Profile of rubber plantations in Indonesia.
The prices of rubber remain high. Strong economic growth recorded by a number of major Asian countries notably China and India in the past several years has caused a jolt in the markets of several primary commodities especially crude oil. The past two years saw a leapfrogging increase in the prices of crude oil bringing on a surge in the prices of oil-based commodities like synthetic rubber. The increase in the price of synthetic rubber has resulted in a proportional rise in the prices of natural rubber.
Apart from the rise in the prices of substitute material, the increase in the prices of rubber was also attributable to strong growth of the Chinese and Indian economies. Demand for rubber in the two Asian giants was strong to feed their tire industry, which expands with the growing automotive industry.
The prices of natural rubber fell hitting the rock bottom toward the end of the 1990s and early 2000s. The price was only 50 U.S. cents per kg in 2001. Now (in October, 2006) the price has shot up to around US$ 1.5 a kg.
The prices of natural rubber began to scale down in mid 2006 but producers in the country believe that the price will not fell to less than US$ 1 a kg. The price is forecast to stay close to the ITCR target of US$ 1.3 a kg. The market of natural rubber is predicted to remain firm for a long time to come as it is not easy to increase production through expansion of rubber plantations, which will take years to be ready for harvest.
Indonesia is no longer number one in natural rubber production in the world. That position has been taken over by Thailand. Indonesia failed to fully take advantage of the rise in the rubber prices as wide rubber plantations have not been well taken care of in the country.
Many rubber plantations have been neglected as a result of the price fall earlier. The productivity of Indonesian rubber plantations, therefore, is low and the quality is poor. As a result the prices of Indonesian rubber are below those of Thailand and Malaysia, whereas Indonesia is the largest in plantation areas.
With large plantation areas, Indonesia is highly potential to increase its production and become number one in production. Large fund, however, will be needed to rejuvenate the plantations, which are dominated by smallholdings. Smallholders have no easy access to sources of funds such as banks.
Plantations by status (smallholding, BUMN, Private)
Smallholdings make up most of rubber plantations in Indonesia. There was almost no expansion of rubber plantations in the country in 35 year period ending in 2003. There was only an expansion of 1.2% annually and it was mainly in the size of smallholders' plantations which expanded by about 1.5% a year. The expansion contribute little to production as smallholdings are poor in maintenance and low in productivity. Meanwhile, state plantations (BUMN) and those owned by private plantation companies tended to decline in size.
When the prices of natural rubber continued to decline in the world market in the 1990s, many plantations owned by private companies were cultivated with other oil palm prompted by booming demand for palm oil. Astra Argo Lestari and the Bakrie group, for example, converted or sold their rubber plantations to concentrate more on oil palm plantations. Plantations companies began to show interest in rubber plantations only in the past two years when the price of that commodity surged in the world market.
With 3.3 million hectares in size in 2005, smallholdings made up 85% of natural rubber plantations in the country providing a livelihood for 15 million Indonesians. Around 91% of the smallholdings have been built purely (Swadaya) by small farmers and the rest or around 288,039 hectares have been built in cooperation with nucleus companies under PIR program, PRPTE, assisted UPP, Partial, and assisted Swadaya program.
Location of Rubber Platations
Sumatra has the largest rubber plantations in the country. The plantation sin Sumatra are located mainly in South Sumatra which alone has 638,000 hectares in 2005 and in North Sumatra, Riau and Jambi.
Other provinces having large rubber plantations are West Kalimantan and Central Kalimantan, Central Java and West Java.
Different from Sumatra and Kalimantan, rubber plantations in Java are dominated by BUMN and private companies. Smallholdings are dominant in Sumatra and Kalimantan.
[FIGURE 1 OMITTED]
Condition of plants
Smallholders' plantations have low productivity of around 600 kg/hectare/year. Among the reasons are poor maintenance of seedlings and the fact that a large part or around 13% of smallholders' plantations have to old rubber trees and no longer productive.
Based on official data of the plantation directorate general, around 45,000 hectares of rubber plantations have been damaged.
Damaged plantations are believed to be much larger reaching around 400,000 hectares and around 2%-3% of productive plantations will need rejuvenation every year.
State-owned rubber plantations
Plantations owned by state and private 4 companies are well managed and, therefore, are more productive than smallholdings.
State plantation company PT PN III in North Sumatra has 45,327 hectares of rubber plantations. PTPN III also has 9,150.8 hectares of plasma rubber plantations run under the smallholder nucleus (PIR) scheme in cooperation with farmers. It also has oil palm and cacao plantations.
The largest rubber plantations including plasma is owned by state company PT PN VII in southern Sumatra--South Sumatra and Lampung. PTPN VII has 65,800 hectares of rubber plantations including 34,439 hectares of nucleus plantations and 31,467 hectares of plasma plantations.
When rubber prices fell in 1994-2003, the country's rubber production dropped. Production, began to rise when the prices rose in 2004. Production rose from 1.79 million tons in 2003 to 2.06 million tons 2004 and to 2.13 million tons in 2005.
The highest increase in output was recorded by smallholdings when the prices began to rise. The production of plantations owned by the state and private companies did not change much as they already reach the highest productivity. Their production will not change unless there is expansion in plantation areas.
Production by location and owners
Sumatra has the largest rubber plantations therefore, it had the largest production of 1.53 million tons in 2005 or 75% of the country's total production. By provinces, North Sumatra has the largest totaling 412,000 hectares, followed by South Sumatra, Riau and Jambi. See the following table.
Production by companies
The productivity of Indonesian rubber plantations is lower than that of Thailand and Malaysia. Rubber plantations in the country produce only 650kg per hectare a year on the average. The productivity of producing plantations with mature trees averages 843 kg per hectare a year.
The productivity of plantations using high yield seedlings could be as high as 1,500-2,000 kg a hectare.
Smallholders plantations have lower productivity compared to plantations owned by state and private companies. Smallholdings have a productivity of 623 kg a hectare a year on the average as against a productivity of 828 kg of state plantations and 769 kg of private companies.
Rubber smallholdings in Sulawesi are higher in average productivity as plantations owned by state and private companies are not yet all producing. Private companies began investment in rubber plantations in Sulawesi only lately.
Rubber is a perennial crop growing well in tropical areas with sufficient rainfall. Rubber originated from Brazil before it was grown in other regions in the world. Now, the largest producers are southeast Asian countries--Thailand, Malaysia and Indonesia.
Rubber trees need 5 to 6 years to be ready for sapping. Their peak productivity is when they are 10 to 15 years old.
Condition needed to grow well
Climate and soil condition determines growth of rubber trees.
Areas suitable for rubber tree cultivation are those between 150 south and 150 north latitude. Beyond those areas rubber tree will not grow well.
Rubber trees need rainfall of 2,500 mm to 4,000 mm/year, with rainy days from 1000 to 150 days a year. Too much rain in the morning will not be good for rubber trees.
Rubber tree grow better in low land of 200 m above the sea level. An area at altitude of more than 600 meter above the sea level will not be suitable for rubber plantations. An optimum temperature is between 25 and 35 degrees C.
Too strong winds is not good for rubber trees.
Young and old volcanic lands even land with peat of less than 2 meters thick are good for rubber tree cultivation. Volcanic soil has suitable physical characteristics in structure, texture, depth of underground water, aeration, and drainage, but its chemical characteristics are not suitable as its mineral content is low.
Alluvial soil is sufficiently fertile but its physical characteristics especially drainage and aeration is not sufficiently goods. The soil should be with pH between 3 and 8. Land with pH < 3 and > pH 8 is not good for rubber plantations.
Lands suitable for rubber plantations should have the following characteristics:
* Land up to 100 cm in depth should not have layers of sandstone or rock formation.
