Department of Agriculture High Value Crops Development Program (RA 7900) Copyright 2013 • Department of Agriculture - HVCDP INDUSTRY/ COMMODITY PROFILE Rubber growers are predominantly smallholders. The industry players classified rubber farms as small, commercial, public lands, and Agrarian Reform Beneficiaries (ARBs) cooperatives. There are an estimated 38,000 families dependent on the commodity and are mostly smallholders with farm size of three hectares. Rubber is mainly planted in Mindanao with some plantings in Luzon and Visayas. The age of rubber trees were categorized as mature and immature. The mature trees were further grouped to 20 years of tapping. Across regions in Mindanao, about 60 percent of the rubber trees are 20 years and up of tapping except in Region 11. Table 2.1 Rubber Farms by Typology Rubber is one of the most popular agro-industrial crops in the world, especially Southeast Asia and South Asia. About 80 percent is used for making tires. The rest includes industrial products like belts, hoses, tubes, linings and bearings, consumer products like balls, erasers and footwear, medical products like gloves and cathethers, as well as seismic materials to name some. A rubber tree’s economic life is around 30 years, and is grown largely by small farmers. Accroding to the Census of Agriculture in 2002, there were around 38,000 farms in the country with farm size of one to seven hectares. The rubber industry is labor-intensive. Thus, an additional of 18,000 are part-time off farm workers in rubber farms while 20,000 are tappers who are employed as share croppers. The top producers of rubber in the world include Thailand, Indonesia, Malaysia, Vietnam, India and China. In the Philippines, the key company players in the downstream industries include Dunlop  Slazenger Philippines, Inc. (tennis balls), Manhattan Rubber and Plastic Manufacturing Corporation (motorcycle and bicycle tires), Mitsuboshi Belting Phil. Corp and Yokohama Tire Philippines. NATIONAL PRODUCTION (Source: Bureau of Agricultural Statistics)  Last year alone, production of rubber was estimated at 425,705 MT. This was 7.71 percent more than previous year’s level of 395, 237 metric tons. Number of mature or tappable trees in 2011 was 42.06 million trees.  Area planted to rubber expanded by 16.48 percent which is 161,565 hectares from 138,710 hectares in 2010.  Expansion program in the past had resulted in more mature tappable trees.  Increased rubber tapping was noted throughout the year. This was influenced by higher prices of rubber in Zamboanga Sibugay, North Cotabato and Basilan. There were also reports of recovery from defoliation in Agusan del Sur and also recovery by rubber processors and good demand for natural rubber.  The top rubber producing regions in 2011 were Zamboanga Peninsula, SOCCSKSARGEN and ARMM with respective contributions of 44.38 percent, 37.35 percent and 8.37 percent to the yearly production. The combined production of these regions accounted for 90.10 percent of the country’s rubber production. PROCESSING There are about 24 primary processors in Mindanao. Most processors are situated in Cotabato and Zambaonga Sibugay with an estimated total capacity of at least 225 tons and 80 tons per day, respectively. Moreover, there are small rubber processors in Cotabato producing between one to three tons rubber every month. These small- scale processing plants are said to produce high grade rubber so as to increase their profits. The least number of processing plants are in Bukidnon and Basilan with estimated total capacities of about 10 tons and 70 tons per day, respectively. There is a small processing plant in Laguna. The raw material obtained by processors from the farmers or traders is commonly in form of cup lumps. Processors in  the country produce natural rubber in the following forms- crepe/sheet (2x Brown) and crumb (SPR 5L, 5, 10, 20) TRADE The country remains a net exporter of natural rubber. Crepe sheets and rubber plate used to dominate the export market. The main markets for crepe sheets and rubber plate were China, Hong Kong, Taiwan, Malaysia, Vietnam and Singapore. However, after 2003 exports have declined due to weaker demand for rubber crepes. At present, most of the exports are cup lumps or reprocessed cup lumps with Malaysia as the biggest buyer. On the other hand, rubber imports have been minimal. Based on industry and UA&P estimates, the country produced about 60,000 tons dry rubber and imported about 10,000 tons of dry rubber which was mainly used by Yokohama Tire Philippines. The country exported about 48,000 tons of dry rubber or 70 percent of its supply. In 2011, exports valued at US$424 million (Trademap). Of the total exports, 81 percent were processed rubber products and 19 percent are primary (raw and intermediate). MARKET PROSPECTS The domestic and export market demand will determine prospects of the rubber industry in the country. Through prices have fallen in 2012 and may remain weak due to AEuro-zone debt crisis and slow down in China demand, the market could respond to stimulus measures that could boost demand. The top three country exporters (Thailand, Indonesia and Malaysia) procured rubber above market levels and decided to slash exports and cut aging trees to curtail fall in prices. With the technical properties of natural rubber making and suitability for various uses, the thriving rubber-consuming industries of China and higher crude oil prices will keep the market for natural rubber attractive. Based on International Rubber Study Group, natural and synthetic rubber will be short compared to anticipated demand over the coming decade. The overall global rubber demand (natural and synthetic rubber) is estimated at 36.7 million tons in 2020. SWOT ANALYSIS Strengths  Both the domestic and exports markets are supplied by the local rubber industry  Availability of potential areas (private and public lands) for production  Agro-climatic condition which is suitable for rubber production  Availability of labor and technical information such as proper handling of planting materials and processing technologies are plus points in the production of rubber and manufacturing of rubber products  Strategic location of the Philippines and existence Weaknesses  Insufficient supply of quality/certified planting materials  Lack of accredited budwood gardens and nurseries  Limited information, education and communication on nursery establishment and proper seedling handling  Disorganized marketing system  High transport costs affect the marketing and other segments of the rubber industry. Opportunities  Growing domestic and global demand for natural rubber  Increasing price of rubber in the world market  Large potential areas suitable for rubber in the Philippines  Access to technical information/knowledge  on then rubber industry  Can be utilized in watershed rehabilitation projects Threats  Generally low productivity of small holders  Long gestation period of rubber  Limited value-adding activities for rubber products  Lack of defined quality standards for rubber products  Weak linkage of farm producers with the key players in the marketing chain  Limited access to credit and financing  Peace and order  Land tenure