rubber industry study by dti regional operations development group

8/13/2019 Rubber Industry Study by DTI Regional Operations Development Group

http://slidepdf.com/reader/full/rubber-industry-study-by-dti-regional-operations-development-group 1/68



Produced by:

Department of Trade and Industry Regional Operations Development Group

(DTI-RODG)

with the cooperation of

MASICAP SMEDevelopment Foundation, Inc.

September 2012



C O N T E N T S

Foreword v

Executive Summary vii

I. Introduction 1

II. Objectives 2

III. Rubber Description and its Uses 2

IV. Te Global Rubber Industry 5

V. World Production 8

VI. Competitive Position of the Raw Materials 15

VII. Rubber rade 12

1. Export

2. Import

VIII. Philippine Rubber Setting 16

1. Competitive Position

2. Production

a. Input Scheme

b. Planted Areas

c. Production Volume

d. Farm Gate Price

e. Suitable Areas 3.

Export Market

a. Raw Rubber as Export

b. Local Manufacturers of Rubber as Raw Materials

c. axes Imposed on Rubber (Industrial Zone or Special) 4.

SWO Analysis 5.

Analysis on Philippine Rubber Map

IX. Recommended Action Plans 27

X. Business Opportunities 30

a. Rubber Nursery

b. Rubber Production

c. Rubber Processing



Annexes 33

Annex 1: Crop Establishment

Annex 2: Projected Production of Philippine Rubber

Annex 3: List of Local Manufacturers

Annex 4: Rubber Nursery

Annex 5: Rubber Production

Annex 6: Rubber Processing

References 55



ANRPC Association of Natural RubberProducing Countries

DA Department of Agriculture

IRSG International Rubber Study Group

CNRA China Natural Rubber Association

AIRIA All India Rubber Industries Association

RRIT Rubber Research Institute ofTailand

FAO Stat Food and Agriculture OrganizationStatistics

UNCTAD United Nations Conference onrade and Development

BAS Bureau of Agricultural Statistics

LGU Local Government Unit

A C C R O N Y M S

F I G U R E S

T A B L E S

PRRDC Philippine Rubber Research andDevelopment Center

PRIA Philippine Rubber Industries Association

NRDP Natural Rubber DevelopmentProgram

HVCC High Value Commercial Crops

BOI Board of Investments

PEZA Philippine Export Zone Authority

ASEAN Association of South East AsianNations

DOST Department of Science andechnology

DPWH Department of Public Ways and

Highways

Figure 1 Global Natural Rubber Demand

Figure 2 Global Natural RubberProduction

Figure 3 NR Production within ANRPC Region

Figure 4 Planted Areas in Hectares

Figure 5 Production Volume in

Figure 11 Recommended Action Plans

able 1 World Rubber Consumption

able 2 Tree Major Consuming Countries

able 3 World Rubber Production

Metric ons

Figure 6 Farm Gate Price in Kilogram

Figure 7 Suitable Areas

Figure 8 Local ManufacturersFigure 9 SWO Analysis

Figure 10 Philippine Rubber Industry ValueChain Map



F O R E W O R D

onsistent with the development thrusts of the Philippine Development Plan 2011-2016, the DI has adopted the industry clustering approach as a major strategyfor poverty alleviation and inclusive growth. It supports the President’s Social

Contract, particularly in bringing about conditions conducive to the sustained growth ofthe business sector, particularly in the countryside.

Under the industry cluster approach, DI will build partnerships with agencies

and institutions to develop thriving and innovative SMEs, implement a program forproductivity and efficiency and establish locally available mechanisms for their continueddevelopment. Te industry cluster approach will be complemented by other strategiesfor the “Big Push” for SMEs that will give industries access to shared service facilities,product development, market promotion, credit and financing, and microenterprisedevelopment assistance and support.

As one of the sectors for industry clustering, the rubber industry is among the 32industries that the DI thru its Regional Operations Development Group (RODG) is

targeting to develop in the next three to four years given their high potential to acceleratethe country’s economic growth. Rubber production, in particular, can provide jobs inseveral parts of the country – considering that while production is primarily in Mindanao,there are already start-ups in Luzon and the Visayas.

Indeed, it is about time that a conscious effort be mounted to fortify the country’srubber industry to take advantage of an expected increase in demand such as expandingtire production requirements. Development and intervention strategies also includeexpanding rubber plantation areas to achieve higher rubber output, enabling industry

players’ capacity to improve product quality, providing access to market and investmentopportunities, and conducting studies to determine how to provide further support forthe rubber industry – as manifested by this work.

Tis Rubber Industry Study is the product of a series of consultations, workshopsand research activities that were conducted with the active participation of RODGstakeholders. It serves both as an effective tool for sharing knowledge and expertise onSME development and as a handy reference for negotiating and crafting trade agreementsin the international trade arena.

Gregory L. DomingoSecretaryDepartment of rade and Industry

September 27,2012

v



F O R E W O R D

he Regional Operations Development Group (RODG) is one of the FunctionalGroups of the Department of rade and Industry which is mandated tochampion business development and consumer empowerment through continual

improvement in its human capital and service delivery processes.

As the project for convergence geared towards poverty alleviation and inclusivegrowth, the National Industry Cluster Capacity Enhancement Project (NICCEP) is

implemented by RODG with the support of JICA. Te Project envisions the developmentand growth of pilot industry clusters across the country. RODG is a prime mover inmobilizing the industry clusters as key catalysts that will spur sustainable industrydevelopment and will create employment opportunities..

Te Rubber Industry Study has been put together as a result of numerousresearch endeavors and consultative dialogues with concerned stakeholders. It can beused as a guide for implementers and industry players in designing business plans andin formulating innovative next steps to achieve heightened levels of productivity and

profitability. Tis will grow more MSMEs in the industry value chain that will, in turn,create jobs in the regions.

Finally, this report would not be made possible without the MASICAP MSMEFoundation, Inc. for being our partner in this endeavour as well as the Working Groupmembers of the Rubber Industry, and the DI Regional Offices, led by ARD Sitti Jain,

who all contributed to this valuable output with the SMEs as the end-beneficiaries inmind.

Merly M. Cruz Undersecretary Regional Operations and Development Group

September 27, 2012

vi



E X E C U T I V E S U M M A R Y

lobal consumption for rubber has been experiencing a robust growth in the pastyears. About 48% of the global demand for natural rubber (NR) comes fromChina, India and Malaysia which are the three major NR consuming countries

within the Association of Natural Rubber Producing Countries (ANRPC). China is thelargest importer of NR where a third of the global demand comes. It is expected to havean annual demand that would exceed 4.8 million metric tons by year 2015.

Te rising world consumption has been attributed to two major factors, theseare: the higher demand for motor vehicles and therefore, for tires, and also the sharpincrease in the price of fuel oil which eroded the competitiveness of synthetic rubber.Te strengthening and continuing growth of the economies of developing countries havefurther driven demand for more rubber to fill up the growing need of the transportationand other industries.

Te world production of NR on the other hand, may remain somewhat tight inthe coming decade despite the increase in re-plantations and new plantations in majorNR producing countries. In 2000 to 2005, natural rubber production had an annualaverage growth rate of 3.5% which was higher than the annual average growth rate of2% from 2006 to 2010. Tis is mainly because of the lower yield expected from the newplantations in the non-traditional areas and massive uprooting of aged trees that are likely

to take place in the next few years.