* Sufficient aeration and drainage.
* Soil should be loose, porous and could hold water.
* The soil consists of clay 35% and sand 30%.
* Peat should not be thicker than 20 cm.
* Mineral content in NPK is sufficient and should not be short of micro mineral elements.
* Land reaction with pH 4.5--pH 6.5.
* Land declivity < 16% and.
* Underground water surface < 100 cm.
Rubber clones recommended
The prices of natural rubber have increased lately prompting immediate implementation of rejuvenation program by replacing not productive trees with high yield clones and by improving cultivation technology. Rubber breeding activities in the country has resulted in high yield clones producing both latex and trees. In a national workshops on rubber tree breeding in 2005, it was recommended the cultivation of new high yield clones of Generation-IV in the period of 2006--2010, namely the clones of IRR 5, IRR 32, IRR 39, IRR 42, IRR 104, IRR 112, and IRR 118. The release of clones of IRR 42 and IRR 112 are to be proposed. The other clones of IRR are already officially released.
Those clones prove to be highly productive and grow well in various areas, but they have variations in agronomic characteristics and other secondary characteristics. Therefore, users must carefully select clones that could grow well in their areas. Cultivation of old clones that area already released including GT 1, AVROS 2037, PR 255, PR 261, PR 300, PR 303, RRIM 600, RRIM 712, BPM 1, BPM 24, BPM 107, BPM 109, PB 260, RRIC 100 are still possible but must be handled carefully both in the selection of location and system of cultivation. Clones of GT 1 and RRIM 600 are reported to be attacked by leaf disease namely Colletotrichum and Corynespora. Clones of BPM 1, PR 255, PR 261 have problem in the quality of latex that uses of their latex are limited to certain type of rubber products. Clone of PB 260 is highly sensitive to dryness of sapping channel and wind and drought.
Types of Natural Rubber
There are several types of traded sap of natural rubber in forms namely latex, crumbs, sheets, and chips. The products are used as feedstock in downstream industry.
There are several types of natural rubber such as processed rubber goods. Processed rubber goods include semi and finished products. The types of natural rubber products widely known include.
a. Rubber processed materials
Rubber processed material is estate latex and plantation latex clumps produced from rubber trees, hevea brasiliensis. Some observers said rubber processed materials are not the product of large plantations but the product of rubber smallholdings. By processing methods, rubber materials consist of 4 types:
1. Estate latex is latex liquid produced through sapping rubber trees. Latex liquid does not yet coagulate either with or without anti coagulation.
2. Wind sheet is rubber material produced from filtered latex and coagulated with formic acid in the form of sheet rubber, which is already ground but not yet finished.
3. Thin slab is rubber material from latex already coagulated with formic acid.
4. Fresh lump is rubber material not produced from plantation latex lumps formed naturally in sapping bowl.
Conventional Natural Rubber
In rubber trade, rubber materials generally traded are known as conventional natural rubber consisting of sheet and crepe The types of natural rubber categorized as conventional are as follows:
1. Ribbed smoked sheet (RSS)--the type of sheet produced through the process of smoking,
2. White crepe and pale crepe are the type of crepe in white or light color, either thick or thin.
3. Estate brown crepe is crepe in brown color produced widely by large estates. This type is also produced from low quality material such as those used in the production of off crepe and latex remnant, lump or coagulum which originates from pre-coagulation, and estate latex already dry from sapping.
4. Compo crepe is the type of crepe produced from lump, tree scrap, cuts or remnants of RSS or wet slabs.
5. Thin brown crepe remilis is brown crepe, which is thin because of repeated grinding.
6. Thick blanket crepes ambers is blanket crepe thick and in brown color, generally produced from wet slabs, sheet without the process of smoking and lump and scrap from estates or smallholdings with good quality.
7. Flat bark crepe is earth rubber, which is the type of crepe produced from natural rubber scrap not yet processed including black ground scrap.
8. Pure smoked blanket crepe is crepe which is produced from the grinding of special smoked rubber from RSS, including block sheet or from the remnants of RSS. Other types of rubber or nor rubber may not be used.
9. Off crepe is crepe not in the form of being frozen or standard, generally produced not through the process of freezing directly from fresh latex, but from remnants of dry rubber, RSS sheets in poor quality.
a. Thick Latex
Thick latex is a type of rubber in the form of thick liquid, not in the form of sheet or other solid materials. Thick latex is sold in the market includes one produced through the process of boiling or creamed latex and through the process of centrifuged latex. Generally thick latex is used in the production of thin and high quality rubber materials such as hand gloves for sanitation.
b. Block Rubber
Block rubber is crumb rubber already dried and milled into bales in certain size. There are block rubber in light color and each class has certain color code.
c. Technical specification rubber (Crumb Rubber)
Technical specification rubber also known as crumb rubber is natural rubber produced specially that its technical quality is guaranteed. Determination of quality is based on technical characteristics. Determination of quality and category of crumb rubber is not based on visual evaluation like in the case of sheet, crepe and thick latex.
d. Tyre Rubber
Tyre rubber is another form of natural rubber produced as semi finished product that could be used directly by consumers either in the production of tires or other rubber goods.
Rubber trees could be utilized as basic material in timber industry. However, old rubber trees have not been fully utilized in the country. Processing rubber trees into finished timber products is a potential business to increase the profitability of rubber plantations. Currently there is strong interest in business utilizing rubber trees. Timber products from rubber trees are high demand in the country and abroad as the color is brighter. In addition, producing timber products from rubber tree has no risk of facing ecolabeling problem as rubber trees are renewable. It could be used as furniture material, particle board, parquet, MDF (Medium Density Fiber-board), etc. Rubber plantations, therefore, have additional product other than latex.
Problem faced in production/cultivation
Financial difficulty in rejuvenation program
Financial difficulty is the main problem hampering rejuvenation of rubber plantations. Funding is not much of a problem in other rubber producing countries like Thailand, Malaysia and India, The government in those countries provide fund for the expansion, promotion and rejuvenation of rubber plantations.
The fund is collected in CESS levy on rubber exports. In Indonesia, CESS levy for the expansion of rubber plantations has been stopped since 1970.
The quality of smallholders rubber products
The basic materials produced from smallholders rubber generally have poor quality. In some areas, the prices received by the farmers are low (60%-75% of FOB) because of inefficient marketing of smallholders rubber. Marketing is not efficient partly because of the distant location of plantations from the processing factory.
The locations of plantations of smallholders are widely separated generally with no easy access to facilitate transport. The production cost, therefore, is higher.
Production of crumb rubber
The types of rubber products exported by Indonesia are relatively few and are dominated by primary products (raw materials) and semi finished products. Thailand and Malaysia have more varying rubber products.
Most of Indonesian rubber production is processed into crumb rubber with codification of "Standard Indonesian Rubber" (SIR) and other is processed into RSS and thick latex.
Number of companies producing crumb rubber
Currently, there are 20 units of latex processing plants with a total annual production capacity of 86,980 tons, and 131 units of crumb rubber processing plants with an annual capacity of 1,892,499 tons.
The capacity of crumb rubber processing plants is sufficient to process the basic material produced in the country, but in the next five years new investment will be needed to build new plants or to rehabilitate the existing factories to meet growing demand for basic material processing facility.
NV Muara Kelingi is the largest crumb rubber processing plant located in South Sumatera. Many large crumb rubber processing plants in South and North Sumatera have been operated since 1970's and they play also as exporters and wholetraders.
Production of crumb rubber by types
Indonesia's rubber production is dominated by crumb rubber. In 2003, crumb rubber accounted for 1.61 million tons of the country's total rubber production of 1.79 million tons. The rest were conventional natural rubber such as RSS and latex.
