NEWS RELEASE:

The Future of Rubber

The uncertainty of rubber prices hits the world today. It goes down to the extreme point and affects the rubber producing countries, one of which is Indonesia. As one of the biggest rubber producing countries in the world, it significantly influences the community especially the rubber farmers. Normally, its price is at US$ 1.5 – 1.6, yet today, it is only at US$ 1.33 or IDR 6000/kg.

This markdown happens might be as the result from (i) the global price of the rubber is determined by the international  traders through commodity stock exchange in Singapore (Singapore is not one of the rubber producing countries).  This stock exchange reflects the condition of stock and market of the most commonly traded rubber. (ii) the global perception that the rubber stock is quite large, particularly the certain type of rubber from China (8/2/2019, kompas.com).

As the price goes down extremely, it might lead to economic sources struggle which could erode the forest resources, for instance opening new land and Agroforestry system by replacing the rubbers with other crops. Whereas, the rubber agroforestry is actually similar to the natural forest, yet, a limited land exist has been a dilemma when it no longer benefits the local people around.

Today, there are about 10.2 million people around the forest specified as the poor. The factors above are the major concerns on how to keep the forest and the locals’ welfare. Therefore, rubber has a significant role as one element to resolve the problems as it is agroforestry crop which could hold deforestation up, protect the various wildlife and benefits the local livelihood. Thus, it is expected to have a normal and stable rubber price in the future.

 

Solution

In terms of domestic perspective, Indonesia has the power to influence the global rubber price by encouraging the development of downstream industries or end-product industries. Thus, this scheme is expected to increase domestic market demands and indirectly affect the global price of the rubbers.

In addition, the central government has offered the short-term solutions through direct intervention to the Minister of Public Works and Public Housing (PURR), Basuki Hadimuljono, to directly buy the rubber from the farmers at Rp 7.500-Rp 8.000 (26/11/2018, cnbcindonesia.com). Meanwhile, the budget allocation for RP. 20 billion has already been made for this activity. The rubbers will be processed as asphalt mixture materials. The PUPR predicts that it will take 2,542 ton rubber to revitalize 93.66 km road in South Sumatera, Lampung, Medan, and Jambi ((7/1/2019, cnbcindonesia.com). the commodity rubber improvement at national level is expected to influence the rubber price. 

 

Rubber Issues in Jambi

As the third largest rubber producers region in Indonesia, Jambi Province is the most-affected region particularly its farmers. The Central Bureau of Statistics (BPS) noted that the Farmer Exchange Rate (NTP) of Jambi Province in December 2018  was only 97.13 or down 0.96 percent compared to November at 98.07 points. It comes as the result of the main commodities price declines, the oil palm and rubbers. (3/1/2019, jambiindependent.com).

After the consistence markdowns happened in 2017, the local government starts to take an action complying with the central policy. The approved Local Regulation Draft (Ranperda) regarding plantation commodity trade system on November 26 2018 was an attempt conducted by the government of Jambi Province to address the problems related to the oil palm and rubber farmers I order to provide and guarantee a stable price to prevent the unfair situation during the trade system, increasing bargaining position, securing mutually beneficial cooperation, improving the quality of pal and rubber, as well as the supervision and monitoring from the regional government (28/11/2018, gatra.com). The main priority of this Ranperda would be able to help monitor the commodity price from the farmers to the factory directly, without other third parties who potentially reduce the maximal profits of the farmers.

However, the inconsistencies are deniable and foreseen through protracted process of ratifying the Ranperda. According to website information of DPRD in Jambi Province (4/12/2018 dprd-jambiprov.go.id), this Ranperda will be ratified in December 2018 so, it could be applied in 2019. However, it does not happen. The Ranperda has not been ratified yet although people put their biggest wish on this regulation as it is expected to end the uncertainty on the rubber price.

Besides monitoring process to have real implementation of each policy,  it is very essential to take an action and effort to encourage the ratified Ranperda since a legal policy establishment without a good monitoring management will never provide a real impact. Thus, a tangible access to the information and policy draft formulation should be made from the beginning by providing such flexibility and letting the publics involved in. Therefore, a commitment to keep the forest and local welfare sustainably will be made. (Nabhan Aiqani)







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