Lack of regulatory policy worries rubber industrialist

Ghana’s rubber cultivation which boasts of premium quality in the global commodities market is faced with non-existence of a comprehensive regulatory policy document which will outline guidelines to promote healthy competition within the crop’s supply value chain.

The policy document when developed and implemented can be become the blue print for the sector’s growth that will also help in maximizing development outcomes for the communities while supporting smaller businesses, as well as alleviating poverty. The document will also help raise the nation's competitiveness in rubber production in the global commodities market.

Lionel Barre, Managing Director of the Ghana Rubber Estates Limited (GREL) speaking to B&FT in an interview during an official visit to the company’s planation and factory premises in the Western Region confirmed that Ghana does not have any rubber sector policy. “There is no rubber sector policy.

“Government should urgently develop a comprehensive rubber sector policy document to sanitize the crop’s supply value chain. 

“Government should quickly develop the policy to guide the sector. I think government has delayed too much in the development of a policy guidelines for the sector to sanitize the sector. 

There should be rules to sanitize the rubber industry in the country. As the competition is getting profound”. 

He explained that there is a huge risk of breaking the country’s rubber industry’s supply chain which has the capacity of  generating employment for a vast number of farmers mainly from rural areas and is important in providing them with economic sustenance for their livelihood.

He added that the non-existence of the policy guideline can deny the country a lot of revenue to the economy as government and out growers will be the main losers indicating that it is important for government to put the right structures in place to sanitize competition within the industry.  

Outlining some of the GREL’s operating challenges, Mr. Barre explained that the unstable currency, climbing inflation rate are the major challenges confronting the company.

In recent years, the economic value of the country’s rubber cultivation has grown rapidly with its foreign exchange earnings shooting up among the country’s export commodities. 

This agricultural commodity which has since become of strategic significance with respect to the global rubber industry is being regulated to the background due mainly to the lack of policy document to help guide the sector.

He indicated that investing in the cultivation of natural rubber accomplishes three main functions in the country’s economy, including the provision of raw materials for the country’s agro-based industries, provision of much needed foreign exchange earnings and ranking the country in the global map as a net exporter of rubber. It also offers employment to a sizeable segment of the Ghanaian rural farming population.

Research has shown that rubber business is more of a smallholder type of business. This is the case in most countries of the world where rubber is planted. It is the smallholders that are more in it than commercial outfits. But the case is different in Ghana as the bulk of production comes from commercial outfits.

The rubber producing countries in Africa only produce four per cent of the total global production, while Thailand, the largest rubber producer in the world produces 27 per cent.

Ivory Coast which is the largest producer of rubber in Africa produces 50 per cent of the total Africa production, while Nigeria produces only 11 per cent with Ghana producing about 19,134 metric tonnes in 2009.

As of 2009, approximately 11,855 hectares of land had been cultivated under outgrower schemes financed by the government. The rubber plant has a productive lifespan of 35 years. 

The country moved from 12,000 hectares of rubber plantations in 1995 to 35,000 hectares, helping to create employment for some 100,000 people.

Rubber production increased from 9,300 metric tonnes in 2000 to 19,134 metric tonnes in 2009, recording an increase of 74 percent over the period.

About 95 percent of the country’s rubber produce is exported to China, France, Turkey, East Africa and South Korea. Ghana also exports to neighbouring Burkina Faso.

Currently the traditional rubber-growing regions are the Western and Central Regions, but the northern parts are also being explored for their potential to cultivate the crop.

Strong global economic growth in recent years, especially in the rapidly developing economies of China and India, has increased demand for rubber significantly.

The global demand for natural rubber has been consistently on the rise, Global consumption of natural and synthetic rubber, pegged at 12.3 and 16.8 million tons, respectively, in 2015, has will increase 3.1 percent and 0.9 percent from 2014. It is projected to reach 15 and 19.4 million tonne by 2020.

China, the United States, Japan, India and Germany are the main rubber consumers, accounting for 56.8 percent of global consumption.