The type of crumb rubber produced in the country is mainly SIR 20, which accounts for 90% of the country's production of crumb rubber.
Indonesia exports most of its production of natural rubber. Only a small part is disposed of on the domestic market mainly for tire industry. In 2003, the country's production totaled 1.6 million tons and only 80,000 to 100,000 tons of which were disposed of on the domestic market. The rest were exported.
Exports have fluctuated and tended to decline in the 1994-2000 period--from 1.2 million tons in 1994 to 1.3 million tons in 2000 after peaking at 1.6 million tons in 1998. The decline until 2000 followed price fall in I international market. In 2002, exports totaled 1.5 million tons valued at US$ 1,049 million.
Since 2002, exports scaled up to reach 1.87 million tons valued at US$ 2.18 billion in 2004. Exports were estimated to rise in 2005 and the trend is expected to continue through 2006 to follow the soaring prices of crude oil.
Exports by types
Crumb rubber of the SIR 20 type dominates rubber exports from the country. SIR 20 accounted for 80% or 1.52 million tons valued at US$1.76 billion of the country's total exports of 1.87 million tons valued at US$ 2.18 billion in 2004.
Other exported types include smoked sheet (RSS) totaling 145,000 tons valued at US$ 170 million in 2004.
Domestic requirement is relatively small compared to exports. In 2003, domestic consumption totaled only 83,600 tons and 70,000 tons of which were for tire industry. The rest for automotive component industry, household equipment industry and sports equipment industry.
According to the International Rubber Study Group (IRSG) world demand for natural rubber and synthetic rubber has continued to increase in the past 10 years--from 15.7 million tons in 1996 to 20.6 million tons in 2005.
Demand remained strong in 2005 when the prices surged to follow the soaring prices of crude oil. The strong demand was attributable to high economic growth especially in Asia notably China and India. China led in economic expansion growing by 10%. Expansion of its automotive industry and tire industry necessitated larger supply of rubber.
Data from the association of rubber companies (Gapkindo) showed that world's demand for natural rubber totaled 8.84 million tons in the first 7 months of 2006. China accounted for 1.89 million tons of the total demand. The surge in demand for natural rubber in Asia was also attributable to relocation of rubber goods processing factories from western countries to natural rubber producing countries in Asia including Thailand and Malaysia.
Tree of rubber industry
Rubber trees are useful both in their latex and logs. Latex is used as feedstock in various rubber goods industries such as medical equipment, components of motor vehicles, sport equipment, household goods, etc..
The logs are used as the raw material for sawn wood to be used further for furniture or construction material. Rubber trees are also used widely as charcoal and for pulp.
Rubber consuming industries
Rubber material in the form of latex could be processed into various finished latex goods and solid rubber (RSS, SIR) could be used as feedstock for various rubber products. There are various kinds of rubber based finished products and could be categorized based on their uses or market channels.
Classification is generally based on their end uses.
(1) Tires and related products and inner tubes and automotive components,
(2) Finished rubber products for industry,
(3) Sports equipment,
(4) Clothes, footwear, and components,
(5) Finished rubber products for general and household uses,
(6) Health and pharmaceutical.
Only less than 30% of rubber is used in non tire industry generally small and medium industries. Latex based industry has not grown well in the country because of various constraints mainly low competitiveness of Indonesian latex products facing products form other countries such as Malaysia.
Small and medium scale industries producing finished rubber goods still need guidance in their development. Industries producing finished rubber products must be developed among companies producing natural rubber/synthetic rubber basic materials, auxiliary materials and molding and should be supported with research facility, regulation, trade, transport financial and other services.
Rubber based small industries that produce finished products establish cooperation with other businesses in securing feedstock supplies and marketing. They seek cooperation with component factories to guarantee supply of basic material. Small industries have no facility to produce rubber components.
In marketing, small industries producing finished products serve as vendors for large companies such as car makers or electronic factories. Small industries often rely on captive market to dispose of their products. Small industries producing finished rubber products generally operate as cottage industry or home industry. They have no access to capital sources. Their products are mainly rubber spare parts, industrial and technical rubber products, which do not require difficult specifications and high technology.
Their products are generally those not produced by large companies, therefore, they have no problem in competition from large rivals. Lately, however, there are imported products from China and Korea that are feared to cause marketing problem for the small industries.
The small industries use simple technology mainly molding and vulcanizing using traditional stoves. Therefore, they use no compounding technology. Their products are sold to the consumers through partners and brokers as they have no access to the end users.
Their partners are generally spare part procurement companies supplying the products to electronic and automotive factories. Cooperation with the partners is informal based on mutual trust without formal contract. The partners sold the products to electronic and automotive factories after being packed at a much higher prices.
Rubber tree logs could be used as basic material for timber processing industry. The picture of the tree of rubber based industry shown that there are quite many types of products that could be produced from latex, and rubber tree logs have also been used by a number of industries but not as many as latex based industries. Rubber tree logs have provided additional value for rubber plantation companies.
Demand for rubber tree logs is growing both on the domestic market and in international markets especially as timber products from rubber tree have bright color with attractive patterns.
In addition producers of timber products from rubber tree have no problem with ecolabeling requirement as rubber are renewable commodity. Tree logs are used as raw material for furniture, particle board, parquet, MDF (Medium Density Fiber board), etc..
Prices remain high
In the past two years, rubber growers and companies enjoy good income with the increase in the prices of that commodity. In 2004, the price of natural rubber averaged Rp 7,200 a kilogram. In 2005, the prices in export market surged to Rp 13,500 a kg. In September, 2006, the price rose further to Rp 17,550. Rubber farmers received a price of Rp 14,500 a kg. for raw rubber. The price in export market peaked at Rp 18,750 in mid 2006.
The price scaled up after strong demand especially from China and India, two growing Asian giants. The mind boggling growth of Chinese economy has boosted development of its automotive industry that require large supply of rubber for car and motorcycle tires. Meanwhile many rubber goods factories have been moved from Europe to rubber producing countries in Asia for efficiency.
The world's largest producers of natural rubbers are three Asean countries--Thailand, Indonesia and Malaysia. The three countries supply 80% of the world's natural rubber requirement. In the first half of 2006, Indonesia contributed 2.28 million tons to the world's natural rubber exports.
Supply is determined by a number of factors including price. The prices have fluctuated in international market. In the past decade the price of natural rubber hit the rock bottom at 0.46 U.S. cent per kilogram in November 2001. The low price discourage production. As a result many rubber farmers in Malaysia and Indonesia changed their crops and grew oil palm.
The rubber price fall since mid 1997 brought the three large producers Thailand, Indonesia and Malaysia together to discuss cooperation in production and marketing.
Cooperation between the three countries succeeded in shoring up rubber prices in the world market. By the end of 2001 (before the signing of the Bali Declaration 2001) the prices of that commodity were around 46 cents and 52 cents a kg. After the implementation of the Agreed Export Tonnage Scheme (AETS) and Supply Management Scheme (SMS) the prices of that commodity began to scale up. In January, 2002, the price rose to 53.88 cents a kg and up again to in August 2003 to 83.06 cents.
With the signing of a MOU on August 8, 2002, the prices rose further to 8955 cents a kg in September that year. In March 2003, the price hit a new record at 96.50 cents after the 1997 crisis. The price fell slightly in April 2003 to 81 cents before rising again in May that year to 82 cents a kg.