Tailand has developed into the world’s largest producer of NR. Te country turnsout more than 3 million metric tons of NR annually and progress in the industry remainsvigorous. It is also the leading exporter contributing 45% to total export in 2010.

Te Philippines has about 138,000 hectares in areas planted to rubberproducing more than 395,000 metric tons in 2010. Te planted areas primarily

vii



managed by smallholders have an annual average growth rate of 10.22% from year 2006to 2010. Mindanao is the biggest producer in the country having good soil and climatic

condition for rubber production.

Te top five producing regions are Zamboanga Peninsula, SOCCSKSARGEN(South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos City) ARMM(Autonomous Region for Muslim Mindanao), Davao Region, and Caraga. ZamboangaPeninsula has the biggest share of the country’s total planted areas, accounting for anaverage of 43% from 2006 to 2010.

Although there is an increasing trend of planted areas for rubber, this is not expected

to cope with the projected domestic and world demand for 2012 to 2016, taking intoaccount the nearing maximum capacity of the existing bearing rubber trees.

Production volume from year 2006-2010 had an average annual growth rate of3.22%. It hardly sustained the domestic consumption of primary rubber processors andindustrial manufacturers. North Cotabato is the top producing province in the country

with a share of 37.4% from its 30,000 hectares productive planted rubber areas.

Te Department of Agriculture identified potential areas for the expansion of NR

in the country. Most lands found suitable for expansion are still in Mindanao of almost500,000 hectares. Te agency is coordinating with the regions of Zamboanga Peninsula,SOCCSKSARGEN, Caraga, Northern Mindanao, ARMM, and partly in MIMAROPAfor expansion of rubber production.

With the attractive farm price, NR is one of the agricultural crops that has beenearning high profit for the farmers. Farm price is largely influenced by demand andsupply situation. Te farm price of cup lump in the first quarter of 2011 went up toPhP81.00 which is 32% higher than 2010. But starting the second quarter of 2012, theprice went down to only PhP40.00 to PhP45.00/kg and is expected by the traders andexporters to stay in this level during the next six months.

Smallholders who predominantly produce rubber are directly transporting the cuplumps to the nearby primary processors since these farmers do not have the capacity toprocess their produced. Te primary processed products with an average mark up of 18%are distributed to the local and foreign industrial manufacturers to be used as one of themain materials in producing tires and other industrial products. Rubber and other rubberrelated products in the country are being subjected to a 15% tax, based on Republic Act1973.

Recommendations to facilitate the growth of the industry, based on the value chainanalysis, are discussed thoroughly on the next pages.

viii



I. INTRODUCTION

ubber includes natural rubber(NR) and synthetic rubber(SR). NR is extracted from

plants while SR is derived frompetroleum, coal, oil, natural gas andacetylene. Tis study focuses on NRbeing one of the high value crops

with a potential role in the Philippineeconomy.

Global demand for NR forindustrial, household and hospitaluse is on the upswing. Te increasingdemand from the tire industry alone,NR is in a more competitive positioncompared to SR due to its price hike.

Considering the correlation of theincrease in population to the demandof rubber-based products, the increase in capacity utilization and expansion in productionof the domestic and global manufacturing firms is expecting to continue in the future.

Te Philippine Natural Rubber Industry Cluster consists primarily of the inputs,production, processing, marketing and support service systems. Te input componentincludes the supplier of fertilizers, agrichemicals, labor and planting materials. Productionincludes the farmers of NR and the post-harvest workers and primary processors. Te

processing subsector includes the processors of intermediate rubber for the manufactureof industrial goods such as tires, footwear, balloons and others. Te marketing sub-system consists of the local traders of raw rubber, exporters and traders of finishedgoods. Supporting these value chains are the government, industry associations, R&Dinstitutions, financial institutions, logistics and other support service providers.

Te lucrative market is anopportunity for the Philippines toexpand its NR Industry performance.Using the Value Chain Assessmentmethod, this study will help determinethe opportunities and constraintsaffecting the industry’s growth. It helpsin determining the roles and functionsof the actors involved in the supply chain.

1



II. OBJECTIVES

enerally the study aims to provide a detaileddiscussion on the value chain of NR in orderto identify and address the constraints in thedevelopment of the industry.

Specifically, it will:a. Provide an overview on the situation of the world and

local NR industry;

b. Discuss the value chain of NR;

c. Identify bottlenecks and constraints following thevalue chain;

d. Recommend necessary actions to answer theconstraints identified in the production, governmentpolicies and implementations, programs on financing,marketing and other factors affecting the industry.

III. RUBBER DESCRIPTION & ITS USES

s already mentioned, this study is focusedmore on Natural Rubber as a high value rawmaterial derived from natural plants.

Natural rubber (polymer designation cis-1-4 polyisoprene, empirical formula (C5H8n) is

obtained from the sap (“latex”) of several rubber-yielding plants (e.g., Hevea Brasiliensis and Parthenia

argentatum) by coagulation with chemicals, drying, electrical coagulation, and otherprocesses. Te rubber trees typically reach 20-30 meters in height on rubber plantations,and are able to produce commercial quantities of latex at about 7 years of age, dependingon climate and location. Economical life span of a rubber tree is between 10 to 20years, but may extend past 25 years in the hands of a skilled tapper and rate of barkconsumption. Philippine is using Hevea Brasiliensis type of rubber tree.

R U B B E R I N D U S R Y

2



Te natural rubber plant requires well-drained weathered soil consisting of laterite,lateritic types, and sedimentary types, non-lateritic red or alluvial soil. Te climaticconditions for optimum growth of rubbertrees consist of (a) rainfall of around 250 cmevenly distributed without any marked dryseason and with at least one rainy days peryear (b) temperature range of about 28°C (c) high atmospheric humidity at around 80%

(d) bright sunshine amounting to about 2000 hours per year at the rate of 6 hours perday throughout the year and (e) absence of strong winds.

Many high-yielding clones have been developed for commercial planting. Teseclones yield more than 2,000 kilograms of dry rubber per hectare per year, when grownunder ideal conditions. In the Philippines, there are only nine recommended clones ofrubber, RRIM 600, PB 235, PB 217, PB 260, PB 330, PB 311, RRIM 712, RRIM 901,and USM 1. Tese recommended clones were studied and tested by the research experts

in the country, the Philippine Rubber

Research Institute in North Cotabato.

Te produce of the natural rubbertree is essential and useful since it can beconverted into different products suchas tires, proofing in constructing tallbuildings, bridges, roads and highways.It is transformed into automotive

3



products like engine mounting, radiator hoses, and fan belts. In addition, it can berehabilitated to industrial products like rubber rollers, conveyor belts, packaging

materials, and the like. In addition, it can be used in making latex products; such asmedical tubing, prophylactics rubber gloves, some sports gear, hygienic products, feedingbottle nipples, and toys. Further, at the end of the rubber trees’ useful life, the wood isused to make furniture or souvenirs.


