Rubber Production In Malaysia Commerce

Rubber can be classified into two main categories; natural rubber and synthetic rubber. The NR is obtained from latex, which is the milky white fluid and easy to find in many plants. However, most of the plants are coming from the Brazilian rubber-tree (Hevea Brasiliensis). In Malaysia, Hevea Brasiliensis covers 2 million hectares areas in Peninsular Malaysia. The main states that are known as the main producers of rubber latex are Johor, Kedah, Perlis and Negeri Sembilan. Other regions include Perak, Sabah, and Sarawak. Unfortunately, SR is the main threat to NR which is due to the price of SR still competitive compare to NR. Meaning, if possible occurs fall in price of fuel in world market will make the SR cheaper than NR. Actually, SR is formed as of unsaturated hydrocarbons.

According to MIDA (in what year?), Malaysia is ranked third behind Indonesia and Thailand in producing NR in the world. It produces approximately 40 percent of NR annually. Furthermore, there are 500 manufacturers in the Malaysian industry producing related rubber-based products such as gloves, tires and shoes. For instance, in 2005, Malaysia was known as the largest producer of the rubber gloves in the world. Meaning, the contribution of rubber industry is very important to the nation, especially to the small holders of rubber plants.

Problem Statement

In response to the rubber production in Malaysia, there has a certain problem related to the price of rubber over the years. According to Yang Berbahagia Dato' Mohammad Izat Bin Hassan which is the RISDA director in the monthly ceremony assembly speech 2010, rubber has unstable in price. He said that rubber price was starting increase on 19th May 2010 and will be maintain for the short time because it is lowest in production among the country producers. Actually, this price was increase starting January on year 2010 and will be achieved the high level on 16th April 2010, that is RM10.60/kg. Unfortunately, starting 17th April 2010, the price are decreasing from 10.60/kg to RM 8.71 /kg on 18th Mei 2010 with the decreasing in percentage is 17.78% or RM 1.885/kg. This phenomena was impact to many group of people especially RISDA. Furthermore, the main problem related to the unstable price is about NR production competitiveness with SR production. That means, whether the NR production can maintain to sustain threats from SR, especially in tyre manufacturing. The threat from SR production is a most quietly because the quality of both NR and SR are same, the price of SR cheaper than NR and its volume easy to control by market demand. In additional, Malaysia rubber production gets the threats from other rubber producers especially from Thailand and Indonesia.

Research Objectives

There are several objectives of this paper to achieve the common problem of unstable price of rubber production related to its competitor, SR production and the other country of rubber producer:

To determine whether Malaysia can sustain in their production of rubber by using Log-Log Regression model.

To determine the relationship between each variable in order to show whether Malaysia can achieve its target to sustain in NR production by comparing its production factors to another country, Thailand.

Scope and Limitation of The Study

This study was focus on Malaysia agriculture of rubber production which is data was covering in time series data from year 1961 until year 2006 that is 46 years. Compare to other commodities such as Cocoa, Oil Palm and Sawn Timber, rubber is the most popular commodity which is stand as the main issue occurs in Malaysia right now. In this paper, Area, Labor and Yield will consider measured to determine the significant of each variable to maintain the NR production to compete with the SR production and other producer of rubber production.

However, while preventing the process of this study, there are several limitations are included.

There is no data founded for labor contribution of rubber industry in Thailand.

Most of the data founded by Thailand is estimate data, especially in production factor of NR.

There is difficult part to find the time series data collection of rubber in both country, Malaysia and Thailand.

Limitation of the internet access because of the line connection.

While get online, there have bureaucracy to find the data, especially in government sector.

Significance of The Study

This paper is very important for improvement of the economic development, especially in Malaysia.

Provide knowledge to government agencies such as RISDA, RRIM, MARDEC and FELDA and to the researcher, students and officers on how the three factors (labor, area and yield) contribute towards the rubber production.

Very useful to show the impact or effect of labor, area and yield towards the rubber production.

Important to help the policy maker on decision making towards the effectiveness of production factor.

Chapter Outlines

Chapter 1 discusses briefly about the introduction of NR production in Malaysia compare to Thailand which is the largest producer of NR production in the world. Besides that, we can know which countries are related to NR production and at what rank. The problem of the rubber production can determine while we conduct this study and from the problem the objective developed. Lastly, this chapter discussed the scope and the limitation while conduct this study and who are actually significance of this paper.

Chapter 2 presented about the literature review of this study which supported by other researcher related to this paper. First, theory and model specification are consider to do to know the overall process while conduct this study. Then, this chapter discussed about the efficiency and the role of each variables to rubber production. Furthermore, the matrix form draws to know the summary of the references consist in this paper. Then, conceptual frameworks also draw to shows the relationship between dependent variables and independent variables of the NR production factor.

In Chapter 3, it presented about the data and methodology used while conducts this paper. After that, data, population and sampling methods will be determined. From the data, we can analysis the data and make a hypothesis development to know the relationship between each variables and then test the data using suitable test.

CHAPTER 2LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK2.1 Introduction

According to a report produced by the Natural Rubber Production: An Outlook of Thailand (2007), Malaysia was declared as the third largest producer of NR after Thailand and Indonesia in 2007. Malaysia produced 1.22 million tons of rubber production compared to Thailand, which was the first largest producer over the world with the volume of 3 million tons, and followed by Indonesia with 2.79 million tons of rubber production.

