Rubber Sector Profile: Value Chain Unit Trade Promotion Department Ministry of Commerce, Cambodia

Rubber Sector Profile Value Chain Unit Trade Promotion Department Ministry of Commerce, Cambodia July 2012 (Draft – please do not cite) Preface The Rubber Sector Profile was prepared by the members of the Value Chain Information Unit within the Trade Promotion Department of the Ministry of Commerce: Ms. Bun Chamnan, Ms. El Chenda, Mr. Chea Vorak, Mr. Sean Sophea, and Mr. Tim Raya. The Value Chain Information Unit was supervised by Mr. Kith Pheara (Trade Promotion Department), and supported by Dr. Michael Freudenberg (adviser, Trade Promotion Department) and Mr. Buntong Borarin and Mr. Tim Raya (national consultants, Trade Promotion Department). The Ministry of Commerce gratefully acknowledges financial support from the Trade Development Support Programme (TDSP), which is supported by the European Commission, Danida and UNIDO, and managed by the World Bank. Abbreviations and acronyms ANRPC Association of Natural Rubber Producing Countries AfD Agence française de développement CARDI Cambodian Agriculture Research and development Institute CDC Council for the Development of Cambodia CEDAC Centre d`Etude et de Développement Agricole Cambodgien FAO Food and Agricultural Organization (United Nations) GRET Groupe de Recherche et d`Echanges Technologiques IRSG International Rubber Study Group ITC International Trade Centre (United Nations) IRSG International Rubber Study Group MAFF Ministry of Agriculture, Forestry and Fisheries MEF Ministry of Economy and Finance MIME Ministry of Industry, Mining and Energy MLMUPC Ministry of Land Management, Urban Planning and Construction MoC Ministry of Commerce MOWRAM Ministry of Water Resources and Meteorology MPWT Ministry of Public Works and Transport NBC National Bank of Cambodia RDB Rural Development Bank RUA Royal University of Agriculture RULE Royal University of Law and Economics SORE State­‐owned rubber estate ii Contents WHY A SECTOR PROFILE ON RUBBER?........................................................................................................... 1 STRUCTURE OF THE REPORT.......................................................................................................................... 2 WORLD RUBBER MARKET.............................................................................................................................. 3 Main rubber producers...................................................................................................................................... 3 Cambodia’s rubber production.......................................................................................................................... 5 Cambodia’s rubber production by Province.................................................................................................... 10 International trade statistics for rubber.......................................................................................................... 11 Main rubber exporters .................................................................................................................................... 12 Cambodian rubber exports and main markets................................................................................................ 14 Main importers................................................................................................................................................ 16 Cambodia’s place in world rubber production, exports and imports.............................................................. 18 Prices ............................................................................................................................................................... 18 CAMBODIA’S RUBBER VALUE CHAIN: MAIN ACTORS, ACTIVITIES, AND CONSTRAINTS................................. 20 Main activities and actors in Cambodia’s natural rubber value chain............................................................. 20 Cultivation........................................................................................................................................................ 21 Collecting and trading...................................................................................................................................... 28 Processing........................................................................................................................................................ 31 Exporting.......................................................................................................................................................... 34 Summary and SWOT analysis of the rubber sector in Cambodia.................................................................... 38 STRATEGIES AND ACTIVITIES TO SUPPORT CAMBODIA’S NATURAL RUBBER SECTOR................................... 39 Government strategy....................................................................................................................................... 39 Activities by government................................................................................................................................. 39 Activities by other stakeholders ...................................................................................................................... 42 RECOMMENDATIONS.................................................................................................................................. 42 OUTLOOK AND INVESTMENT OPPORTUNITIES ............................................................................................ 46 Outlook............................................................................................................................................................ 46 Potential markets for Cambodia to diversify its exports................................................................................. 47 Investment opportunities................................................................................................................................ 