Sumernet

Meeting regional and global demands for rubber: A key to poverty alleviation in Lao PDR?

This paper discusses a brief history of rubber production in China, Vietnam and Northeast Thailand and then focuses on the current rapid increase of rubber production in Lao PDR that is being driven predominantly by investors from China and Vietnam.

 
Global demand for rubber production has increased dramatically over the past several years predominantly due to growth in the Chinese and Indian economies. Dramatic rises in the price of crude oil have further increased the price of synthetic rubber, making the production of natural rubber a viable option in meeting this insatiable demand.
 
Drawing upon the experiences of Thailand, Malaysia and India there is clear evidence to support the notion that smallholder rubber production is a viable and effective proposition in moving households and communities out of poverty. Recent assessments of the financial viability of smallholder rubber production in Lao PDR support this observation. However, there are structural impediments that could negatively influence the viability of rubber production.
 
Problems associated with land concessions to private investors mean that this mechanism may not always result in equitable distribution of benefits to both state and citizens, thus forcing the Government of the Lao PDR (GoL) to impose a moratorium of the granting of concessions for plantation crops in 2007. Moreover, the development of contracts between private investors and farmers may not have legal jurisdiction and may in some cases prejudice the grower.
 
There is a need for the development and enforcement of institutional policies that protect the rights of growers from investors and secure benefits for the state. In order to promote the establishment of a vibrant smallholder rubber sector in Lao PDR there is a need for the Government to establish institutional structures that provide low interest loans to farmers and cushion the impacts of wild fluctuations in rubber prices common to the industry. Finally, it is important that the development of rubber does not compromise or negatively impact other economically viable sectors that support poverty reduction. In this respect ecotourism may be a more viable and sustainable livelihood option in certain cases. 
Citation: 
Douangsavanh, L., Thammavong, B., & Noble, A. D. (2008). Meeting Regional and Global Demands for Rubber: A Key to Proverty Alleviation in Lao PDR. Bangkok: Sustainable Mekong Research Network (Sumernet).