Rubber's Future In Thailand

[Astropuppy]

My wife and I have 55 rie in Buriram and hope to have another 45 rie before I retire to the country in 10-12 years. (We should have the extra ground in five years.) My wife's parents have moved back from BKK to grow rice/vegetables on some of the land and they have planted rubber trees (1000) on some of the land. I am curious what other rubber growers think about the rubber market in seven years. The last I heard was that rubber was selling for about 30THB/KG due to the regulated pricing in Singapore and the price has been flat for many years (except for a recent spike).

My idea of retirement looks more like trees, fishponds, and rice than daily vegetable pickings. Any advice on a stable blend of "lower" maintenance or managable crops that we can develop now?

[pallasaide]

It is good but it is long term.

It is going to grow on Chinese demand for vehicles (tyres).

Little in it as a short to mid term project and scale is important (bigger is better).

For Tim

D.V.

[69_68iou1]

I would not say the price is fixed.

It is traded on the AFET http://www.afet.or.th/english/exchange/data/quote.php and prices in thailand are fixed by this.

it also follows the same price on the Malaysian Rubber Exchange http://www2.lgm.gov.my/mre/MonthlyPrices.aspx

there is alot of historical data on these sites on the prices. The going price in isian is about 10 baht cheaper per KG than the price FOB BBK when you sell it to the local collector. There is quite a bit of completion from middle men to buy the product from plantations and take it to factories so the market over Thailand tends to follow the exchange price. (easy business for a Thai to start, some do it with a pick-up and a tank on the back. you might have seen the same sort of thing having water in the back when there are water shortages). alot of farmers are just collecting the latex and putting it in oil drums and not making rubber sheets now (Pens). So they sell it to middle men that take it to factories to be processed in to sheets.

there is some data for the future of the NR here http://www.thainr.com/ As pallasaide said the china auto industry is going to grow and has been growing quite a bit. NR is needed for tyres and as the oil price goes up SR goes up and NR follows it.

The peak in the price a few months ago was due to global demand being more than production and global stocks were going down. It has settled down now.

If you have more questions please let me know as I have lived on a working plantation for a while now and have set up a new plantation

[Galong]

Rubber is a horrible monoculture; Nothing lives in rubber trees. They're toxic and they have replaces almost all of the original jungle in Thailand (saving a few bit for national parks). Why don't you do something original and creative instead of copying what everyone else does.

Little in it as a short to mid term project and scale is important (bigger is better).

Smarter is better than "bigger"... being earth-friendly is better than "bigger". A healthy environment is better than "bigger".

[donx]

Rubber is a horrible monoculture; Nothing lives in rubber trees. They're toxic and they have replaces almost all of the original jungle in Thailand (saving a few bit for national parks). Why don't you do something original and creative instead of copying what everyone else does.

Little in it as a short to mid term project and scale is important (bigger is better).

Smarter is better than "bigger"... being earth-friendly is better than "bigger". A healthy environment is better than "bigger".

Can you point me to where you got this informaton? I'm having difficulty finding any references regarding the environmental impact of rubber trees.

[Tim207]

Rubber is a horrible monoculture; Nothing lives in rubber trees. They're toxic and they have replaces almost all of the original jungle in Thailand (saving a few bit for national parks). Why don't you do something original and creative instead of copying what everyone else does.

Little in it as a short to mid term project and scale is important (bigger is better).

Smarter is better than "bigger"... being earth-friendly is better than "bigger". A healthy environment is better than "bigger".

Can you point me to where you got this informaton? I'm having difficulty finding any references regarding the environmental impact of rubber trees.

LOL

From the attitude of the poster I assume he is one of those environmentalists full of claims that everything is destroying the world but has no evidence. There claims often have no basis in reality. I am not saying that this is necesarily the case here but the rhetoric of the poster sure makes that impression to me strongly enough that I would discount anything they have to say without independant corroberation. I wouldn't bother looking for corroberation that likely does not exhist.

[timber]

He posted about the same thing in the southern section a while back. I did some web work on what he said and much of it was the opposite of what he was saying. Rubber effects the bio-diversity of the environment as many other things. In general birds like rubber. Not toxic. I don't think he does much homework on what he says. a bit of an eco-terrorist

[chownah]

terrorist is a strong word to be tossing about

I've never heard that rubber trees are any worse for the environment than any other monocrop. If there are any links to suggest this please post.

Monocrops in general are not beneficial environmentally and don't provide mixed habitat.....a subject for another topic perhaps?...let's not discuss it here...ok?

Best to not flame people just because you strongly disagree with them and especially if you don't really understand their point of view.

Chownah

Edited January 6, 2007 by chownah

[teletiger]

"Nothing lives in rubber trees."

