RANGOON — A four-year decline in world rubber prices and difficulties in negotiating export hurdles has hit plantation owners hard in Wa territory, many of whom switched to the crop after the United Wa State Army (UWSA) began eradicating opium production in the areas under its control.
One kilogram of crude smoke sheet rubber sold for US$1.19 on the Singapore Commodity Exchange in Apr. 2011. Weak global demand in the years since has led to a steep drop in value, with the average selling price sitting at $0.35 in March.
In Wa territory, home to 81,000 hectares (200,000 acres) of rubber tree plantations, the decline has hurt earnings across the supply chain. Farmers are now earning 1 yuan ($0.16) per kilogram harvested, down from 8 yuan ($1.28) two years earlier.
The work of local producers is further complicated by their reliance on the Chinese market, a result of the area’s geographical and political isolation from the rest of Burma. Refining companies must seek a sponsor company on the other side of the border, who must in turn seek approval from their provincial government. Exporters are then liable for a 24 percent tax on the total sale value.
Tax Sam Ka, an officer of the Teng Long Rubber Company, said that the approval process was often subject to long delays.
“Our first problem is permission,” he said. “When there is a good rubber price, we want to sell as soon as possible. When we have to wait, we can’t get a good price. By the time they give permission, the price goes down.”
The company produces refined rubber in 33 kilogram blocks, which Tax Sam Ka said were sold for 35,000 yuan ($5600) in 2012. The price has since dropped to 9,000 yuan ($1440).
Teng Long owns 3200 hectares (8000 acres) worth of rubber plantations and currently has 400 tons of export blocks sitting idle. In February, the company was presented with a chance to export 300 tons, but export permission has not yet been granted.
Tax Sam Ka said that the company’s 6000-strong workforce have had their salaries cut to reflect Teng Long’s dwindling revenues. Previously, refinery employees could expect to earn between 1500-3000 yuan ($240-480) per month, an enviable salary in a country with average individual monthly income south of $100.
“We even hired some outside rubber experts,” he said. “We gave specialists at least 5000 yuan ($800) per month when rubber prices were good, which is something we cannot give now.”