4



The Global Rubber Industry

5



BEHAVIOR OF DEMAND

lobal consumption for rubber has been experiencing a robust growth in the pastyears. Te world consumed about 24.6 million metric tons in 2010, which is15.3% higher than in 2009 where in global consumption fell due to the world

economic crisis. Te increase reflected a strong recovery in the demand for vehicles andtires. According to the International Rubber Study Group (IRSG), global natural rubber

demand is forecast to increase by 4.6% in 2012. Te following shows the world’s rubberconsumption for the past years.

able 1: World Rubber Consumption

Source: International Rubber Study Group (IRSG) Vol 65, No 7 - 9, January - March 2011


6



Asia’s share in the global Natural Rubber consumption in 2010 reached 74.1%. About 48% of the global demand for NR comes from China, India and Malaysia which

are the three major NR consuming countries within the Association of Natural RubberProducing Countries (ANRPC).

Te table shows the Rubber consumption of the top three rubber consumingcountries.

Te world’s major consumer of natural rubber is China, accounting for 33.8% ofthe 74.1% Asia’s demand in 2010. Its annual demand is expected to exceed 4.8 millionmetric tons by 2015. According to Zhu Xiuyan, Chairman of the China Natural Rubber

Association (CNRA), automobile tires alone will demand more than 3.3 million tonsof natural rubber by 2015. Domestic natural rubber supply has been falling short ofdemand, even though the planting area totals over 1 million hectares, producing 687,000tons of dry rubber each year. About 70 percent of natural rubber consumption is used inmaking tires, and markets predict that China’s tire output will hit 560 million by 2015.

India is another major consumer of rubber and, with a good economic growth;the demand will most likely keep on going up. Rubber Board of India expects the samepace to continue to the next years taking the country’s demand to 1.0 million tons which

would be short of the domestic supply by 110,000 tons (Association of Natural RubberProducing Countries). According to the latest reports, rubber consumption would climbto 1.89 million tons in 2020, compared with 930,000 tons in 2010. Te quantum ofIndia’s annual rubber consumption was almost equally split between the tire and non-tire

industries till a few years ago. But the tire sector’s demand for rubber is likely to be two-thirds in the near future on account of the growth in the automobile sector.

Te rising world consumption has been attributed to two major factors, theseare: the higher demand for motor vehicles and therefore, for tires, and also the sharpincreases in price of fuel oil which eroded the competitiveness of synthetic rubber. Testrengthening and continuing growth of the economies of developing countries havefurther driven demand for more rubber to fill up the growing need of the transportation

able 2: Tree Major Rubber Consuming Countries

THREE MAJOR RUBBER CONSUMING COUNTRIES

(‘000 tons)

Year

2007

2008

2009

2010

China

2750

2740

3040

3300

India

851

881

905

930

Malaysia

450

468.9

469.6

480

Source: Association of Natural Rubber Producing Countries Natural Rubber rends & Statistics, Volume 2,No. 12, December 2010

H E G L O B A L R U B B E R I N D U S R Y

7



and other industries. Te World Bank has forecast that the global economy will growby 2.1% during the period from 2006 to 2015, which is higher than during the period

2001-2006 (avarolit, 2006). Global economic growth is expected to stimulate globalconsumption, thus increasing global rubber demand.

V. WORLD PRODUCTION

obal NR supply may remain somewhat tight in the coming decade despite theincrease in re-plantations and new plantations in major NR producing countries.Tis is mainly because of the lower yield expected from the new plantations in

the non-traditional areas and massive uprooting of aged trees that are likely to take placein the next few years. Moreover, a host of other factors including climate change, paceof global economic recovery; crude oil prices etc. will have their tell-tale impact on NRsupply in the years to come.

In 2000 to 2005, NR production recorded an annual average growth rate of3.5% which was higher than the annual average growth rate of 2% from 2006 to2010. According to IRSG, global NR production in Q1 of 2011 was 6.2 million tons,increasing the annual supply to 24.8 million tons in March 2011. Tailand produced

a total of 914,000 tons in Q1 2011, 5.1% increase over Q1 2010, Indonesia’s outputreached 721,000 tons, a 7.8% increase, and Malaysia recorded only 2.1% rise in outputto 265,000 tons in Q1 2011. otal NR output in the remaining Asian countries grew by21.4% in Q1 2011, producing 456,000 tons.

otal production of NR from all member- nations of the ANRPC was expectedto grow only at 5.8% annualized rate during the second quarter (April-June) of 2011.Te growth for the second quarter, as forecasted in March 2011 was 10.5%. Tailand,


8



Indonesia, Malaysia, India, Vietnam, China, Sri Lanka, Philippines and Cambodiatogether account for 92% of the commodity’s global supply. Meanwhile, the output

growth in 2011 was down further to 4.9% from 5.8% as forecasted in March 2011and 6.4% growth attained in 2010. Jom Jacob, Senior Economist of the Association ofNatural Rubber Producing Countries (ANRPC) expects an additional supply of 1.13million tons entering the international market in 2012. His assumption is based onthe fact that about 2.55m hectares would be opened for tapping from 2012-2017. Tisis equivalent to 36% of the yielding area of the ANRPC-member countries. ANRPCprojected NR output of 10.2 million tons in 2010, increasing to 15.4 million tons in2020. Te high rubber demand across all segments has led to increasing deficit, pointsout Vinod Simon, President of the All India Rubber Industries Association (AIRIA). He

sees the deficit ballooning from 189,000 tons this year to 840,000 tons in 2020.

Global natural rubber output is projected to rise by 1.1 percent to 10.420 milliontons in 2012. However, the increase is lower than an earlier estimate because of heavyrains in plantations in Malaysia and China (ANRPC, Monday, 02 Apr 2012).

Cambodia, China, India, Indonesia, Malaysia, Papua New Guinea, Philippines,Singapore, Sri Lanka, Tailand and Vietnam are the 11 countries accounted for about92 per cent of the global production of natural rubber during 2010, of which Tailand,

Indonesia and Malaysia is accounted for about 72% of the total world production(Association of Natural Rubber Producing Countries).

able 3: World Rubber Production (in ‘000 tons)

Source: International Rubber Study Group (IRSG) Vol. 65, No 7- 9, January - March 2011


9



Tailand has evolved as the world’s largest producer of natural rubber. Te countryturns out more than 3 million metric tons of natural rubber annually, and progress in

the industry remains vigorous. Major rubber products manufactured in Tailand includegloves at 10.93 billion units in 2009, inner tubes at 58.76 million, motorcycle tires at19.95 million, passenger car tires at 19.58 million, bicycle tires at 18.29 million andrubber bars at 800,759 units.

During the 1st quarter of 2012 natural rubber production growth was expected tomarginally increase by 0.3%.

Figure 3: NR Production within Asociation of Natural Rubber Producing

Countries Region

VI. COMPETITIVE POSITION OF THERAW MATERIALS

he importance of the rubber industry and its role in the development of moderncivilization prompted much interest in discovering its chemical composition inorder to synthesize this product. Trough research projects, the tire industry saw

the possibility of breaking away from the grip of the world’s natural rubber plantations.Synthetic rubber is produced artificially from polymers in different varieties to mimic thedifferent properties of natural rubber.


10



Natural rubber has a hightensile strength and is resistant

to fatigue from wear such aschipping, cutting or tearing.However, natural rubber hasonly moderate resistance todamage from exposure to heat,light and the ozone in the air.Natural rubber also has tack,

which means it can adhere toitself as well as other materials.