"They're toxic "

[Flames edited out. /Meadish]

If I haven't understood his point of view......It's because he didn't bother to explain it.

Throw out a few sound bytes and try to sound intellactual is their stock in trade.

Same with those eucalyptus muppets.

Here's an example of real eco-disaster in Issan. Corn in Issan ripens in november. The farmer lets the plant die and waits for the corn ear to dry out Dec/Jan. He then picks the corn and ploughs in (or burns) the stubble. The first rains of the monsoon are met with bare fields......and another inch of topsoil gets washed off the fields. The farmer then puts down 10 KG NPK per rai to replace the 1 ton+ of corn that he's harvested the previous season. Anybody seen any websites about this?

<deleted> the 10,000 rai of new eucalyptus....this is going on in MILLIONS of rai in Issan.

[Please observe the board rules. Thank you. /Meadish]

regards

[meadish_sweetball]

Please refrain from name calling and attacks on other posters. Some things have been edited out to stop this thread from degenerating into a flame war.

Try to discuss with respect for other posters even if you do not share their views. Thank you.

/Meadish

[teletiger]

Please refrain from name calling and attacks on other posters. Some things have been edited out to stop this thread from degenerating into a flame war.

Try to discuss with respect for other posters even if you do not share their views. Thank you.

/Meadish

Point taken Meadish. Apologies to anyone who may have taken offense.

Regards

[tamaique]

OK, I'm not an expert but I'll try to address a few things that might be useful:

1) Rubber is a commodity. Prices are dictated by the market. And the market is as perfect as can be expected for any commodity. I see somebody already provided a few websites. Rubber prices are dictated by supply and demand. You can check the physical prices here. There might be a section on futures as well...

http://www2.lgm.gov.my/Mre/daily.aspx (this is for the Malaysian exchange...I have a Thai site somewhere...I'll look for it, or just google natural rubber futures thailand, or NR futures thailand or STR20 futures thailand, etc.).

2) Rubber trees take around 7 years to grow before you can start "milking them". During this time you have to keep investing to keep them healthy and to weed out other plants, etc. (I'm no farmer so no specifics to tell you here).

3) Size is definitely an issue. 1000 trees doesn't sound too promising. Provided you can get a much larger extension, you can plant in phases (one section per year) so that when you do start producing your trees don't ALL age at the same time

4) IMHO if you don't have a factory you'll be screwed. You'll need to sell your product to factories and you'll get much less profit. So, you need to have enough land to justify the factory.

5) Once you have the factory you can also purchase from other farmers who don't have factories.

6) Your finished product (" natural rubber") isn't just generic. There are different kinds of NR such as:

Latex: You'll notice the prices for latex seem low in comparison, this is because latex contains more water. If you take into account density, Latex is most expensive (I believe).

Smoked Sheets #1, #3, #5: #1 being the most expensive because it is washed best. Usually used for products where color matters, plus having less dirt gives it better properties. Next #3...cheapest #5 (prices for that should be similar to STR20).

Next you have STR CV, STR L, STR 5, STR 10, STR 20: These also have to do with how "clean" the rubber is...think dirt content and Mooney viscosity as guideliness for the products. STR 20 is preferred for most automotive products (especially products where color doesn't matter), since the price is most competitive.

STR means Standard Thai Rubber (the Malaysian variety is SMR, SIR for Indonesia, etc.).

7) For smoked sheets, rubber is first set into "slabs". There's a washing process. Once it is dry enough they hang it and blow smoke into it (the unsophisticated factory setting is to build a fire and have a fan blowing the smoke towards the sheets...dunno about higher technology). The hot smoke and fan action helps dry the rubber faster. The smoke adds some properties to the rubber so it won't rot, etc. (important for export to far away markets for example). The STR, etc. come in thicker "blocks" which i believe are compressed, but I'm not possitive.

8) If you have no market you'll need a broker or distributor (this is essential I think, unless you already have potential clients lined up...even then I'd say you have to go through a broker) and they will buy rubber at the "spot price" (the current price for the commodity at a current place and time). Your goal is to sell when the market is up, their goal is to buy when the market is down.

9) Most large tyre companies have their own plantations and won't buy from you (I noticed someone mentioned tires). There's not many tyre companies (not sure about China) in the world since tyres are extremely high tech products.

10) 35% of the world production of rubber comes from Thailand, around 90% comes from Asia in general.

11) A plantation in Indonesia (no factory) can make around 15,000 Baht net income per hectare in peak conditions (i.e. mature clonal trees...I believe that means older than 10 years but I don't know younger than how many years). I also don't know if figures are similar to Thailand and what the difference would be if you have a factory (since this income is for selling slabs, which contain like 50% dirt and water). (I found this information on a website since I wanted some indication of net income per hectare so you could get a better idea regarding plantation size...I can't vouch for the authenticity of the figures...I do urge you to research this though).