48 REFERENCES................................................................................................................................................ 50 Main references............................................................................................................................................... 50 Further readings .............................................................................................................................................. 50 Websites.......................................................................................................................................................... 51 ANNEX ........................................................................................................................................................ 52 iii Why a sector profile on rubber? Rubber has long been a major commercial crop and export earner for Cambodia, and the sector has the potential for increased exports and value addition. Rubber is among the 19 product and service sectors with potential for export diversification, according to Cambodia’s Trade Integration Strategy 2007 launched by the Royal Government of Cambodia (DTIS, 2007). A survey among 24 Provincial Departments of Commerce reveals that rubber is among the “Top Ten Products” in five Provinces: Kampong Cham, Kratie, Pailin, Ratanakiri and Stung Treng. The Royal Government of Cambodia has realized that natural rubber plays a key role in the socio economic development of Cambodia. The employment directly involved in this sector is estimated around 27,000, and if subcontracting companies and seasonal work are included, the number of direct and indirect jobs is close to 40,000 (EIC, 2007). As a result, the rubber sector generates rural income, alleviates poverty, and through rural employment prevents farmers’ emigration to the cities. Moreover, rubber also contributes to the environmental protection by creating green canopy, maintaining the natural balance, and preventing soil erosion (MAFF, 2012). A strong increase in rubber prices on international markets during the past decade has generated considerable interest from both domestic and foreign investors in the sector in Cambodia. However, the rubber business is risky: Rubber has high potential income, but rubber trees yield latex only at least five years after planting, and income is uncertain because of prices are very volatile. The outlook for the global natural rubber sector is regarded as favourable, and despite the many challenges to overcome, there are significant opportunities for investment and market diversification for the rubber sector in Cambodia. The Government targets a total planted area for rubber of 300,000hectares, of which 235,000 hectares for harvesting, yielding an average production of 290,000 tons by 2020 (Ly, 2011). Table 1. The rubber sector at a glance World Main producers (Share in 2010) Main exporters (Share in 2010) Main importers (Share in 2010) 2009 2010 2011 2020 (target or estimate) Thailand (29%), Indonesia (27%), Malaysia (8%), India (8%), Vietnam (7%), China (7%) Cambodia (0.4%, rank 16) Thailand (33%), Indonesia (31%), Malaysia (12%), Vietnam (5%) Cambodia (0.3%, rank 19) China (24%), United States (13%), Japan (10%), Malaysia (8%), Germany (5%), Korea (5%) Cambodia (0.0%, rank 128) Cambodia Total area planted (ha) Area tapped (mature trees only) (ha) Production (dry rubber) (tons) Yield (kg/ha) Main producing provinces Types of plantations Number of plantations Plantation size Employment Number of processors Main processed products Price for Malaysian rubber RSS (USD/ton) Exports of “Natural rubber, HS 4001” (tons) Main export product Main export markets 129,920 181,433 213,104 300,000* 34,135 38,406 45,162 235,000* 37,380 42,466 51,339 290,000* 1,095 1,100 1,140 1,235* Kampong Cham, Ratanakiri, Kampong Thom, Kratie Smallholders; Private­‐owned plantations (agro­‐industries); Economic land concession (ELC) companies .. .. .. .. Ranging from about 2 ha (smallholders) to more than 6,000 ha (Chup) About 40,000 direct and indirect jobs .. .. .. .. Mainly CSR L and CSR 5, but also CSR 10 and CSR 20 (for which world demand is strong) 3,650 4,820 3,100** 31,469 27,031 .. .. Cambodian statistics: “Natural rubber in other forms (HS 400129)” Partner statistics: “Technically specified natural rubber TSNR (HS 400122)” Vietnam, China, Malaysia Source: Taken from various tables in this report, based on ITC’s Trade Map, World Bank, MAFF. * Government target; ** Forecasted by World Bank. Rubber Sector Profile 1 Structure of the report A simplified model of the value chain in Cambodia’s natural rubber sector is presented in Figure 1. There are different ways of looking at the value chain (DFID, 2008), including: ! What are the main activities in the value chain? ! Who are the main actors involved in these activities and what do they actually do? ! What are the flows of products, information and knowledge? For example, where do the inputs / products / services come from and where doesthe output go? ! How does the value change along the chain and where is the highest value addition? ! What types of services are feeding into the value chain? ! What is the location and position of selected groups (e.g. the poor, women) in the chain? ! What are the key constraints in each stage? ! What are potential solutions to these constraints? Figure 1. Simplified model of the value chain in Cambodia’s natural rubber sector Provision of inputs Culovaoon Collecoon Processing Distribuoon / Exporong The main steps in this report are the following. We will successively: ! Identify the main activities and actors in each stage of the value chain; ! Analyse the main constraints (“Where does the sector stand today?”); ! Find out if there is a government strategy for the sector (“Where does the government want the sector to be in the future?”); ! Identify the main activities to support the sector, both by government and other stakeholders (including development partners); and finally, ! Suggest possible solutions to address these issues. 2 Rubber Sector Profile ... - tailieumienphi.vn