The changing outlook for natural rubber
Dr. Kees Burger Vrije Universiteit, Amsterdam
Over the years, economic models developed at the Free University, Amsterdam have been used to project future developments in the Natural Rubber market. While in 1995, world NR production was forecasted to reach levels of 7.5 million tonnes by 2010, present forecast are around 9 million tonnes. Major differences are found in the projections for the production capacity in Thailand and Malaysia. Forecasts for Thailand (for 2010) in particular changed from 1.6 million to 2.6 million tonnes. This paper elaborates on the reasons behind the change in outlook for NR, focussing on the changes in NR production. The higher production levels, notably in Thailand, can be attributed to higher yields of existing area, rather than to larger areas being planted. Economic developments in the major producing countries help to explain this phenomenon. The strong devaluation of the relevant currencies after 1997 improved the profitability of rubber cultivation, whereas opportunities for alternative employment weakened. As the peak of new planting took place in the 1980s, future developments depend crucially on what happens to these cohorts of trees that now reach the age of declining yields and enhanced probability of discarding.