It adheres particularly well tosteel cord, which makes it anexcellent material for use intires.

Synthetic rubber onthe other hand, offers betterresistance to abrasion thannatural rubber, as well as

superior resistance to heat andthe effects of aging. Many typesof synthetic rubber are flame-resistant, so it can be used asinsulation for electrical devices.It also remains flexible at low

temperatures and is resistant to grease and oil.

Te major advantage of Natural Rubber, which makes it dominant in manyengineering applications, is its dynamic performance. It has a low level of damping,and its properties remain fairly constant over the range 1 to 200Hz, and show onlyslight increase to 1000Hz. Its combined dynamic properties generally out perform anysynthetic rubbers or combinations available to date. Despite proliferation of general andspecial purpose synthetics, Natural Rubber still holds a significant market share between30 and 40%.

Despite the competition of synthetic compounds, natural rubber continues tohold an important place in tire consumption. In particular, its superior tear strengthand excellent resistance to heat makes it better suited for high performance tires used

for racing cars, trucks and buses, and aircrafts. In these applications, the potential forswitching from natural to synthetic rubber is quite limited, given the clear-cut technologyadvantages of natural rubber.

Overall, the combined properties of natural rubber outweigh synthetic rubber orcombinations of synthetic rubbers available.


11



VII. RUBBER TRADE

n 2010, 7.88 million tons of natural rubber was traded worldwide. Tis volume was forecasted to increase by 8.2% in 2012. o continue to meet the growingdemand, NR production is expected to become more and more capital intensive

with yields continuing to increase even with acreage declines. Globalization will be animportant factor influencing rubber demand.

1. Export Te world’s gross export in 2008 was 7.016 million metric tons, 7.9% higher than

2005 (IRSG, 2009). ANPRC total export of NR in 2011 was anticipated to reach 7.709million tons, up 3.2% from the previous year. During the second quarter of 2011 (April-

June), total export of NR from all member nations of the ANRPC was anticipated togrow at 5.2% annualized rate as against 5% year-to-year rate attained during the firstquarter of 2011 (January-March). Preliminary estimates indicate that export rose by6.4% in April 2011 and is likely to rise 6.3% in May of the same year. Te growth is

anticipated to slow down during June to 3.1%. ANRPC member-countries exported1.94 million tons in the first quarter of 2011 and the anticipated exports for the secondquarter stands at 1.75 million tons.

Tailand which is the biggest producer of natural rubber in the world is also theleading exporter contributing 45% to total export in 2010. Based on statistics from theRubber Research Institute of Tailand (RRI), in 2009 the country’s rubber exportsreached 2.72 million metric tons. By material type that year, standard Tai rubber output


12



was 1.06 million, ribbed smoked sheet was 837,294, concentrated latex was 703,817and crepe was 487,160 metric tons. Te country exported about 90% of production, or

US$4.26 billion worth in 2009.

Indonesia’s natural rubber output on the other hand, may fall by 3.2% in 2012, dueto heavy rain in Sumatra and Kalimantan. Tus, exports may also decline to about 2.45million M from 2.6M M in 2011 according to Asril Sutan Amir Chairman, Rubber

Association of Indonesia (Bloomberg, Feb. 18, 2012)

Meanwhile top rubber producing countries are moving towards manufacturingrubber products for domestic use and export.

2. Import

In 2008, the world import of natural rubber reached 1.34 million metric tons whichis 6.3% higher than of 2004 (FAOstat).

China is the largest importer where a-third of the global NR demand comes from.Import of NR sharply rose at 58% rate during October 2010 and 65% rate duringNovember 2010 on year-on-year basis. It’s reliance on overseas natural rubber is onthe rise. NR consumption reached 3.12 million tons in 2010, and domestic suppliesaccounted only for 20% of the total supply, according to Zhu Xiuyan. Te phenomenalgrowth in the Chinese Auto and ire Industries has given rise to increased demand fornatural rubber.

Te total natural rubber import is expected to rise to 3.8% in the 1st quarter of2012.


13




14



The Philippine Competitive

Position

15



VIII. PHILIPPINE RUBBER SETTING

1. Competitive Position

ubber was introduced in the Philippines in the early 1900’s when the country was

going through a difficult agricultural phase. Te rubber manufactured as tires andshoes mostly came from Indonesia and Tailand. In the early 1920’s, rubber mills

were established in Basilan, but it was only in the 1950’s when local private corporationsembarked on setting up rubber processing plants in Mindanao (http://blog.agriculture.ph).

In 2006, local industry exported 40% of its natural rubber, which is lower compared

to its 2002 exported rubber that is almost 60% or 45,000 of its total production (Foodand Agriculture Organization). Rubber is among the Philippines export winners,accounting for 2.5% of the total exports in 2004.

In 2010 Philippines ranked as 10th largest rubber producing country in the world,accounting for about 1% of the total world output, which is 4 notches down comparedto its 6th place in year 2006 (International rade Center UNCAD).

According to the Bureau of Agricultural Statistics, in 2010 Philippines produced395,237 metric tons of natural rubber which is 11% higher than the country’s productionin 2005. Despite increasing output from the country, its share in the world market is very


16



minimal due to the rapid increase of output from the other top producing countries, suchas Tailand, Indonesia and Malaysia. Te country’s average annual growth rate from 2006

to 2010 was 3.22% which is much lower than Tailand’s 5.7% and Malaysia’s 8.2%.

Philippine rubber supply will still be limited. Te scope for improvement in outputis influenced by constraints like limited space for further expansion, average yield havingalready reached 1,675 kg/ha, uncertain climate like recurrence of long dry spells and lowrate of replanting in the past few years.

As the Global economy grows, global consumption/use of goods and services areexpected to rise, thus increasing global rubber demand. Consumption was expected to

increase by 5% for synthetic rubber and 3.8% for natural rubber in 2011. As demandcontinues to increase while supply declines, the Natural Rubber industry will continueto face shortages. NR is an export commodity and as the major NR producing countriesuse more, less is available for export, thus giving the country a great opportunity to takeadvantage of the situation.

2. Production

a. Input Scheme

Planting material is the most significant input in producing natural rubber. Lackof planting materials will hamper the propagation. Presently there are seven bud woodgardens with each site having an approximate area of ½ hectares located at various sitesin Mindanao. Tere are 17 nurseries, seven of which are government owned and the rest

which are located in Basilan are either LGU or privately owned. A hectare of bud woodgarden can supply the requirement for planting materials of about 300 hectares of NRplantation.

Te Department of Agriculture identified 138,000 up to 500,000 hectares suitableareas. As of May 2011, the said agency has allocated some Php10 million for theestablishment of a rubber nursery in Lake Sebu, South Cotabato. It will be projected tocater 10,000 hectares suitable lands identified for plantation crop (rubbermarketnews.net).

o utilize and operate the remaining identified suitable areas, bud wood gardens andnurseries should be established. Te total available area of 500,000 hectares for expansion

will require the output of around 1,667 hectares of rubber nursery. Refer to Annex 1 page24-25 for the detailed information on the proper establishment of NR.

b. Planted Areas Philippine NR planted areas were expanded by 10.22% or equivalent to 11,350

hectares annually from 2006 to 2010. From the 94,347 hectares planted in year 2006,this increased to 138,710 hectares in 2010. Tese areas are predominantly operated orowned by smallholders. Each of them has production areas ranging from seven to tenhectares. Te plantation type of rubber production is either owned by private companiesor a consolidation of smallholders into production cooperatives.