Starting 2004, a leapfrogging increase was recorded in the prices of natural rubber as the price of synthetic rubber surged to follow the soaring prices of oil in the world market. The increase in the prices caused concern on the market. In September 2006, Malaysian Minister for Plantation and Primary Commodities Datuk Peter Chin Fah Kui as the International Rubber Consortium, (IRCo) to seek to stabilize the prices of natural rubber. Indonesian rubber companies supported the call. They said too high prices of natural rubber will not be good for the country, the second largest producer in the world after Thailand. The ideal prices are US$ 1.5 to US$ 2 per kg.
The International Rubber Study Group predicted that the high prices will continue until 2010. With consumption growing 4.7% annually, demand will reach 10,998 million tons in 2010 as against supply of only around 10,677 million tons. Supply will come only from the present producers as it is not easy to grow rubber trees and produce natural rubber by other countries. It will take years before the trees are ready for sapping.
It is forecast that the prices of natural rubber in 2010-2020 will rise to US$ 2.5 per kg.
Smallholders or farmers contributed the largest part to the country's production of natural rubber. They are many but each of them is small producer. They sell their production to traders.
In Jambi, in the 1950s, 1960s, and 1970s, traders come by boats to the villages in the interior areas near the Batanghari river and its tributaries. The traders offer loan in the form of basic necessities, textiles, and money to the farmers to be repaid with rubber. That way the traders maintain business ties with the rubber growers.
In the beginning the traders served to represent rubber milling companies now crumb rubber mills. Later with the improvement transport facility especially with the availability of land transport facility, many rubber trades became independent and some grew to become big traders.
Now big traders dominate rubber trade dictating the market even rubber mills. They control stocks and distribution of raw rubber.
Almost all rubber producing villages in Sumatra have 1 to 5 small traders collecting rubber from farmers. The small traders sell the rubbers to middlemen or agents in district areas and then to whole sale traders in large cities such as Jambi, Palembang and Medan before the rubber is sold to rubber mills.
In all parts of the chain transport cost and unloading cost are needed and the each trader has profit margin. It hardly ever happens that a small village trader deals directly with factory unless the trader represents cooperatives or groups of farmers.
The traditional ties between small village traders and rubber growers are not easily cut. For a long time farmers have relied on traders, who offer fund for various purposes, such as to finance the school of their children to be repaid with rubber.
It is often that repayment is not in full that the farmers remain bound by debt to the traders. The prices, quality and discount, therefore, are generally dictated by the traders.
The village traders and whole sale traders play an important role in the distribution of rubber to rubber mills. Some whole sale traders have also operated rubber processing factories and served as exporters. Rubber auction places have been established in several areas organized by he Trade Ministry, but their role is not as determinant as wholesale traders.
Large state plantation companies have their joint marketing office which helps the plantation companies in exports. Generally rubber produced by state plantation companies is sold through auction managed by the Joint Marketing Office. Private plantation companies handle their own marketing both on the domestic and international markets.
Some large processing companies also serve as exporters. Large companies such as state-owned PT Perkebunan Nusantara and private companies like Bakrie Sumatra Plantations and SOCFIN, handle their own marketing including exports.
Generally the exporters and processing companies are old players in the business. See the following list of rubber processing companies and exporters in North Sumatra and South Sumatra.
Investment in rubber plantation low
Plans for New Investment and Expansion
In 2005 and 2006, investment in the rubber sector was more in crumb rubber, latex and RSS industries, as recorded by the Capital Investment Coordinating Board (BKPM). There was no record of investment for new plantations or expansion of plantations.
The main bottleneck in investment in the rubber plantations is difficulty in securing capital such as from banks. Banks are reluctant to face risk of non performing loans especially as investment in rubber plantations is a long term investment.
Investment Scale and Cost in Rubber Plantations
It will take 5 to 6 years before a seedling of rubber tree is ready for tapping, therefore investment in rubber plantation is a long term venture. See the following table.
Financial feasibility study is needed to start investment in rubber plantation based on the following assumptions:
* Production averaging 1,576 kg dry rubber /ha/year,
* FOB price of SIR 20 : US $ 1.50/kg and
* Exchange rate : Rp10,000/US $ (in December 2005) and
* Purchasing price from farmers 80% FOB,
The financial feasibility of investment in rubber plantation is gauged with Internal Rate of Return (IRR), Net Present Value (NPV) and B/C ratio. If IRR is larger than prevailing interest rate of 18% the rubber plantation project is financially feasible.
If NPV is above nil (positive), the investment is feasible on discount rate set namely 18% and 14%. To analyze financial feasibility IRR and NPV are calculated based cash flow in 30 years with constant cost assumption, but the selling price is set on three scenarios--first, the price rising 20%, second the present price (December, 2005) and third, the price falling 10% . The results will be as follows:
The table shows that rubber plantation project with interest rate of 18% is feasible, and when the selling price falls by 20%, the NPV is still positive and IRR is more than 18% If credit carries only an annual rate of 14%, the feasibility of the project will be higher.
Prospects of Investment in Rubber Plantations
The prospects of investment in rubber plantation are better with the growing call for healthier environment. A number of world leading tire factories already introduced what is called "green tires" with higher content of natural rubber.
Meanwhile, the number of polymer factories using natural rubber as feedstock is expected to increase. With the dwindling oil and coal reserves (non-renewable natural resources) to provide feedstock for synthetic rubber, natural rubber will be more competitive.
Indonesian role growing again
Demand for natural rubber in the future will grow to follow the world's economic growth, and rising prices of synthetic rubber, and growing demand for healthier environment.
Meanwhile, Malaysian rubber production is expected to decline because of that country's government policy of concentrating more on development of the downstream sector and growing conversion of rubber plantations into oil palm plantations.
Thailand is also expected to face difficulty in expanding its rubber plantations because of limited availability of land and labor force. Indonesia, therefore, has greater opportunity to gain from growing market demand expected in the future. Indonesia has a number of comparative advantages in the abundant availability of cheap labor, and land suitable for rubber plantations.
The country, however, needs to set direction for development of rubber commodity. In long term until 2025, rubber agribusiness should be developed into latex and tree log-based agribusiness with high competitiveness, environmental concept and sustainable.
Competitive means that the business must be market oriented relying on productivity and added value. The investment must be driven by capital and skilled and innovative human resources.
Projection of Rubber Production and Land for Rubber Plantations
The fact that rubber plantations are dominated by smallholdings in size, development of smallholdings must come first in the development priority. Development of smallholdings will depend much on the availability of fund aid from the government.
According to the government's plan, there are a number of targets to be achieved in the development of rubber agribusiness as follows:
* Accelerating rejuvenation rubber trees using recommended technology.
* Increasing productivity and production and improving the quality of products through rehabilitation and intensification of plantations.
* Expansion of natural rubber-based downstream industry.
* Increasing added value and income from plantations.
For that purpose, the government sets long term (2005-2025) targets for rubber agribusiness development as follows:
* Rubber production target is set at 3.5 million- 4 million tons and becoming the largest producer of natural rubber in the world. Around 25% of the production is to feed domestic tire industry and 75% is to be exported.
* Average productivity is to rise to 1,200-1,500 kg/ha, and rubber tree log production is at least 300 m3/ha/cycle.
* At least 85% of the seedlings to be grown are high yield clones producing both latex and tree logs.
* Rubber farmers are to earn US$ 2.000/ family depending on the price, which is 80% of FOB price. Farmers are to have share in rubber processing units and earn income from business diversification and from the sales of tree logs.
* Expansion of natural rubber-based downstream industry and rubber tree log processing industry.
The government's short term (2005-2009) targets are as follows:
** Rubber production is to grow from 2 million tons at present to 2.3 million tons and 10% of the production is for domestic consumption and 90% to be exported.
** Average productivity is to increase to at least 800 kg per hectare from currently 600 kg-700 kg, and at least 55% of seedlings are clones of high yield variety producing latex and tree logs.
