Farmers felled by slump tap into a rubber rebound

PUBLISHED : Friday, 17 February, 2006, 12:00am
UPDATED : Friday, 17 February, 2006, 12:00am

Rubber farmer Azizah Hamdan suffered in poverty for years because the price of latex averaged a few cents a kilogram, making it uneconomical to tap the trees.

She abandoned her two-hectare plot in Dengkil to the weeds and lived on an allowance from her daughter, a bank clerk in Kuala Lumpur, 60km away.

Last year the government classified Ms Azizah, 61, as being so poor she was entitled to M$60 ($120) a month. Since then her situation has changed dramatically.

Now Ms Azizah is enjoying new-found wealth. She has repainted her wooden house, bought a new sofa and a Honda motorcycle.

She has to thank the violence in southern Thailand, the steep rise in oil prices and China's insatiable appetite for primary commodities for her change of fortune. Rubber prices climbed to a dizzying M$7 this month - a record high.

Industry experts said the daily killings in southern Thailand had disrupted rubber production in the second-largest producer after Indonesia. A sharp rise in oil prices has made synthetic rubber unattractive and China's appetite for rubber is insatiable.

'China takes any amount of rubber you have,' a market analyst with a local bank said.

For people like Ms Azizah and 250,000 poverty-stricken rubber smallholders, almost all rural Malays, the change in fortune is a godsend. The smallholders, who own about a million hectares of rubber trees, are now flush with cash.

'If this price holds I will be averaging M$6,000 a month,' said a smiling Ms Azizah, who was making M$100 a month before. 'This is truly a gift from Allah.'

The high price has sparked a production frenzy. Thousands of rubber smallholders are feverishly tapping away at the trees, almost doubling the average monthly production to about 45,000 tonnes.

With one hectare easily yielding about M$300 of latex a day, once abandoned smallholdings now have been cleared of weeds, fenced off and are guarded against intruders. Even the smallholders' children are giving up their urban jobs and returning to help their parents.

Latex flows into a bowl tied to the tree after a thin slice of the bark is sliced off. The latex gathers in the bowl, coagulates and is collected and sold to wholesalers for instant cash.

Rubber, originally from Brazil, was the mainstay along with tin during the colonial era but lost its lustre as the country modernised.

Giant plantations converted to oil palm or redeveloped their holdings into modern townships, industrial estates or golf courses. But smallholders were left holding their uneconomical plots, until now.

Government officials fear the smallholders are killing the golden goose by their frenzied tapping.

'They are tapping twice a day, reducing the trees' productivity period from 15 years to four years,' said Rural and Regional Development Minister Aziz Shamsuddin.

Industry experts agree, saying the boom is unlikely to last.

'The high price is unrealistic and artificial ... it is inevitable the bubble will burst,' a rubber expert advised investors this week.

But people like Ms Azizah, who have had hungry stomachs, are not in the mood to listen.