H E P H I L I P P I N E C O M P E I I V E P O S I I O N

17



Rubber plantation areas are mostly found in Mindanao with 136,861 hectares or99.60% share in the country. Tis is no surprise, considering the soil suitability and

climatic condition for rubber production present in the island. Zamboanga Peninsulaand SOCCSKSARGEN are the two major producing regions accounting for 47% and23% respective shares on the total production areas as of 2010.

It is projected that in year 2016, the planted areas will reach to 267,050 hectaresproducing an approximately 773,000 metric tons. Te detailed projected computationsare shown in Annex 2.

c. Production Volume

Natural rubber production volume has an annual average growth rate of 3.22%from 351,556 metric tons in 2006 to 395,237 metric tons in 2010. It was highest in2008 at 411,044 metric tons; however, frequency of tapping went down by 4.89% in2009 due to low farm price. Production recovered by 1.09% in 2010 with a farm priceescalating to Php61.49 from Php31.00 in 2009. For the year 2011, production reached425,690 metric tons or 7.70% more than the 395,237 metric tons in 2010. Te outputgain resulted from the increased of frequency tapping due to high price of rubber inNorth Cotabato, Zamboanga del Sur, and Sibugay.


18



North Cotabato province has a high rate of production output among provinces with its 30,000 hectares of rubber plantations. It is producing about 150,000 metric

tons compared to Zamboanga Sibugay’s 108,000 metric tons produced from more than37,000 hectares per year. Te comparative advantages of the latter are having advancetechnology and the existence of the lead research agency, the Philippine Rubber Researchand Development Center located in Kabacan, North Cotabato. Te said agency clonedRb-99-03 (USM 1), one of the varieties of rubber recommended in the Philippines. Itcan yield an approximately 2,500 kilograms per hectare per year of dry rubber, the mostproductive cloned rubber in the country. Meanwhile, another three regions in Mindanaoare also considered as active in producing rubber. Tese regions are the: ARMM, DavaoRegion, and Caraga that gained annual average shares of 8%, 4.1%, and 3.8% respectively.

Figure 4 shows the natural rubber production output in the Philippines from 2006-2010.

Source: BAS


19



d. Farm Gate Price

Natural rubber has a lucrative market in the global industry and is expected tosustain price increases in the next 20 years, according to the Philippine Rubber Industries

Association (PRIA). Te price of the rubber is not related to the cost of production, butit’s partly governed by the law of supply and demand.

Due to the invariably high market demand and supply gap for natural rubber, farmgate price is aggressively increasing at 24% every year from 2005 to 2010. Te increasein price by 133% from PhP26.38/kg of cup lump in 2005 to PhP61.49/kg in 2010significantly augmented the income of the farmers. Prices are even higher during the firstquarter of 2011 reaching to PhP81.02/kg. In general, the farm price returns the invested

capital of the growers. (Source: BAS)


20



e. Suitable Areas

Figure 7: Suitable Areas

Local and global consumption of natural rubber is expected to reach 3.8 millionmetric tons by 2020. In order to meet the expected demand for the commodity, the

Department of Agriculture through its Natural Rubber Development Program (NRDP)is now focusing on the expansion of the current area planted to rubber from 138,000hectares to more than 200,000 hectares in addition to improving the average annual yieldfrom the present level of around one ton per hectare to two tons per hectare by 2016.

Without affecting the vital rice farms and prime irrigated lands in the midst ofthe global supply crunch, expansions are specifically taking place in SOCCSKSARGEN,Zamboanga Peninsula, ARMM, Caraga, Northern Mindanao, Davao Region, andPalawan. Te mentioned regions land classification is highly favorable to the growth of

rubber. At the same time, their climatic condition is in ype III and IV according toModified Corona’s System that suits to the climatic requirements of rubber plants.

Te identified potential areas may help the country maintain its presence in the

export market and be able to sustain the domestic demand without depending on itsimportation.


21



3. Export Market

a. Raw Rubber as Export

Natural rubber is either exported as “latex concentrates” or processed into “dry/solidrubber” (in sheet, crepe or block forms). Latex concentrate is made from freshly tappedfield latex, uncoagulated while dry rubber is prepared from coagulated field latex (sheetrubbers and pale crepes) or re-milled rubber sheets (estate brown, thin brown, thickblanket, and flat bark crepes). Dry rubber is either visually graded (sheets and crepes) orclassified by instruments (block rubber).

Figure 8: Philippine Natural Rubber Exports

Source: FAO

Figure 6: Farm Gate Price, In Kilogram


22



Philippine rubber export products are usually in the form of crepe, sheets, rubberin plates, and other rubber-based products like footwear (outer soles and upper slippers).

Of the total production, only 10% of the average gross supplies were exported whilethe remaining 90% were used by the local processors for pre-processing. Te majorexport destinations are Malaysia, aiwan, Singapore, Germany and China. About 9% oftotal Mindanao exports go to China. Tese are all in primary form rubber for use in itsautomotive and other manufacturing industries.

Te highest rubber export was in 2003 with a total volume of 61,040 metric tonsand consistently dropped in 2004 until the present because of the near maturing stagesof the rubber trees. In 2010, the country exported 37,835 metric tons dry rubber valued

at US$56,476,605.

b. Local Manufacturers of Rubber as Raw Materials

Most of the rubber primary processors for exports and domestic consumptionare located in Mindanao for easy access of rubber farms located therein. Some of theprocessors are members of the Philippine Rubber Industries Association, Inc. (PRIA).It is an association of manufacturers of rubber products, processors of natural rubberand traders of rubber raw materials and supplies. Te main activity of the association

is the promotion of the business objectives of rubber industry and its members. Teother processors are organized as cooperatives by the Bureau of Agrarian Reforms forthe purpose of protecting the lands of the farmers and augmenting the income of eachmember.

Figure 9: Local Manufacturers

Te rubber farmers directly transport and sell their tapped rubber to the nearbyprocessors in their designated areas instead of processing the produce in their farms,since many of the farmers do not have capability to invest on quality and productivetechnologies for the primary processing of rubber. Listed on Annex 3 are the twenty-

Location & Numbers of Local

Processors:

• Region IX 12

• Region X 3

• Region XII 7

• Region XIII 1

• ARMM 2

• Smallholders 10

Source: HVCC Regional Coordinator


23



five (25) major processors in Mindanao with their location products. (Source: HVCCRegional Coordinator)

c. axes Imposed on Rubber (Industrial Zone or Special)

A corporation investing in the Philippines may avail of tax breaks and incentives byregistering with the BOI - Board of Investments. Te company must operate a business

which has been recognized as a preferred area of investment in the Philippines InvestmentPriority Plan (IPP). For business activities not covered by the IPP incentives may still beavailable if:

1. At least 50% of production/service is for exports, if Filipino-owned enterprise;

2. At least 70% of production/service is for exports, if majority foreign-ownedenterprise (more than 40% foreign equity),

Fiscal Incentives include the following:

1. 4 to 8 years Income ax Holiday (IH);

Income Tax Holiday (ITH) Advantages:

Companies registered with the BOI are eligible for income tax holidays which rangefrom 3 - 8 years. 4 years for new projects without pioneer status and 6 years for projects

with pioneer status. A 100% foreign owned corporation may be entitled to incentives iftheir business has been categorized as a pioneer project and at least 70% of production/ service is exported or the project is in one of the less-developed areas mentioned in theIPP. Companies not exporting 100% of their production / services are obliged to have60% Filipino ownership within a period of 30 years from time of registration with theBOI. Foreign ownership of corporations in non-pioneer projects is limited to 40% exceptif the company exports more than 70% of its production / service.