The following table shows the targets for the size of rubber plantations set by the agriculture ministry.
Expansion of plantation is expected to increase production and rejuvenation is expected to increase productivity . Until 2010, the country's rubber production is forecast to rise 4% annually.
The good prices in the past the past two years, is expected to encourage the farmer to increase their production.
** The increase in the prices of natural rubber has followed the rise in synthetic rubber prices which have surged with the soaring oil prices. Synthetic rubber is produced from oil as the basic material. The prices of natural rubber, therefore, is expected to proportionally follow the trend in the oil market. The prices of natural rubber may decline if the oil price fall or new cheaper technology is invented in the production of synthetic rubber. In short term the prices of crude oil are not expected to be far away from the range of US$ 50 to US$ 60 a barrel. Therefore, the prices of synthetic rubber as well as natural rubber are expected to remain high.
** Rubber distribution networks are fairly long and are dominated by large traders. Small rubber growers or farmers may not enjoy the good prices of that commodity, therefore, they may not be encouraged to spend money for rejuvenation of the their rubber plants.
Conclusion and recommendations
** The prospects of business in rubber industry are good with the growing awareness of the people in general of healthy environment. A number of leading tire producers in the world already introduced what is called "green tyres" which have higher content of natural rubber.
** Meanwhile, the number of companies operating in polymer industry using natural rubber as feedstock is expected to increase from year to year. With dwindling non renewable oil and coal reserves in the world the market competition between natural rubber and synthetic rubber will be more in favor of natural rubber.
** With the crude oil prices remaining high above US$60 a barrel , demand for natural rubber will remain strong , therefore, long term investment in rubber plantation will be more feasible now than it was ten years ago when natural rubber was sidelined by synthetic rubber.
** Indonesia has the largest rubber plantations in the world although inferior in productivity against Thailand and Malaysia as most of the Indonesian rubber plantations are owned and run by small and traditional farmers, who always are late in anticipating market. Smallholders rubber plantations are poorly managed and are not well taken care of well after the price fall earlier. Banks also remain reluctant to extend credit to finance rejuvenation.
** The high prices especially if the trend will last long will encourage farmers to improve their productivity and increase production. Rubber , therefore, is expected to regain its lost position as one of the country's major export earners. Rubber business will be more profitable, and banks are expected to be eager to provide credit. If everything goes as expected the country could easily become the world's largest producer of natural rubber relegating Thailand.
** Currently domestic consumption of rubber is relatively low. The country has not made much headway in the development of rubber-based industry. The country needs to develop and expand rubber-based industries to help expand captive market for natural rubber and increase added value of business in rubber sector.
Table--1 Size of rubber plantations in Indonesia Year Width of area (Ha) Smallholding State co. Private co. Total 1994 2,892,994 280,543 298,842 3,472,379 1995 2,952,684 248,393 294,824 3,495,901 1996 2,978,507 246,246 293,688 3,518,441 1997 2,957,538 226,839 290,025 3,474,402 1998 3,082,330 229,809 295,156 3,607,295 1999 3,086,543 218,344 290,173 3,595,060 2000 2,882,795 212,617 277,009 3,372,421 2001 2,838,421 221,876 284,470 3,344,767 2002 2,825,476 221,228 271,655 3,318,359 2003 2,772,490 241,625 275,997 3,290,112 2004 2,747,899 239,118 275,250 3,262,267 2005 2,767,021 237,612 274,758 3,279,391 Source: Plantation Directorate General Table--2 Width of rubber plantations in Indonesia by provinces and status, 2005 Smallholdings State co. No. Provinces (ha) (ha) 1 Nanggroe Aceh D. 71,370 11,485 2 North Sumatra 296,434 72,125 3 West Sumatra 98,839 1,236 4 Riau 370,431 14,253 5 Jambi 414,936 3,509 6 South Sumatra 601,615 13,080 7 Bangka Belitung 29,516 0 8 Bengkulu 57,815 10,863 9 Lampung 49,980 16,476 Sumatra 1,990,936 143,027 10 Jakarta 0 0 11 West Java 7,582 19,263 12 Banten 16,414 1,295 13 Central Java 972 25,508 14 D.I. Yogyakarta 0 0 15 East Java 0 13,753 Java 24,968 59,819 16 Bali 0 0 West Nusa 17 Tenggara 0 0 East Nusa 18 Tenggara 0 0 Nusa Tenggara 0 0 19 West Kalimantan 357,441 3,487 20 Central Kalimantan 238,757 4,694 21 South Kalimantan 109,420 16,199 22 East Kalimantan 31,834 3,980 Kalimantan 737,452 28,360 23 North Sulawesi 0 0 24 Gorontalo 0 0 25 Central Sulawesi 2,243 5,097 26 South Sulawesi 6,140 0 27 Southeast Sulawesi 0 0 Sulawesi 8,383 5,097 28 Maluku 741 0 29 North Maluku 0 1,309 30 Papua 4,539 0 Maluku + Papua 5,280 1,309 Private co. Total area No. Provinces (ha) (ha) 1 Nanggroe Aceh D. 16,095 98,950 2 North Sumatra 91,120 459,679 3 West Sumatra 1,684 101,759 4 Riau 45,726 430,410 5 Jambi 2,226 420,671 6 South Sumatra 23,356 638,051 7 Bangka Belitung 0 29,516 8 Bengkulu 1,321 69,999 9 Lampung 404 66,860 Sumatra 181,932 2,315,895 10 Jakarta 0 0 11 West Java 28,895 55,740 12 Banten 4,136 21,845 13 Central Java 5,636 32,116 14 D.I. Yogyakarta 0 0 15 East Java 4,978 18,731 Java 43,645 128,432 16 Bali 102 102 West Nusa 17 Tenggara 0 0 East Nusa 18 Tenggara 0 0 Nusa Tenggara 102 102 19 West Kalimantan 9,483 370,411 20 Central Kalimantan 6,434 249,885 21 South Kalimantan 16,308 141,927 22 East Kalimantan 2,643 38,457 Kalimantan 34,868 800,680 23 North Sulawesi 0 0 24 Gorontalo 0 0 25 Central Sulawesi 4,343 11,683 