positions, plan and manage for an improved and better future. Let’s do it together.