2. Special 5% tax rate on gross income after the lapse of IH(for Eco-zone locators);

• PEZA may grant the right to the locator on a case to case basis the sale of upto 30% of production to the domestic market.

• Exemption from wharf age dues and export taxes, imposts and fees.

• Permanent resident status for foreign investors and immediate familymembers.

• Employment of foreign nationals.

• Simplied import and export procedures.

• Other incentives under Executive Order 226 (Omnibus Investment Code of1987), as may be determined by the Philippine Economic Zone AuthorityBoard.

For companies that will not avail of PEZA incentives see the rules on foreignownership of Philippine companies

3. Duty-free importation of capital equipment (for BOI-registered firmsunder E.O. 528);


24



4. Additional deduction for labor expenses

Non-fiscal

• Unrestricted use of consigned equipment;

• Exemption from wharf age dues and export tax, duty, impost and fees;

• Employment of foreign nationals

• Special Investors Resident Visa

China’s Finance Ministry announced in 2009 that the tariff of compound rubberimported from senior members of Association of South East Asian Nation (ASEAN) suchas Brunei, Indonesia, Malaysia, Singapore, Tailand, and Philippines will be lowered

from 5% to 0% however, those imported from Vietnam will remain at 5%. Naturalrubber in general trade will be imposed a tariff of 20% or specific duty (RMB2600 perton), whichever is lower. In addition natural latex will be imposed a tax of 10% or specificduty (RMB720 per ton), whichever is lower. (Source: E-to-China.com)

In the Philippines, rubber producers and manufacturers are subject to a 15% taxunder Republic Act 1973, Chapter 40. Te law defined rubber as natural rubber, balata,gutta-percha and similar natural gums, synthetic rubber, rubber substitutes derived fromoils (factice) and such substances reclaimed there from. Hence, all of the aforementioned

rubber and other related rubber products are subject to this article. (Source: Te LAWPHiLProject)


25



4. SWOT Analysis

Figure 10

5. Analysis on Philippine Rubber Map

Figure 11: Map for Philippine Rubber Industry


26



IX. RECOMMENDED ACTION PLANS

Te rubber industry in the Philippines is constrained from growing due toproduction bottlenecks related to the supply of planting materials, cultivation of suitableland, programs on financial assistance, technological intervention and technical expertiseof the farmers, infrastructure support, and policies and implementation of governmentprograms.

Supply of Planting Materials

Planting materials play an integral part in rubber production. Tere is a need toenhance the current number of cloned rubber at the same time develop hybrid typesof clones that produce higher yields and could adapt to more varied agro-climaticconditions. In pursuing such, establishment of additional laboratories for further researchand development is necessary not just in Mindanao area but also in Luzon and Visayas.Bud wood gardens and nurseries should be expanded to complement the development ofhybrid clones and expansion of research and development activities.


27



Cultivation of Suitable Land

Te limited output of the rubber industry inthe Philippines is due to the limited number ofcultivated land. Te Department of Agriculturehas identified 500,000 hectares of land suitable forrubber, but only 170,000 hectares are cultivated,mostly located in Mindanao. Tese lands areinsufficient to meet the huge rubber demand bothlocally and globally.

Cultivation of unutilized land suitable forrubber could be by integration of landholdersthrough establishment of cooperatives andproduction centers and developing cooperative joint

venture between private investors and landowners.

Financing Programs

Due to the long gestation period of about 5

years before rubber can be harvested, financialinstitutions are hesitant to provide assistance torubber farmers. In view of this, special financingprograms and credit packages should be extendedto farmers and investors involved in the rubberindustry.

Technology Intervention and TechnicalExpertise of Farmers

More advanced technological intervention should be introduced in place oftraditional methods being used in the harvesting and processing of rubber that result tolow yields and poor quality output. echnical and financial assistance to help acquire theneeded technologies may be available in coordination with government agencies such asthe Department of Science and echnology and Department of Agriculture.

Lower yields during tapping are the result of inadequate knowledge of the farmers.Information dissemination of accurate methods and techniques of the entire process

of production through trainings and seminars should be implemented by the localgovernment units and other concerned agencies.

Infrastructure Support

Areas planted with rubber and those suitable for rubberproduction are commonly located at hilly lands which are notaccessible due to poor farm to market road infrastructure, thus


28



resulting to marketing problems. Te industry with thehelp of the government should find alternative linkages

to transport the products from the farm to the marketin a manner that lessens intermediaries that result tohigher mark-ups when the products finally reachthe end users.

Implementation of Government Programs

Government programs aimed at promotingand developing the rubber industry should involve the

active participation of the main players in the industryfrom the planning of these programs to their implementation. Properfund allocations and uses should be well defined, complemented with continuousmonitoring of all the players including the beneficiaries. Te support and commitmentof the agencies involved should be rationalized and properly consolidated in order toachieve the industry’s desired growth, stability, and sustainability.


29



X. BUSINESS OPPORTUNITIES

a. Rubber Nursery

Te rubber nursery will require a total investment of PhP1, 010,000.00. Tecomputation includes a six months working capital amounting to PhP698,300.00. Aftersix months, the rubber seedlings are readily available to market and will be pegged at

PhP30.00 each. Furthermore, the ten years of operation will generate an average incomeof PhP602,100.00 hence the venture will have a return of 60%. (Refer to Annex 4 pages49-56 for detailed computation on rubber nursery)

b. Rubber Production

Te computation for rubber production will take up to year five (5) since tappingactivity will start on the sixth year after planting. Te rubber production has a total


30



investment cost of around PhP170,000.00 starting from planting up to growing; thisamount will be recovered in approximately eight years and nine months. Te computationexcludes the cost of land since valuation of agricultural land in every region varies.

Te production of rubber will require intensive labor and minimal farm chemicals.On the first year of operation/tapping activity, a hectare of rubber is estimated to yield

1,536 kilogram and per kilo of rubber will be pegged at 81.02. Te return on investmentis 89% and payback period of approximately nine years taking into consideration theaverage productive life of rubber which is 25 years. (Kindly see Annex 5 pages 33-42 forthe schedules of the computations).


31



c. Rubber Processing

Te country is dominated by semi-processors situated in Mindanao. Most of thesesemi-processors are cooperatives and private company. Te said processors partiallyprocessed fresh latex onto dry rubber crepes, sheets, and crumbs. Te processed rubberis sold to neighboring countries such as Malaysiaor China that convert the material into finishedproducts such as tires, gloves and other hygieneproducts.

Establishing a Rubber Processing Plant will

cost an approximately PhP32M. Te processingplant will have a capacity of 2 tons per hour with

working hours of two 8 hours shifting per day and6 days in week. Please refer to the Marketing PlanHarvestime Rubber made by Jose C. Policarpio,

Jr. for the detailed information.