Thailand has maintained its position as the largest rubber producer in the world due to its consciousness in sustaining and maintaining their position as the main NR producer in the world. According to Rubber Research Institute of Thailand (RRIT), Thailand has taken into consideration two ways in order to sustain its position i.e. up-stream industries and down-stream industries of rubber production. For example, in the up-stream industries of rubber production, the industry does tapping training to their workers and an activity such as farmer group meetings. For down-stream industries, their objective is to increase the domestic consumption of NR within five years from the total number of rubber production worldwide.

2.2 Theory and Model Specification

This paper are shows about the statistical technique applied to analyze the data collected, that is the rubber production, area, labor and yield data. The data are covers from year 1946 until year 2006 to examine the correlation between each dependent and independent variables. Furthermore, the Unit Root Test will used to know the significant of each variable in difference level and then Log-Log Regression will be measured to know how strong their correlation . At the end, the statistical test and data analysis were done through Eviews and Microsoft Excel.

2.3 Literature Review

The Economic Planning Unit (EPU, in what year?) stated that because of the anticipated yield improvements from 900 kilograms to 1500 kilograms per hectare in 2003 to 2005, the rubber productions were forecasted to increase by 3.8 per cent per annum in the following years. In this case, in order to ensure the sustainable of NR for the long-term period, effort would be continued in producing more the downstream furniture production. Besides that, the EPU asserted that the area of rubber plantation was expected to decline because of the use of land for oil palm plantation and others. According to Carrere (2006), in the case of Cambodia, both rubber and oil palm need larger areas of plantations. Meaning, the decreasing in the area was not a good outlook to sustain in the NR production.

According to Wahid et. al. (2008), in their journal of Review of Malaysian Agricultural Policies with Regards to Sustainability, there was significant result of contribution of smallholders in agriculture sector. But, they was also the most group which is suffer due to uneconomic size of land and also being the lower income group. Furthermore, because of that, the area of agriculture land also decline. In contrast in Menglun Township, Southwest China, the area of rubber plantation is rapidly expanded between 1988 and 2003, Liu et. al. (2006). The change shows that increasing in land was come from forested areas (4150 ha, 42%) and fallow fields (3001 ha, 23%).

Furthermore, in their model, they also found that gender has a significant impact of probability at one percent on the tappers'' efficiency. However, it was estimated statistically significant at one percent that the coefficient for gender variable to be at a negative value. The result found that the female tappers were not efficient compared to the male counterparts. This is because they were only focusing on factors of socio-cultural and the attachment of their times as housewives and taking care of the household activities. This finding also supported by Giroh et. al. (2006) with his findings found out that women were not important part of the most extension activities, but the focus was mostly on the men. In many farm settlements in Nigeria only focused on the men not women for the land allocation.

According to Kaur, A., labour is very important factors that can be effect mostly in the NR production. In his journal, he said that the availability and ability to control, labour would be the important part of production. It is also important in the social relations of transformation. This statement also support by Ke and et.al. which is said that the labour intensive productivity is more quietly close to NR productions. This because of their ability and skill which is can maintain for a long time period. According to Mesike et. al. (2009), smallholder had a responsibility on increasing and sustained the rubber production. This can be explained by their job characteristics which is they provide a highly labor intensive although there was a low level of productions' operating.

By 1925 there were

already thousands of hectares of rubber estates that

were predominantly owned by Europeans in

Southern Nigeria.

It should be noted that Nigeria has a very

vast potential for rubber production especially in

many of the southern States in the country where

the vegetative and climatic conditions are suitable

for its production.

(refer 4..Farmers' Perception of the Factors Militating Against Rubber Production in Edo and)

Other factor (intermediary)

Climate

The west coast of Southern India experiencing humid tropical monsoon climate with high temperature and

rainfall is climatically suitable for rubber. The mean annual rainfall range from 1500 mm to 5000 mm and

mean annual temperature is 27.1 °C in rubber -growing areas. Mean annual temperatures lower than 20 °C

experienced in hill ranges with elevation more than 600 meters above mean sea level was found to seriously

impair the productivity of rubber. Again, the rubber latex production was found to be related to the period of

soil moisture availability (or its deficit) in a year.

(refer Land and soil controls over the spatial distribution and productivity of rubber)

Land

Tropical lands experiencing hot humid climate are eminently suitable for rubber production. The land related

controls over rubber are elevation, climate and susceptibility of land to flooding. Elevation induced lower

temperatures limit the suitability of land for rubber in high altitude regions of tropics. Well distributed

rainfall, even when the total rainfall is only around 1500 mm, is adequate for the crop. Highly weathered,

well drained tropical soils, though strongly acidic, low in bases and cation exchange capacity, were not found

to limit rubber production. Soils with drainage limitations were unsuitable for rubber. Available water

capacity of soils, as determined by the effective soil volume, coupled with amount and distribution of

precipitation had a significant influence on productivity of the crop. Soil classification following USDA Soil

© 2010 19th World Congress of Soil Science, Soil Solutions for a Changing World

1 - 6 August 2010, Brisbane, Australia. Published on DVD.

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Taxonomy can be used as a primary guide for selecting areas for natural rubber production. Iso-hyperthermic

temperature regime employed as a criterion for differentiating soil families according to Soil Taxonomy may

be used with caution for assessing climatic suitability for rubber since the lower limit of the class (mean

annual temperature of 22 °C) do not ensure year long temperature above 22 °C. Yield performance of rubber

declines rapidly as the temperature goes below the value.

(refer Land and soil controls over the spatial distribution and productivity of rubber)

2.4 Conceptual FrameworkDependent Variable