Revitalizing Rubber production to spike non-oil revenue

Stakeholders have urged the federal government to revitalize rubber production in the country as this will further boost revenue from the non-oil sector. The call became necessary so that the FG could tap the full potential in agriculture, a sector where the country has comparative advantage over others in areas of crop production, revenue generation, employment and rural development.

Rubber is the fourth largest foreign exchange earner for Nigeria after crude oil, hide and skin and cocoa, and has since been neglected by successive governments thereby throwing rubber farmers out of business.

Before now, Nigeria was known for the export of the three major cash crops which are palm oil, groundnuts and rubber; but presently, little or nothing is heard about these sources of foreign exchange. The country’s sole dependence on crude oil has dominated the economy and rendered it unproductive. Oil has become the major export Nigeria is recognized for in the world economy.

Rubber is used in the manufacture of a number of industrial products which range from tires, balls, containers, shoes, bands and a lot of other items. Rubber is important in the socio-economic life of many tropical developing nations.

The capacity in Nigeria’s rubber industry has fallen from well above 130,000 metric tonnes per annum to between 65,000tpa and 60,000tpa on account of the failure to replenish old plantations and establish new ones, according to experts.

The International Rubber Group (IRSG) in 2014 predicted that there would be strong global demand for rubber through to the end of the decade. The demand-supply gap of natural rubber is predicted to significantly widen in the course of the current decade and likely to end up in a shortage of as much as one million tonnes by 2020.

The gap between the forecasted production of natural rubber (12.5 million tons) and the forecasted consumption (13.6 million tons) will be 1.1 million tons, IRSG adds. To meet this anticipated increase in demand for the commodity, the group recommended increase in the hectarage under new cultivation and yield particularly under small holding farmers.

IRSG revealed that current major rubber producers mainly Malaysia and Thailand are facing land constraints for natural rubber due to severe competition for land by other crops mainly palm oil, the same with Vietnam, China and India. For the needed increased hectarage and yield therefore, Africa (West and Central) are among the sub-regions to be targeted with an estimated production capacity of 680,000 tons in 2020.

However, while increases are expected from countries like Liberia, Cote d’Ivoire and Cameroon, the forecast for Nigeria is that production would remain static unless the natural rubber industry particularly in the small holder sector is revived.

Nigeria’s rubber production has been on the downward trend in recent times. Factors such as low yield in plantations, dwindling international market for cars, fluctuating international rubber prices to volatility of oil prices and energy challenges have made the industry drop. These have forced firms which used local rubber to manufacture tyres, to quit the Nigerian space.

Dafinone, chief executive officer, Sapele Integrated Industries Limited, a key crumb rubber processor, attributed the capacity crash in the industry to lower yield in plantations, dwindling supply of rubber from rubber trees as well as declining prices of international prices for cars.

“Lumps from trees are in short supply because most of the rubber trees today were planted in the 1960s and 1970s, adding that the trend has continued because the trees have a life of 30 years”, he adds.

“I foresee export of rubber falling by as much as 50 percent,” he further stated in an exclusive interview with BusinessDay.

Analysts say that there is the need to gear up efforts towards increased production and also the need for total valorisation of rubber tree and to explore new uses for rubber, especially now that car tyres which used to consume over 70 percent of Nigeria’s rubber are no longer produced in the country following the exit of Michelin and Dunlop tyre manufacturers.

Michelin, a French tyre maker, closed down its manufacturing plant in Port Harcourt in 2007, owing to harsh business environment, notably increase in second-hand tyre imports, smuggling, high energy cost, among others. Later in 2008, Dunlop, now DN Tyre, shut down its plant after recording N2 billion loss, owing to infrastructural challenges, which made it difficult for it to cover overhead and variable costs and pay back loans borrowed from some bank.

Josephine Okojie