32



ANNEXES

33



Annex 1: CROP ESTABLISHMENT(Based on Alcala, E. A. 2007)

any high-yielding clones have been developed for commercial planting. Teseclones yield more than 2,000 kilograms of dry rubber per hectare per year,

when grown under ideal conditions. In the Philippines, there are only ninerecommended clones of rubber, RRIM 600, PB 235, PB 217, PB 260, PB 330, PB311, RRIM 712, RRIM 90 and USM 1. Tose mentioned recommended clones werestudied and tested by the research experts in the country, the Philippine Rubber ResearchInstitute in North Cotabato.

1) Plant Propagation

Select seeds that are fresh, big, heavy and shiny. Before sowing the seeds, they mustbe soaked in water overnight. en (10) kilograms of seed can be germinated in every onesquare meter of seedbed, 10 cm thick, with fine river sand or sawdust as seedbed medium,and with partial shade. In sowing the seeds, they should be pressed firmly into the seedbeduntil the top of the seed is level with the surface, then cover the seeds thinly with themedium to prevent exposure to direct sunlight. Water the seeds twice a day and in 10-14


34



days, the seedlings can be pulled and planted intopolyethylene bags or in ground nursery.

2) Preparation of Nursery Beds

Land preparation should be done prior to seedgermination. Te area should be cleared and clean.Te size of poly could either be:

A) 6x12 in #.003 – for young green seedlings

with 1-2 leaf storey

B) 7x14 in #.003 – for brown seedlings with two leaf storey

Te perforated poly bags are filled with loam soiland placed in a shallow canal arranged in east-westorientation with 2 poly bags per row spaced 36 inchesbetween rows. In the absence of soil analysis, apply10-15 grams of 14-14-14 fertilizer per bag every 3-4

weeks.

3) Planting

Budded seedlings ready for planting havematured top leaf whorls with healthy and vigorous appearance with dark green color.Te size and shape of the planting hole would depend largely on the soil condition andplanting materials. In fertile and light soils, hole should measure 25-30 cm in diameterand 40-45 cm deep. In poor and heavy soils, bigger holes are required -40-45 cm diameterand 50-60 cm deep. Further, if the land is currently being cultivated, smaller holes willdo, but in uncultivated land, bigger holes are needed.

4) Tree Management (Pruning)

Pruning must be done regularly to develop a smoothtrunk without branches or large scars on the stem/trunkalong the optimum height of 2.5-3.0 meters from theground. Tis should result to the bigger tapping panel.Pruning/cutting the top portion of the tree is not a

recommended practice.

5) Nutrient Management

Te first three years of plantationestablishment is the most critical period wherecomplete nutrition should be provided to theplant. Ideally, fertilizer application should bebased on the results of soil and plant tissue

A N N E X E S

35



analysis, to ensure that the optimum amount is applied. Hole, broadcast and ring methodsof fertilizer application can be used and application is made at the start and before the endof the rainy season. Organic fertilizers can be used- with the rate of application based onthe kind of organic fertilizer and recommendations.

6) Pest Management

Weeds and rubber farms can be controlled by line weeding, slashing, round/ring, weeding, and use of herbicides. Weeds in rubber areas must be controlled or minimizedto prevent stunted growth of the rubber trees and to prevent fires during the dry season.

Tere are about six foliar fungal 1) bird’s eyespot; 2) powdery mildew; 3) leaf spot;4) leaf blight; 5) anthracnose; 6) algal spot

7) Harvest Management

Rubber trees are ready for tapping when the trunk circumference at 75 cm fromthe stock-scion union reaches 40-50 cm in circumference. It requires around five yeargrowing period under good management. apping should start on the 6th or 7th yearafter planting.


36



Annex 2: PROJECTED PRODUCTION OFPHILIPPINE RUBBER

Shown in the table and graph on the next page are the total plantedareas of rubber trees from year 2006 to 2010 and its behavioral increasingtrend.

Note: Te 11% projected increase per year is based on the historical increase from year 2006-2011.

able 5: Increasing rend of Production and Planted Areas

able 6: Projected Production Volume

A N N E X E S

37



Annex 3: LIST OF LOCAL MANUFACTURERS


38



Annex 4: RUBBER NURSERY

Assumptions:

• A can contains 2,000 rubber seedlings

• Mortality rate is 10% after planting and 15% after budding;

• Selling price per budded rubber plant is pegged at PhP30.00 and it will increaseby 5% annually;

• Cropping cycle is equivalent to six months;

• e one cropping cycle can supply to 55 hectares of land suitable for rubber

production;

• Inventory end is 10% of the total budded rubber plant available for sale;

• Farm overhead and Selling and Administrative Expense are 10% of Gross Salesand 20% of Gross Profit respectively;

• Farm inputs cost and direct labor expense will increase by 5% per annum

Annex 4.1: TOTAL PROJECT COST

A N N E X E S

39



Annex 4.2: PROJECTED INCOME STATEMENT

Schedule 1: PROJECTED SALES


40



Schedule 4: ANNUAL DEPRECIATION

Schedule 2: FARM INPUTS

Schedule 3: DIRECT LABOR EXPENSES

A N N E X E S

41




42



Annex 4.3: PROJECTED CASHFLOWS

Annex 4.4: ACQUISITION OF NURSERY TOOLS ANDFACILITIES

A N N E X E S

43



Annex 4.5: RETURN ON INVESTMENT

Annex 4.6: PAYBACK PERIOD


44



Annex 5: RUBBER PRODUCTION

Financial Assumptions:

• Number of hills per hectare is 550

• Mortality rate is 9%

• Tapping is done 15 times a month

• Average yield per hectare will increase by 6% annually

• Selling price per kilo of rubber will increase by PhP6.36 per annum

• Handling loss is 5% of total annual yield

• Expenses for farm inputs will increase by 5% yearly

• Laborers except for the tappers are compensated using minimum wage and willincrease by 5% annually

• Rubber tappers are compensated 50% of Gross Sales

• Farm overhead is 3% of the total sales

• Selling and Administrative expense is 20% of Gross Prot

• Amortization and depreciation is computed using Straight Line Method

Annex 5.1: TOTAL PROJECT COST

A N N E X E S

45



Schedule 1: LAND DEVELOPMENT COST

Schedule 2: LABOR


46



Schedule 3: RUBBER SEEDLINGS

Schedule 4: DIRECT LABOR PLANTING COST

Schedule 5: FARM INPUTS (Gestation Period)

Schedule 6: DIRECT LABOR (Gestation Period)

A N N E X E S

47



Annex 5.2: PROJECTED INCOME STATEMENT

Schedule 1: PROJECTED SALES

Schedule 2: FARM INPUTS

Schedule 2.1: FUNGICIDE EXPENSE


48



Schedule 2.2: FERILIZER EXPENSE

Schedule 2.3: INSECICIDE EXPENSE

A N N E X E S

49



Schedule 2.4: MAINENANCE COS

Schedule 3: DIRECT LABOR

Schedule 3.1: LABOR EXPENSE DURING LAND PREPARAION

Schedule 3.2: MAINENANCE COS


50



Schedule 3.2.1: MAINENANCE COS PER WORKER

Annex 5.3: PROJECTED STATEMENT OF CASH FLOWS

Annex 5.4: ACQUISITION OF FARM TOOLS

FARM TOOLS (YEAR 6)

