Challenges in Natural Rubber Value Chain

28 May 2023 News

The challenges facing natural rubber smallholders

One of the most prominent challenges faced by natural rubber smallholders is low productivity. Smallholders typically have limited resources and knowledge of modern farming practices, which leads to low yields. Additionally, natural rubber production requires extensive maintenance, a labour-intensive process that many smallholders cannot afford. This problem is exacerbated by limited access to credit and the high cost of inputs such as fertilizers and pesticides.

Another challenge is the fluctuation in rubber prices. The price of natural rubber ishighly volatile and subject to various factors such as supply and demand, global economic conditions, and the weather. Smallholders often lack the resources to hedge against these fluctuations, leaving them vulnerable to market shocks. This problem is compounded by the fact that many smallholders sell their rubber to local intermediaries or brokers, who offer much lower prices than the market rate. Their limited access to market opportunities places them as the most vulnerable stakeholder in the value chain. In addition, smallholders now face major adversities such as inflation and trade disputes happening globally. 

Furthermore, natural rubber smallholders face environmental challenges, including climate change and deforestation. Climate change has resulted in erratic weather patterns, which affect the growth and yield of rubber trees. Deforestation has led to the loss of biodiversity and soil degradation, which negatively impacts rubber tree growth.  

Finally, the lack of access to information and technology is a significant challenge faced by natural rubber smallholders. Many smallholders lack access to modern farming technologies that could significantly improve productivity, such as irrigation systems and mechanized equipment. Additionally, smallholders often lack access to market information, which makes it difficult for them to make informed decisions on when to sell their rubber.

Working together to find solutions

Natural rubber smallholders face various challenges that affect their productivity and profitability. Addressing these challenges requires a multi-faceted approach that involves investment in research and development, access to credit, sustainable farming practices, and market access. The environmental challenges require sustainable farming practices and investment in reforestation initiatives to protect the natural rubber supply chain and PEFC is there to support them.

There is a need for collaboration with larger stakeholders and commercial operators to develop new and improved varieties of rubber trees that are more resistant to environmental challenges and require less maintenance. Smallholders need access to credit and training on modern farming practices, including sustainable farming and mechanization. Governments and development agencies can also work with smallholders to improve market access and develop value chains that provide fair prices for their rubber.

By addressing these challenges, smallholders can increase their productivity and contribute to a more sustainable natural rubber supply chain.

For corporates and organizations interested to find out more about these solutions, contact us or your local PEFC national member here.

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The challenges at a glance

Farmers/producer challenges:

- Low productivity due to limited resources and knowledge of modern farming practices

- High cost of inputs such as fertilizers and pesticides

- Labour-intensive maintenance process that many smallholders cannot afford

- Fluctuation in rubber prices and vulnerability to market shocks

- Environmental challenges, including climate change and deforestation

- Lack of access to information and technology, including market information

 Processor challenges:

- Quality of rubber produced by farmers may not meet the required standards

- Difficulties in sourcing and coordinating with smallholder farmers

- Ensuring a steady supply of raw materials

Factory:

- Ensuring the quality and consistency of the raw materials received from processors

- Managing production and supply chain logistics

- Meeting production deadlines and quality standards

Buyer challenges:

- Ensuring the quality and consistency of rubber purchased from factories

- Managing logistics and supply chain risks

- Negotiating prices and terms with factories

Final manufacturers:

- Ensuring the quality and consistency of rubber purchased from buyers

- Meeting production and delivery deadlines

- Adapting to changes in consumer demand and market trends

Consumers:

- Expectation of high-quality rubber products that meet their needs and preferences

- Concerns around sustainability and ethical sourcing of raw materials

- Influence on market demand for natural rubber products.