Rubber processors change strategy as margins dip

Rubber processors and exporters have resorted to inter-cropping on account of slump in profits and revenue. The dip in margins emanates from poor investments and long neglect in the industry as well as long gestation period of trees, which hovers between six and seven years.

Intercropping is the practice of growing two or more crops in proximity. The most common objective of intercropping is to produce a greater yield on a given piece of land by making use of resources that would otherwise not be utilised by a single crop, Wikipedia says.

“Rubber has long gestation period of between six and seven years,” said Sunday Kolawole, president, National Rubber Association of Nigeria, in an exclusive interview.

“What players now do is inter-cropping. Some plant rubber trees along side banana, cassava and other crops. There are even players that plant rubber trees and practise animal husbandry on the same area,” Kolawole said.

Industry margins of the rubber industry players have continued to dip as capacity, which stood well above 130,000 metric tons per annum (tpa) few years ago, now hovers between 65,000tpa and 60,000tpa on account of the failure to replenish old plantations and establish new ones. Secondly, the margins are affected by drop in rubber prices to between $1,970 and $1,700 per tonne, from more than $4,000 per ton few years ago.

Stakeholders say the strategy has become necessary as total dependence on rubber would have untold effect on families.

“However, rubber plantations are what can sustain anybody after retirement. This is the way it is done in Ivory Coast,” said Ede Dafinone, CEO, Sapele Integrated Industries Limited.