PARTICULARS

A. SIZING AND GIRDING

TAPE MEASURE

SUB TOTAL

B. MARKING AND INSTALLATION

SPOUT

COLLECTION CUP

SPRING WIRE

SUB TOTAL

C. HARVEST

COLLECTING PAIL (BIG)

HONING STONE

TAPPING GUIDE

TAPPING KNIFE

SUB TOTAL

TOTAL

QTY / HECTARE UNIT COST TOTAL NUMBEROF HECTARES

ESTIMATEDUSEFUL LIFE

ANNUALDEPRECIATION

1

500

500

5

2

1

2

1

UNIT

PIECES

PIECES

KILOGRAM

UNIT

UNIT

UNIT

UNIT

32.00

3.00

5.00

74.00

263.00

158.00

23.00

475.00

3

3

3

3

3

3

3

3

32.00

32.00

1,500.00

2,500.00

370.00

4,370.00

526.00

158.00

46.00

475.00

1,205.00

5,607.00

11.00

11.00

1500.00

833.00

123.00

1,456.00

175.00

53.00

15.00

158.00

401.00

1,868.00

A N N E X E S

51



FARM TOOLS (YEAR 9)

PARTICULARS

A. SIZING AND GIRDING

TAPE MEASURE

SUB TOTAL

B. MARKING AND INSTALLATION

SPOUT

COLLECTION CUP

SPRING WIRE

SUB TOTAL

C. HARVEST

COLLECTING PAIL (BIG)

HONING STONE

TAPPING GUIDE

TAPPING KNIFE

SUB TOTAL

TOTAL

QTY / HECTARE UNIT COST TOTAL NUMBEROF HECTARES

ESTIMATEDUSEFUL LIFE

ANNUALDEPRECIATION

1

500

500

5

2

1

2

1

UNIT

PIECES

PIECES

KILOGRAM

UNIT

UNIT

UNIT

UNIT

43.00

4.22

7.50

88.50

351.00

211.00

31.00

637.00

3

3

3

3

3

3

3

3

43.00

43.00

2,110.00

3,750.00

442.50

6,302.50

702.00

211.00

62.00

637.00

1,612.00

7,967.50

14.00

14.00

703.00

1,250.00

148.00

2,101.00

234.00

70.00

21.00

212.00

537.00

2,652.00

Annex 5.5: RETURN ON INVESTMENT

Annex 5.6: PAYBACK PERIOD


52



Annex 6: RUBBER PROCESSING

atural Rubber starts its journey when the tree is tapped. A tapper starts the trekaround the plantation before dawn. At each tree a sharp knife is used to shave offthe thinnest possible layer from the intact section of bark. Te cut must be neither

too deep, nor too thick. Either will reduce the productive life of the tree. Tis starts thelatex flowing, and the tapper leaves a little cup underneath the cut.

When latex is required, which covers about 10% of all NR produced, the materialis gathered on the tapper’s return journey, poured into containers and delivered to aprocessing station where it is strained and concentrated. At no stage in the process is the

latex heated. Tis means most of the proteins remain in the latex. More stabilizers areadded and the latex goes into a centrifuge to remove some of the water, and increase therubber content of the latex. After centrifuging, the material is known as latex concentrate,and contains roughly 60% solid rubber and 40% other stuff (water, proteins etc.).Concentrated latex can be used in making gloves, shoes, and other hygienic products.

If solid rubber is required, the cuplump, together with tree lace (the remnantsof the latex flow from the cut down to the

cup) and other bits and pieces are collectedtogether and processed. Tat processinginvolves quite a lot of heat, which destroysmany (but not necessarily all) of the proteins.It ends up as solid rubber. Depending on themethod of processing and the final purity ofthe material, the industry refers to it eitheras SR (technically specified rubber), orsometimes sheet rubber. SRs are divided

into a number of grades which are laid down in technical specifications drafted by ISOand are manufactured using new processing techniques.

Te distinction is drawn between the following forms of natural rubber:

1. Crepes

Pale crepe rubber is among the highestquality crepes. Coagulation of this high-

quality natural rubber is achieved with sodiumhydrogen sulfite (NaHSO3). Te cleancoagulum is washed and milled. Tis producessheets between 1.2 and 1.5 mm thick and 24 cm

wide. Te washing process removes from thecoagulum considerable amounts of the serumconstituents which can cause rotting. Te sheetsare dried in drying rooms for 2.5 to 4 days at 37°C or air-dried for 5 to 10 days on drying

A N N E X E S

53



floors. Excessive temperatures lead to discolored patches in the sheets as a result ofoxidation. Te sheets are packed as bales and marketed as “thin pale crepe”.

2. Sheets

• ADS (air dried sheets)

Air dried sheets are less common. Tey have an appearance similar to RSS (ribbedsmoked sheets), but are more transparent, as they are manufactured in smoke-free rooms.

• RSS (ribbed smoked sheets)

Te fresh latex is diluted to a rubber content of 15 - 16% and coagulated incoagulation tanks using formic acid or acetic acid. Lumps of coagulum are formed afterthe acid has acted for 3-4 hours. After milling and washing, sheets between 2.5 and3.5 mm thick, 24 cm wide and 90 or 135 cm in length are produced. Te final millis an embossed mill, which gives the sheets their ribbed structure. Since these rubbersheets are not washed as intensively as crepes, they contain a higher proportion of serumconstituents which encourage mold and rotting. For this reason, the sheets undergo anadditional preservation process in which they are smoked in smokehouses.

Figure 1: Processing Flowchart


54



references

55



• Bureau of Agriculture Statistics

• Cecilio P. Costales and Angelo King Institute Natural Rubber Industry

• Cluster Assessment for Trade Liberalization in Line with the Finalization of DohaDevelopment Agenda

• National Economic Research Business and Assistance Center (NERBAC)

• Zamboanga Peninsula and Region 12, Rubber Industry Profile , Region IX, RubberPlantation

• Philippine Rubber Industries Association, Inc. (PRIA), List of Members as of 2011

• Provincial Government of Cotabato, Rubber Industry in Cotabato Province 2009,Te Rubber Industry Roadmap of Cotabato Province 2009

• Association of Southeast Asian Nations, Tari and Duty Rates

• Department of Agriculture Blog, Rubber Industry

• Transport Information Service, Natural Rubber

• Department of Agriculture Davao Region (Agribusiness and Marketing AssistanceDivision), Industry Profile 2011

• Planning and Evaluation Department Bureau of Postharvest Research and ExtensionCLSU Compound, Science City of Muñoz 3120 Nueva Ecija, Philippines,Philippine Postharvest Industry Profile: Rubber

• Food and Agriculture Organization Statistics

• Philippine Rubber Industry Association News

• Association of Natural Rubber Producing Countries; Natural Rubber rends &Statistics, Volume 2, No. 12, December 2010

• International Rubber Study Group (IRSG)

• rubbermarketnews.net

• Department of Agriculture-Southern Mindanao Integrated Agricultural ResearchCenter


56



Industry Cluster Map

rubber industry study by dti regional operations development group

Documents