26 South Sulawesi 6,268 12,408 27 Southeast Sulawesi 0 0 Sulawesi 10,611 24,091 28 Maluku 0 741 29 North Maluku 0 1,309 30 Papua 0 4,539 Maluku + Papua 0 6,589 Source: Plantation Directorate General Table--3 Plantation areas and production by owners and condition of plants (ha) Year/owners Immature Mature Damaged Total 2003 * Smallholders 739,700 1,985,930 46,860 2,772,490 * State (BUMN) 41,849 187,060 12,716 241,625 * Private co. 84,269 171,017 20,711 275,997 * Total 865,818 2,344,007 80,287 3,290,112 2004 * Smallholders 610,453 2,099,739 37,707 2,747,899 * State (BUMN) 40,014 189,226 9,878 239,118 * Private co. 82,161 173,251 19,838 275,250 * Total 732,628 2,462,216 67,423 3,262,267 2005 * Smallholders 586,151 2,162,544 18,326 2,767,021 * State (BUMN) 39,993 189,332 8,287 237,612 * Private co. 82,292 173,318 19,148 274,758 * Total 708,436 2,525,194 45,761 3,279,391 Source: Plantation Directorate General Table--4 Areas and production capacity of state plantation companies Name of Location Plantation areas company PT Perkebunan NAD (Aceh) Nucleus 11,918 ha Nusantara I Plasma 10,118 ha (PTPNI) PTPN II North Sumatra 11,265 ha PTPN III North Sumatra Nucleus plantations 45,327 ha Plasma 9,150 ha PTPN V North Sumatra Nucleus plantations 14,322 ha Plasma 17,861 ha PTPN VI North Sumatra Nucleus plantations 6,384 ha Plasma 35,878 ha PTPN VII Southern Nucleus plantations Sumatra 34,439 ha Plasma 31,467 ha PTPN VIII West Java Nucleus plantations 27,245 ha Plasma 2,446 ha PTPN IX Central Java Nucleus plantations 23,546 ha PTPN XII East Java Nucleus plantations 14,943 ha PTPN XIII Kalimantan Nucleus plantations 14,898 ha Plasma 46,342 ha PTPN XIV Sulawesi Nucleus plantations 2,513 ha Plasma 2,556 ha Name of Production company annually PT Perkebunan RSS: 1,906 tons Nusantara I SIR: 14,328 tons (PTPNI) PTPN II RSS: 4,200 tons SIR 3 L: 600 tons SIR 10/20: 1,600 tons BSR: 200 tons C,L,: 2,100 tons Thick latex: 2,224 tons PTPN III RSS: 2,885 tons SIR 3 CV: 2,329 tons SIR 3 L: 1,250 tons SIR 3 WF: 155 tons SIR 10: 12,334 tons SIR 20: 1,370 tons Sediment: 1,496 tons PTPN V SIR-3L: 4,221 tons SIR-3 WF: 469 tons SIR 1 and 10: 11,041 tons RSS: 45 tons PTPN VI SIR-3L: 139 tons SIR-3 WF: 2,121 tons SIR 10: 6,269 tons SIR 20: 5,274 tons PTPN VII SIR: 38,393 tons RSS: 4,016 tons PTPN VIII RSS: 6,624 tons TPC: 1,620 tons Thick latex: 3,979 tons SIR: 8,098 tons PTPN IX Rubber: 12,529 tons Thick latex: 4,500 tons PTPN XII Rubber : 10,351 tons PTPN XIII RSS: 5,124 tons SIR: 24,956 tons Br. crepe : 1,212 tons PTPN XIV RSS: 1,299 tons SIR: 3,076 tons Br. crepe: 430 tons Source: Plantation Directorate General Table--5 Production of rubber plantation in Indonesia Year Production (Tons) PR PBN PBS Total 1994 1,138,893 188,122 172,409 1,499,424 1995 1,191,143 199,943 182,217 1,573,303 1996 1,193,146 202,021 178,859 1,574,026 1997 1,174,473 187,770 190,342 1,552,585 1998 1,242,751 192,512 226,635 1,661,898 1999 1,206,410 181,522 216,427 1,604,359 2000 1,125,161 169,866 206,401 1,501,428 2001 1,209,284 182,578 215,599 1,607,461 2002 1,226,647 186,535 217,177 1,630,359 2003 1,396,244 191,699 204,405 1,792,348 2004 1,662,016 196,088 207,713 2,065,817 2005 1,723,318 196,673 208,432 2,128,423 Source: Plantation Directorate General Table--6 Rubber production by provinces and owners, 2005 Smallholders State co. No. Province (tons) (tons) 1 Nanggroe Aceh D, 45,475 6,228 2 North Sumatra 252,718 54,891 3 West Sumatra 69,930 1,280 4 Riau 231,329 17,090 5 Jambi 212,100 4,121 6 South Sumatra 361,683 12,911 7 Bangka Belitung 19,217 0 8 Bengkulu 33,296 9,535 9 Lampung 27,783 16,842 Sumatra 1,253,531 122,898 10 DKI Jakarta 0 0 11 West Java 3,102 18,289 12 Banten 8,741 883 13 Central Java 265 20,432 14 Yogyakarta 0 0 15 East Java 0 11,657 Java 12,108 51,261 16 Bali 0 0 West Nusa 17 Tenggara 0 0 18 East Nusa Tenggara 0 0 Nusa Tenggara 0 0 19 West Kalimantan 201,350 2,217 20 Central Kalimantan 169,715 4,523 21 South Kalimantan 59,440 8,991 22 East Kalimantan 19,604 3,246 Kalimantan 450,109 18,977 23 North Sulawesi 0 0 24 Gorontalo 0 0 25 Central Sulawesi 2,478 2,171 26 South Sulawesi 5,026 0 27 Southeast Sulawesi 0 0 Sulawesi 7,504 2,171 28 Maluku 0 0 29 North Maluku 0 1,366 30 Papua 65 0 Maluku + Papua 65 1,366 TOTAL Indonesia 1,723,318 196,673 Total Private co. production No. Province (tons) (tons) 1 Nanggroe Aceh D, 6,439 58,142 2 North Sumatra 104,646 412,255 3 West Sumatra 2,016 73,226 4 Riau 21,359 269,778 5 Jambi 1,996 218,217 6 South Sumatra 17,825 392,419 7 Bangka Belitung 0 19,217 8 Bengkulu 1,391 44,222 9 Lampung 4,923 49,548 Sumatra 160,595 1,537,024 10 DKI Jakarta 0 0 11 West Java 15,962 37,353 12 Banten 2,986 12,610 13 Central Java 4,716 25,413 14 Yogyakarta 0 0 15 East Java 3,680 15,337 Java 27,344 90,713 16 Bali 89 89 West Nusa 17 Tenggara 0 0 18 East Nusa Tenggara 0 0 Nusa Tenggara 89 89 19 West Kalimantan 4,167 207,734 20 Central Kalimantan 1,583 175,821 21 South Kalimantan 6,466 74,897 22 East Kalimantan 2,243 25,093 Kalimantan 14,459 483,545 23 North Sulawesi 0 0 24 Gorontalo 0 0 25 Central Sulawesi 0 4,649 26 South Sulawesi 5,945 10,971 27 Southeast Sulawesi 0 Sulawesi 5,945 15,620 28 Maluku 0 0 29 North Maluku 0 1,366 30 Papua 0 65 Maluku + Papua 0 1,431 TOTAL Indonesia 208,432 2,128,423 Source: Plantation Directorate General Table--8 Productivity of rubber plantations by owners (kg/ha/year) Productivity Small State Plantations on the Regions holdings plantations of private co. average Sumatra 630 859 883 664 Java 485 857 627 706 Kalimantan 610 669 415 604 Sulawesi 895 426 560 648 Indonesia 623 828 769 650 Source: Data Consult/ICN Table--9 Number production capacity of rubber processing plants by provinces in 2003 Type of Rubber Production Capacity products / Provincy Number Volume Unit Crumb Rubber D.I Aceh 1 7,200 Ton/year North Sumatra 33 470,697 Ton/year Riau 10 135,400 Ton/year West Sumatra 7 134,800 Ton/year Jambi 9 151,600 Ton/year South Sumatra 23 488,900 