12) Once the trees become too old and the production drops to a certain level, the trees are cut down (I believe it's something like 25 or 30 years) and the wood is sold (parawood). The plantations are replanted with young saplings (which makes me wonder how much a good clonal sapling would cost? As your profit will depend on this. Rubber is not planted from seeds...clones are grown and sold (the saplings). These used to be highly protected from each country that produced rubber (including Brazil and Malaysia...Brazil I believe was almost wipped out by a plague, but I'm not certain)

My family used to have some plantations a long time ago and I don't remember much good coming out of them. Of course, the owners weren't there to keep an eye since the plantations were far away from home and no one took them seriously enough (as far as I remember. I was young. they were setup during a rubber shortage to supply a rubber factory if it ever happened again).

The above is EXTREMELY basic and maybe not even completely accurate. I'm sure I missed many important aspects. I would urge you to research very well before undertaking your project. Most failed businesses stem from shitty planning. Develop a good business plan first. See what the investment is like, whether you can wait enough for the trees to start producing, etc. You can buy business plan pro at pantip plaza or something similar to guide you through the process somewhat.

OK I'm spent. I hope this helps.

Good luck!

[tamaique]

P.S. If you know of anyone who is interested in exploring an export market in Mexico and the USA for rubber, particularly STR20 (perhaps smoked sheet #3 and #5)...please let me know.

Cheers

[Astropuppy]

Wow, thanks for some really great advice.

I actually understand the concerns for the environment. Most farmers that plan on staying in the business for more than a couple of years have to be aware of balance when they manage their resources. Killing the ground is just bad business on top of morally wrong: most farmers are very aware of this.

Our plan is to add more land as-needed and about a thousand rubber trees per year for seven years. Then balance the back-end cutting with replacing the same thousand trees at the fourteenth-fifteenth year. I have heard there is a signifigant production loss after fifteeen years: is that actually twenty-five? There was a mention about bigger is better. I know that big can get pretty big. In terms of profitability; what is big? If one tree is economically a waste of time and 25,000 trees is a business, then where in between does growing rubber actually become economically balanced and profitable?

The plan has always included processing our own NR and then either leasing some facility capacity to other growers or buying their rubber and processing it for profit. Leasing is the option of choice because I hope to be winding down instead of gearing up with work. We (my wife's family) should have the buildings up in three years and possibly start compounding in the forth. I make a fair income now in the States and supporting the investment should not present a problem through the next ten years.

I was thinking about the "vertical" economics from growing trees through processing, but establishing export agreements in the West would seem to be better suited for a Co-op Agreement in Thailand than for individual farmers. Tamaique, is this what you have in mind? Is there a Co-op group already established in Thailand to handle these kinds of export agreements? Running the rubber through Singapore or Malaysia as business-as-usual does not seem to be the best future for Thai rubber. Not that I believe that our stand of trees will have any effect on how business is done.

Edited January 20, 2007 by Astropuppy

[brahmburgers]

It looks to me like making money with rubber trees requires a large plantation and (as mentioned earlier) a rendering plant of sorts. As a pure money maker it might work between 10 and 30 years from initial planting. For a more enjoyable existance, how about growing a mix of trees. You might make less money, but you don't feel like a factory-farmer, and your land looks and feels much better. I have a dozen Brazil nut trees, inter-spaced with avocado, macadamia, pomelo, grapefruit, fig, and some local fruits and indigenous non-commercial types. The Brazil trees started producing nuts in their 3rd year and already I've got 2nd generation growing from seed of the originals.

Brazils are the tallest trees that grow in the Amazon, and they love the Thai climate. You won't see Brazil nuts in the Thai marketplace, but I doubt you'd have any problem selling the nuts - even if just used chopped up with candies.

Most farang who choose to farm in Thailand are doing it as 'gentlemen farmers' and aren't desperate for every satang. Better that we make our little parcels attractive and soothing for the soul - than monocultural sentinals of commerciality. The rewards you get from walking with a neighbor or family member through your 'garden of eatin' - should be more satisfying than the added sheckles you get for shipping out raw products to tire factories or wherever.

[Astropuppy]

I like the way you think Brahmburgers. The house that we are planning in the village has a feel like you discribed.

The rubber plan is a "family business" project that my father-in-law is donating the sweat and bruises on. Any economic success would be to the advantage of the many relatives that I have come to love. The Garden of Eatin [:-)] is a great plan but it misses all of the points I need to touch.

Maybe a few extra fruit and nut trees here and there wouldn't hurt. I like it.