Exports of rubber up, but prices on the fall + Rubber projects on hold

[geovalin]

Exports of rubber up, but prices on the fall

Thu, 8 May 2014

Chan Muyhong

Despite a large increase in exports during the first quarter, natural rubber producers continue to see declining revenues, as world prices fall further.

The latest figures from the Ministry of Commerce show natural rubber exports grew 26 per cent during the first quarter of 2014, compared with the same period last year.

Meanwhile, overall revenue from natural rubber sales fell 28 per cent.

“Last year, rubber was selling at about $2,800 per tonne, but early this year, surprisingly, the price has dropped to as low as $1,980 per tonne,” Heng Sarath, deputy director of the General Directorate of Rubber, said, adding that prices had been on the decline since 2011.

Sarath said he could not foresee an end to the sector’s price slump, citing a slowdown in global demand for natural rubber, in particular China’s car tyre manufacturing industry.

Srey Chanthy, an independent economist, said a lack of infrastructure meant Cambodia had little choice but to sell natural rubber straight to the market despite falling prices.

“The reason exports are increasing [despite low prices] is because Cambodia does not have processing plant or warehouse to stock the harvested rubber,” he said, while agreeing that the Kingdom’s skilled labour shortage may deter investment in such
infrastructure.

Cambodia produced 85,000 tonnes in total of raw natural rubber in 2013.

“I believe when Cambodia could produce 400,000 tonnes of nature rubber, there will be investors who will consider investing in a processing plant,” Men Sopheak, deputy director general of Chop Rubber Plantation, said in April.

++++++++++++++++

Rubber projects on hold

Thu, 8 May 2014

Daniel de Carteret

Controversial Vietnamese rubber giant Hoang Anh Gia Lai (HAGL) has suspended part of its operations in Ratanakkiri province amid an investigation by the World Bank’s investment arm into claims of land grabbing, a company memorandum reveals.

The April 28 announcement states that three projects in Ratanakkiri province – Heng Brother Project, CRD Project and Hoang Anh Oyadav Project – will be suspended from May 1 to November 30. The statement does not cite a cause for the suspension, but notes the decision follows an April 2 meeting with the Compliance Advisor Ombudsman at the World Bank’s International Finance Corporation (IFC).

“During the reclamation suspending period, the subsidiaries are only allowed to tidy up and to collect the branches of trees in the already reclaimed areas prior to 28 April 2014,” the company memo says.

In February, 17 indigenous communities who accused HAGL of land grabbing in their home villages in Ratanakkiri province filed a complaint with the IFC – which invests in the rubber producer via an intermediary fund called Dragon Capital Group.

The Post reported last month that the IFC’s compliance ombudsman had launched an investigation into the agricultural giant’s rubber plantations after meeting with villagers in early April.

Eang Vuthy, executive director of NGO Equitable Cambodia, which is working with affected families, welcomed the company’s suspension as a positive step towards a resolution, but said the stoppage did not cover all the areas that need to be addressed.

“We would like to see the company halt all clearance at all affected communities, not just 13 as indicated in the announcement,” he said in an email yesterday.

“Also, we would like to see the company put a stop on planting rubber trees on the disputed land, lands that have already been cleared, until the disputes are appropriately addressed.”

Last year, UK-based NGO Global Witness published a report accusing HAGL of illegally logging outside concession areas and being in possession of at least 47,000 hectares of economic land concessions – almost five times the legal limit.

The IFC, Deutsche Bank and, later, Credit Suisse were all singled out for investing in HAGL. Deutsche Bank subsequently divested, while Credit Suisse claimed that its holdings predated the Global Witness report.

A spokesperson for the IFC’s Cambodian office labelled the intervention as a mediation process, rather than an investigation, before referring specific questions on the action to the Washington-based watchdog carrying it out.

The compliance ombudsman did not immediately respond to questions from the Post yesterday.

HAGL could also declined to comment on the matter.

Despite the recent progress towards a resolution, affected villagers contacted yesterday were cautious of a process that has been a long time coming.

“They just suspend it, but we still are not allowed to do anything on our land,” said Sol Sophat, a farmer from Malik village in Ratanakkiri province, who was forced from his home in 2012 to make way for one of HAGL’s rubber projects.

HAGL’s partial suspension of production comes just weeks after Bloomberg reported that the agricultural giant was planning an expansion of its business in Cambodia.

The April 21 report quoted HAGL chief executive officer Nguyen Van Su as saying that the company would harvest corn in Cambodia this year, with further investment planned in food commodities to support increasing demand across the region.

ADDITIONAL REPORTING MAY KUNMAKARA