Ton/year Lampung 4 36,000 Ton/year Bengkulu 4 14,898 Ton/year West Java 13 47,100 Ton/year West Kalimantan 14 285,499 Ton/year South Kalimantan 10 99,400 Ton/year Central Kalimantan 2 21,000 Ton/year South Sulawesi 1 4.572 Ton/year Total Indonesia 131 1,892,499 Ton/year Sheet (RSS) D.I. Aceh 11 22,560 Ton/year North Sumatra 62 278,670 Ton/year Riau 2 2,475 Ton/year South Sumatra 5 4,610 Ton/year Lampung 5 4,353 Ton/year West Java 115 60,926 Ton/year Central Java 91 81,635 Ton/year West Kalimantan 5 34,365 Ton/year South Kalimantan 6 17,750 Ton/year East Kalimantan 3 27,000 Ton/year Total Indonesia 305 534,344 Ton/year Latex North Sumatra 10 72,243 Ton/year Lampung 1 360 Ton/year West Java 8 9,877 Ton/year Central Java 1 4,500 Ton/year Total Indonesia 20 86,980 Ton/year Source: Data Consult/ICN Table--10 The List of major crumb rubber processing plants 2003 Production Name of capacity Companies Location Total (tons/year) NV Muara Kelingi I,II South Sumatra 2 72,000 PT Prasidha AN I,II South Sumatra 2 54,000 PT Panca Samudra S South Sumatra 1 45,000 PT.Rubber Hok Lie North Sumatra 1 44,000 PT. Adei Crumb Rubber North Sumatra 1 42,000 PT New Kalbar Process West Kalimantan 1 40,000 PT Cemaru Lestari West Kalimantan 1 37,400 PT PD Sunan Rubber South Sumatra 1 36,000 PT.Good Year S.P North Sumatra 1 35,000 PTPN IV North Sumatra 3 34,000 PT Bumi Indah Raya West Kalimantan 1 30,000 PT Remco South Sumatra 1 30,000 PT Jambi Waras I Jambi 1 30,000 PT Sumber Jantin I West Kalimantan 1 28,548 PT Hok Tong West Kalimantan 1 28,000 PT Sumber Alam West Kalimantan 1 27,276 Source: Data Consult/ICN Table--11 Production of crumb rubber by quality, 1999-2003 Year 1999 2000 2001 2002 2003 SIR 3CV 14,715 15,436 13,592 14,809 16,869 SIR 3L 26,981 21,537 23,489 20,516 20,812 SIR 3WF 1,155 1,976 2,568 2,518 2,849 SIR 5 28,426 6,308 21,923 20,534 19,305 SIR 10 37,365 55,966 44,776 33,962 32,316 SIR 20 1,125,616 1,159,264 1,290,144 1,399,126 1,516,015 Total 1,234,258 1,260,487 1,396,492 1,491,465 1,608,166 Source: Plantation Directorate General Table--12 Rubber exports, 1994-2005 Volume Value Year (Tons) (000'US$) 1994 1,244,950 1,271,940 1995 1,324,295 1,963,636 1996 1,434,285 1,917,902 1997 1,404,010 1,493,416 1998 1,641,186 1,101,453 1999 1,494,543 849,200 2000 1,379,612 888,623 2001 1,453,382 786,197 2002 1,495,987 1,037,562 2003 1,662,210 1,494,811 2004 1,874,261 2,180,029 2005 2,053,544 2,611,603 Source: BPS, Data Consult/ICN Table--13 Rubber exports by types, 2004 No. Commodity Exports Volume Value (Tons) (000' US$) 1 Latex a. Latex containing LT.. 1/2% ammonia; cream concrete 2,845 3,069 b. Latex containing LT. 1/2% ammonia; centrifuge concentrate 449 478 c. Latex 1/2% centrifugal (Latex containing LT. 1/2% ammonia; other 174 112 concentrate) d. Latex containing > 1/2% ammonia; cream concentrate 359 405 e. Centrifugal latex 7,233 8,356 (Latex containing >1/2% ammonia; centrifuge concentrate) f. Other latex (Latex containing 1/2% ammonia; other concentrate) 37 44 g. Other (other natural rubber latex) 658 1,042 2 Smoked sheet 145,895 170,145 3 SIR-3 CV 116,145 137,392 4 SIR 10 32,248 38,877 5 SIR 20 1,524,435 1,760,477 6 Other SIR 7,360 9,358 7 Other TSRN 26,924 32,997 8 Other 9,499 17,275 Source: BPS, Data Consult/ICN Table--14 Production, sales and stocks of crumb rubber, 1999-2003 Early year Year stock Production Sales Domestic Exports 1999 77,074 1,234,258 54,193 1,194,131 2000 63,008 1,260,487 70,365 1,185,149 2001 67,981 1,396,492 64,991 1,341,451 2002 58,031 1,491,465 90,836 1,395,897 2003 62,763 1,608,166 83,636 1,524,006 End year Year Sales stock Total 1999 1,248,324 63,008 2000 1,255,514 67,981 2001 1,406,442 58,031 2002 1,485,733 62,763 2003 1,607,642 63,287 Source: BPS, Data Consult/ICN Table--15 World Rubber Production and Consumption ('000 tons) Production Consumption Year Natural Synthetic Total Natural Synthetic Total Rubber Rubber Rubber Rubber Rubber Rubber 1996 6,440 9,760 16,200 6,110 9,590 15,700 1997 6,470 10,080 16,550 6,470 10,010 16,480 1998 6,850 9,880 16,730 6,570 9,870 16,440 1999 6,872 10,336 17,208 6,646 10,196 16,842 2000 6,739 10,819 17,558 7,315 10,764 18,079 2001 7,261 10,485 17,746 7,223 10,253 17,476 2002 7,345 10,882 18,227 7,546 10,723 18,269 2003 7,992 11,448 19,440 7,967 11,381 19,348 2004 8,645 11,978 20,623 8,319 11,860 20,179 2005 8,682 11,965 20,647 8,742 11,917 20,659 Source: International Rubber Study Group various issues and International Rubber Study Group (IRSG) vol. 60 No. 6-7, March/April 2006 Table--16 Prices of natural rubber in the world market (US$/lb) Year Types by quality RSS-I RSS-II RSS-III SIR-20 1994 57.68 57.23 56.86 54.85 1995 78.81 78.66 77.76 73.02 1996 70.01 69.80 68.74 62.31 1997 52.32 51.98 48.66 48.58 1998 38.61 37.79 37.01 33.64 1999 34.68 34.33 33.70 30.71 2000 36.64 36.38 35.77 32.86 2001 33.18 32.82 32.33 27.16 2002 41.18 40.74 41.28 38.87 2003 55.55 55.03 55.52 50.27 2004 66.99 66.53 66.47 60.42 2005 65.55 65.2 65.42 60.44 Source: Weekly report of Bank Indonesia Table--17 List of rubber exporters in North Sumatra and South Sumatra Name of exporters Regency/city North Sumatra ASAHAN CRUMB RUBBER PT Medan BAKRIE SUMATRA PLANTATIONS PT Medan DARMEX CRUMB RUBBER FACTORY PT Medan GAYA SENTOSA LESTARI PT Medan GOODYEAR SUMATERA PLANT PT Medan HADI BARU PT Medan IRAMA DINAMIKA LATEX PT Medan KANTOR PEMASARAN BERSAMA PT.PERKEBUNAN Medan LATEXINDO TOBA PERKASA PT Medan MERTJU BUANA PT Medan NUSIRA PT Deli Serdang PANTJA SURYA PT Medan PAROMBUNAN PT Medan PTP NUSANTARA II Medan SOCFIN INDONESIA PT Medan WIPOLIMEX RAYA PT Medan South Sumatra ANEKA BUMI PRATAMA PT Palembang BADJA BARU TRAD COY PT Palembang GAJAH RUKU, PT Palembang KARINI UTAMA, PT Kota Prabumulih LINGGA JAYA, PT Palembang MUARA KELINCI, PT Palembang PANCA SAMUDERA SIMPATI PT Palembang PD HOKTONG, PT Palembang PD SUNAN RUBBER PT Palembang PERKEBUNAN X PT Palembang PP ALICIA INDONESIA, PT Palembang PRASIDHA ANEKA NIAGA, PT