Economic Crisis Looming For Rubber Producers

Press, Volume CIII, Issue 30529, 26 August 1964, Page 14

Economic Crisis Looming For Rubber Producers

(N.Z. Prest Assn.—Copyright) LONDON, Aug. 24. A new economic battle has been joined in South-east Asia and its outcome will affect the area for years, the “New York Times” News Service reports from Kuala Lumpur. The rapid increase in world production of synthetic rubber has raised a new challenge to the producer of natural rubber. Processed latex, tapped from rubber trees, is a major source of income in virtually all of the lush, steaming lands that stretch from Ceylon to the Philippines. For the governments of some of these countries rubber sold on the world market makes the difference between balanced budgets and deficit financing. For the small farmers it makes the difference between buying the few necessities of life or making do without them.

Impressive Gains Led by Malaysia, the world’s largest’ producer of natural rubber, some countries have been making impressive gains in increasing the yield of their rubber trees, and in preparing latex for foreign markets. But new methods for making synthetic rubber as a chemical by-product of crude oil have matched these gains. In some instances they have out-distanced them.

The appearance of synthetic rubber in larger quantities, in better qualities, and in specific. types for certain industrial uses, has caused a steady decline in natural rubber prices.

It has also meant a steadily decreasing share for natural rubber in a world market that has, in the past, Wen eager to buy this rubber and willing to pay high prices for it. Challenge Felt This challenge is already making itself felt in Malaya, Indonesia, Ceylon and Thailand. Its threat for the future is even more disturbing. Since the early 1930’s the economies of Malaya and Indonesia, and to a slightly lesser degrbe, of Ceylon, have become increasingly dependent on natural rubber.

In Malaya and Singapore, the two largest parts of the Federation, more than three million people, nearly a third of the population, are engaged in the rubber industry. Malaysia’s ambitious development budget is based largely on foreign earnings from rubber'

In Indonesia, rubber is more important even than oil, in that normally bountiful country’s export trade. In South Vietnam it is the principal export earner. In Ceylon, Cambodia, and Thailand it is the second largest export.

In 1960 a major breakthrough was made in the chemical process by which synthetic rubber is made. Today a growing number of large chemical companies are using plant space to make synthetic rubber. The world production now is nearly a million tons a year. This is equal to the amount of natural rubber Malaya is expected to produce annually by 1970, when greater effects from replanting will be shown. Net Exporter An economist in Kuala Lumpur predicts that by 1967 the United States will be producing synthetic rubber in quantities equal to or above the total amount of rubber it now uses, making the United States a net exporter of synthetic rubber. Projections of rubber consumption indicate that the use of natural rubber in the

United States will decline from 310,000 tons this year to about 100,000 tons in 1970. In Britain, France and West Germany, the three largest European users of rubber, consumption of natural rubber is now 400,000 tons a year. By 1970 this is expected to drop to 300,000 tons. Economists in Kuala Lumpur now believe that the best markets for natural rubber in the future will be in the Soviet Union, China and eastern Europe. It is estimated that the Communist nations consume about 500,000 tons a year, most of it natural. By 1970 it is estimated they will be buying more than 900,000 tons.

If the trends envisioned materialise, it is possible that South-east Asia may become more and more dependent on these markets.