IRCo – Media Release: International Tripartite Rubber Council (ITRC) Ministerial Committee Meeting 2014

Thursday, 20 November 2014

Kuala Lumpur, Malaysia

The Ministerial Committee Meeting of the International Tripartite Rubber Council (ITRC) was held in Kuala Lumpur, Malaysia on Thursday, 20 November 2014. The ITRC is represented by Thailand, Indonesia and Malaysia (TIM).

This Ministerial Committee Meeting was originally scheduled on 12 December 2014 to coincide with the date of the establishment of ITRC in Bali, Indonesia, 12 December 2001. However, due to the prevailing market sentiments for natural rubber (NR) prices, ITRC countries have agreed to convene this meeting earlier to discuss measures that could be implemented to strengthen NR prices.
The meeting was chaired by H.E. Datuk Amar Douglas Uggah Embas, Minister of Plantation Industries and Commodities of Malaysia, and attended by H.E. Petipong Pungbun Na Ayudhya, Minister of Agriculture and Cooperatives of the Kingdom of Thailand, and H.E. Rachmat Gobel, Minister of Trade of the Republic of Indonesia.
The three ITRC countries currently account for 67% of global NR production and 79% of global NR net export. In addition, the rubber planting in the three countries is dominated by rural smallholders and is an important source of income. Currently, there are more than 4.6 million rubber smallholders in the three ITRC countries. The Ministers reiterated their commitment towards ensuring remunerative income to the rubber smallholders, as well as a fair level to consumers.
The meeting discussed the latest developments in the rubber market, particularly its supply fundamentals, current stock levels as well as the recent rubber price trend. The Ministers is optimistic that the global NR supply and demand balance is improving beginning the 4th quarter of 2014, arising from the reduction of NR supply, and also from the increase of NR demand due to the substitution of synthetic rubber.
The Ministers reiterated the three Governments’ commitment in cooperating and implementing measures to improve and strengthen rubber price for the benefits of the producers and smallholders in the three countries. The Ministers also agreed that ITRC countries will ensure that the allowable planted area under the Supply Management Scheme (SMS) for the period 2015 – 2020 for the TIM countries do not exceed the target set. These include not expanding new planted area. This is to ensure healthy balance of NR supply and demand in the global rubber markets. In this context, the Ministers agreed that ITRC review the SMS.
The TIM countries also agreed to manage the NR exports to the global market. This is to ensure there is no excess supply to the global markets that will contribute toward destabilizing price. In this context, the three countries to regularly update IRCo on export statistics for purposes of monitoring and future direction. The Ministers also requested IRCo to strengthen its roles among the TIM countries. These include coordinating policy actions, statistical analysis and other related areas.
The Ministers agreed to continue strengthening ITRC and IRCo roles and functions in meeting new challenges. In this context, the three Governments as the shareholders agreed to inject additional capital to IRCo to support its roles and functions to strengthen this tripartite cooperation framework for the benefit of the NR industry.
The Ministers also welcomed the initiatives to promote the demand and usage of NR through the establishment of a Demand Promotion Scheme Committee comprising of experts from the three countries. A list of focus areas have been identified as great potentials to utilize NR, amongst others, roads and dam construction as well as promoting the usage of high quality rubber gloves and latex beddings in government hospitals and clinics. In this context, TIM Countries agreed to enhance domestic consumption NR of up to 10% annually.
The Ministers also noted the progress of work towards the establishment of a Regional Rubber Market, including the report of LMC International on the viability of the Regional Rubber Market. The Regional Rubber Market would provide a platform for better price discovery and effective hedging functions bringing benefits to producers, consumers and market players. In this context, the Ministers agreed that the three countries undertake follow-up measures recommended in the report and work toward realising the Regional Rubber Market within 18 months.
In conjunction with the Ministerial Committee Meeting, a meeting was also held with other ASEAN rubber producing countries namely Cambodia, Laos PDR, and Vietnam. The meeting focused on joint effort and cooperation on measures to strengthen NR prices for mutual benefits. In this context, the meeting agreed to initially forge strategic alliance with other rubber producing countries in ASEAN, namely Cambodia, Laos PDR, Myanmar and Vietnam through annual meeting at Ministerial level.