Palembang REMCO, PT Palembang SUNAN RUBBER, PT Palembang Source: Data Consult & various s ources Table--18 New Investment and Expansion in Rubber Sector, 2005-2006 Name of Status Location Prod. Capacity company (Tons/year) Felda Indo PMA, new Muara Latex Rubber, PT Enim, concentrate -- South 6.000 ton Sumatra Crumb rubber -- 40.000 ton Djambi Waras, PMDN, Bungo, SIR-20--19.000 PT expansion Jambi tons Bumi Beliti PMDN, Musi SIR-20--66.000 Abadi, PT new Rawas, tons South Sumatra Pinago Utama, PMDN, Musi Crumb rubber PT expansion Banyuasin, 35.600 tons South Sumatra Bumi Kita PMDN, Sintang, RSS & blanket Utama, PT new West crepe--2.500 Kalimantan tons Name of Investment BKPM company (Rp million) Approval Felda Indo US$ 5 million June 2005 Rubber, PT Djambi Waras, Rp. 28 billion May 2005 PT Bumi Beliti Rp. 70 billion August 2005 Abadi, PT Pinago Utama, Rp. 33,86 Feb 2006 PT billion Bumi Kita Rp. 25,12 May 2006 Utama, PT billion Source: BKPM, Data Consult/ICN Table--19 Costs of investment and taking care of young and not yet productive trees and productive trees per hectare Cost Description (Rp/ha) 1. Land certificate 400,000 2. Land clearing and planting (with intercrops) 7,449,888 3. Maintenance of TBM (1-5 years) 12,664,125 TOTAL INVESTMENT VCOST (TBM) 20,514,013 4. Cost of taking care of TM: per year 6-15 years in age, 4,347,500 16-25 years in age, 3,774,500 26-28 years in age and 3,349,000 29-30 years in age 2,305,750 Source: Chairil Anwar, Rubber Research Center, 2006 Note: TBM = Immature crops TM = Mature crops Table--20 Analysis of feasibility of investment in rubber plantations (1 ha) Description NPV IRR (%) B/C ratio (million Rp) Scenario 1 (interest = 18%) Rubber selling price up 20% 26.6 34.5 1.30 Present selling price 19.2 31.5 1.17 (December 2005) Selling price down 10% 11.7 27.4 1.05 Scenario 2 (interest = 14%) Selling price up 20% 47.6 34.5 1.33 Present selling price 35.8 31.5 1.20 (December 2005) Selling price down 10% 24.0 27.4 1.07 Source: Chairil Anwar, Rubber Research Center, 2006 Table--21 Projection for the size of rubber plantations Province 2006 2007 2008 Nanggroe Aceh Darusalam 99,868 100,837 101,811 North Sumatra 460,597 461,566 462,540 West Sumatra 102,065 102,388 102,713 Riau 431,328 432,297 433,271 Jambi 421,789 422,958 424,132 South Sumatra 638,969 639,938 640,912 Bangka Belitung 29,822 30,145 30,470 Bengkulu 70,917 71,886 72,860 Lampung 71,378 72,347 73,321 West Java 56,046 56,369 56,694 Banten 22,151 22,474 22,799 Central Java 32,422 32,745 33,070 D.I. Yogyakarta 0 0 0 East Java 19,037 19,360 19,685 Bali 89 93 99 West Nusa Tenggara 0 0 0 East Nusa Tenggara 0 0 0 West Kalimantan 371,648 372,936 374,229 Central Kalimantan 250,803 251,772 252,746 South Kalimantan 142,845 143,814 144,788 East Kalimantan 39,375 40,344 41,318 North Sulawesi 0 0 0 Gorontalo 0 0 0 Central Sulawesi 12,601 13,570 14,544 South Sulawesi 13,326 14,295 15,269 Southeast Sulawesi 0 0 0 Maluku 847 970 1,095 North Maluku 1,615 1,938 2,263 Papua 4,657 4,826 5,000 INDONESIA 3,294,195 3,309,868 3,325,629 Province 2009 2010 Nanggroe Aceh Darusalam 102,790 103,774 North Sumatra 463,519 464,503 West Sumatra 103,039 103,367 Riau 434,250 435,234 Jambi 425,311 426,495 South Sumatra 641,891 642,875 Bangka Belitung 30,796 31,124 Bengkulu 73,839 74,823 Lampung 74,300 75,284 West Java 57,020 57,348 Banten 23,125 23,453 Central Java 33,396 33,724 D.I. Yogyakarta 0 0 East Java 20,011 20,339 Bali 106 115 West Nusa Tenggara 0 0 East Nusa Tenggara 0 0 West Kalimantan 375,527 376,830 Central Kalimantan 253,725 254,709 South Kalimantan 145,767 146,751 East Kalimantan 42,297 43,281 North Sulawesi 0 0 Gorontalo 0 0 Central Sulawesi 15,523 16,507 South Sulawesi 16,248 17,232 Southeast Sulawesi 0 0 Maluku 1,221 1,349 North Maluku 2,589 2,917 Papua 5,179 5,363 INDONESIA 3,341,469 3,357,397 Source: Agriculture Ministry Table--22 Projection of Production, 2006-2010 Province 2006 2007 2008 Nanggroe Aceh Darusalam 58,713 65,002 71,605 North Sumatra 412,826 419,114 425,717 West Sumatra 73,440 75,798 78,274 Riau 270,349 276,637 283,240 Jambi 219,788 227,076 234,679 South Sumatra 392,990 399,278 405,881 Bangka Belitung 19,431 21,789 24,265 Bengkulu 44,793 51,081 57,684 Lampung 50,119 56,407 63,010 Jakarta 0 0 0 West Java 36,567 37,925 39,401 Banten 11,824 13,182 14,658 Central Java 24,627 25,985 27,461 Yogyakarta 0 0 0 East Java 15,551 16,909 18,385 Bali 153 211 237 West Nusa Tenggara 0 0 0 East Nusa Tenggara 0 0 0 West Kalimantan 209,305 216,593 224,196 Central Kalimantan 177,392 184,680 192,283 South Kalimantan 75,468 81,756 88,359 East Kalimantan 26,664 33,952 41,555 North Sulawesi 0 0 0 Gorontalo 0 0 0 Central Sulawesi 5,220 5,508 6,111 South Sulawesi 11,542 12,330 13,433 Southeast Sulawesi 0 0 0 Maluku 0 0 0 North Maluku 1,580 1,938 2,414 Papua 636 1,425 2,528 INDONESIA 2,138,978 2,224,576 2,315,376 Province 2009 2010 Nanggroe Aceh Darusalam 78,538 85,818 North Sumatra 432,651 439,930 West Sumatra 80,874 83,604 Riau 290,174 297,453 Jambi 242,613 250,892 South Sumatra 412,815 420,094 Bangka Belitung 26,865 29,595 Bengkulu 64,618 71,897 Lampung 69,944 77,223 Jakarta 0 0 West Java 41,001 42,731 Banten 16,258 17,988 Central Java 29,061 30,791 Yogyakarta 0 0 East Java 19,985 21,715 Bali 287 317 West Nusa Tenggara 0 0 East Nusa Tenggara 0 0 West Kalimantan 232,130 240,409 Central Kalimantan 200,217 208,496 South Kalimantan 95,293 102,572 East Kalimantan 49,489 57,768 North Sulawesi 0 0 Gorontalo 0 0 Central Sulawesi 7,045 8,324 South Sulawesi 14,867 16,646 Southeast Sulawesi 0 0 Maluku 0 0 North Maluku 3,014 3,744 Papua 2,961 3,241 INDONESIA 2,410,700 2,511,248 Source: Data Consult
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|Title Annotation:||INDUSTRY PROFILE|
|Comment:||Profile of rubber plantations in Indonesia.(INDUSTRY PROFILE)|
|Publication:||Indonesian Commercial Newsletter|
|Date:||Sep 1, 2006|
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