Indonesian rubber growers bet the farm on oil palm
The world’s second-largest rubber supplier, accounting for 14% of global output, is seeing a wave of farmers switch to palm oil, a move that could tighten global rubber supplies.
Indonesia, a world leader in palm oil production, is witnessing a significant shift as small-scale rubber growers abandon their traditional crops in favor of oil palm plantations. The country, which contributes 14% of global rubber output, is now seeing a wave of farmers like Sumaryono, a 45-year-old Indonesian smallholder who invested his life savings into converting his 10-hectare rubber plantation to oil palm trees.
Sumaryono highlighted the advantages of oil palm farming, such as twice-monthly harvests and consistent cash flow, compared to rubber farming's daily tapping and longer wait times for returns. The agriculture ministry reports a 17% decline in rubber plantations over the past five years, with production dropping from over 3 million metric tonnes in 2021 to a projected 2 million tonnes this year.
The main reason for this shift is the better returns from palm oil, which has seen a surge in prices, especially during the pandemic. While palm oil is Indonesia's largest export contributor, it has been promoted actively by successive governments, accounting for 8.3% of the country's exports and 3.5% of its GDP. The switch to palm oil farming has accelerated over the past seven to ten years, driven by higher fresh fruit bunch prices and stagnating rubber prices.
The shift could tighten the global supply of rubber, which is used in various industries, including automotive and healthcare. The tyre industry, which uses around 50% of Indonesia's natural rubber, is also impacted by this shift, as natural rubber production has significantly declined in Indonesia over the past five years.
Written by urgent.news from Free Malaysia Today's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
