MELAKA: The clock shows 7.30am, and daylight has just broken over the trees and small rise around Ab Manap Minhat’s house. The 65-year-old steps out of his home, clad in a thick, long-sleeved shirt with long pants tucked into his boots.
He starts up his motorcycle and heads out to start tapping the trees on the 6 acres of rubber plantation that he and his wife own in Bukit Katil, Melaka.
Further down the road in the same kampung, Faridah Wahab has stepped out earlier at 7am to start tapping her rubber smallholding, which measures just over 2 acres of land.
Strapping a mosquito coil holder around her waist, over a thick secondhand shirt like Manap’s, she starts tapping the plantation surrounding her compound in the kampung.
While many livelihoods have been ravaged by the COVID-19 pandemic, this year has been a bumper year for rubber glove manufacturers in Malaysia, as the fight to contain the disease led to a surge in demand for latex surgical gloves and other latex medical products.
For tycoons such as Stanley Thai and Lim Kuang Sia, the founders of glove manufacturers Supermax Berhad and Kossan Rubber Industries respectively, they have reportedly been elevated to billionaire status after their stocks took off due to global demand.
The stock value reportedly tripled for the world’s largest rubber glove manufacturer, Top Glove Berhad. Founder Lim Wee Chai’s net worth is said to have jumped to RM2.5 billion (US$599 million).
READ: Malaysia’s largest rubber glove manufacturer bullish about prospects as demand soars amid COVID-19
According to numbers compiled by the Department of Statistics Malaysia (DOSM), export of rubber gloves rose steadily, from just RM1.7 billion in March this year, to RM3.17 billion in July.
However, for the lives of people such as Faridah and Manap, there appears to have been little trickle-down effect in terms of income.
There are various reasons for their predicament. Notably, many smallholders produce rubber in cup lump form, but what is required by the major manufactures is liquid latex.
DECLINING PRICES OFFERED BY MIDDLEMEN
According to the rubber tappers, the prices they are being offered for rubber have been dropping steadily.
“I moved here back in 1998, when I got married to my late husband. At that time, with both of us, there was quite a lot of rubber to tap,” Faridah recounted.
Faridah and her late husband would start tapping before light, and not stop work until 11am.
“Last time, with my husband, we could sell one kg for about RM5. About six years back, we could get RM7 to RM8. That was for a few months but I could build a garage,” Faridah said.
But that also meant their hard work suffered from theft, due to the good price rubber commanded then.
“We would go out, start tapping rubber at 2am in the morning, and then we’ll be back around 6am to pour formic acid into the cups to make the latex coagulate faster.”
“By morning, people were already waiting in the nearby oil palm estate to steal the latex we’ve tapped. You go back to the plantation, and nothing looks out of place. But you go up to the cup and it’s empty already,” she said.
Nowadays, the price is so low, the rubber lumps coagulated are not worth stealing, she said with a laugh.
From her small plot, now divided between her and her children according to Islamic inheritance regulations, she might earn a few hundred ringgit a month.
During the last week of August this year, Manap said 1kg of rubber cup lumps could only fetch RM2.10. And at times, the tappers said they had been offered as low as RM1.70 per kg.
MAKING ENDS MEET
To make ends meet, Manap also taps the rubber trees on other estates near his home. He then splits the proceeds from the sale with the landowner.
“Once a week, I’ll go around the different plots to tap, then collect the lumps around Friday morning, so by 10am on Friday, we can sell the cup rubber in buckets to the middleman buyer,” he said.
While Faridah might only sell her latex lumps once a fortnight, Manap sells his cup lumps and any collected latex strands from the trees every Friday.
“The towkay is licensed by the Malaysian Rubber Board, so he looks after Jasin, Tehel and the surrounding areas,” Manap told CNA, when asked if the middleman was licensed by the government.
Both tappers noted that the government middlemen offer higher prices. If they were to sell to the private middlemen, they would get offered less and also have to spend money on petrol to transport the latex to the private middlemen.
From a weekly sale and after giving back the landowners their share of the proceeds, Manap said he would earn about RM600 to RM700 a month.
“Then I’ll do a variety of odd jobs, like small repairs and helping other landowners spray pesticide on their land or weeding. The afternoon is spent tending to my herd of cows, which I’ve been building up with my family over the years,” he said.
From all these efforts, plus whatever money his children, all grown up send to him, Manap gets about RM1,500 a month.
“And then at times, if it rains, you can’t tap. Because the water would dilute the latex and it becomes even poorer in quality,” both Faridah and Manap pointed out.
During the strict phase of Malaysia’s movement control order, enforced from Mar 18 until May 4, Manap and Faridah claimed they lost all their normal income, given the ban on all non-essential movement.
“Luckily, my wife, who is also a smallholder and I both got some financial aid as smallholders. And we live in the kampung, our lifestyle is not so expensive,” he said.
The Malaysian Rubber Board’s Director-General Zairossani Mohd Nor told CNA that the economic situation of smallholders was a concern. This group, totaling 445,479 smallholders and non-landowning rubber tappers, accounted for 90 perc ent of rubber production and total planted area in the country.
Currently, the government, through the Rubber Board offers the Rubber Production Incentive (IPG), which stands at RM2.50 per kg for Standard Malaysian Rubber (SMR) 20.
This means that if the average price in the field is currently at RM2.10, the government will pay out an incentive of RM0.40 for each kg sold.
This incentive is limited to Malaysian smallholders with less than 100 acres and have a Rubber Transaction Authority Permit (PAT-G) issued by the Rubber Board.
While this incentive applies to only peninsula smallholders, rubber smallholders in Sabah and Sarawak also have similar incentives issued by the states’ respective rubber or agricultural authorities.
During the annual monsoon season, smallholders get one-off financial aid given out by the Rubber Industry Smallholders Development Authority (RISDA), subject to certain eligibility conditions.
For instance this year, each eligible recipient will receive RM300 for two months between December to January.
SMALLHOLDERS PRODUCE CUP LUMP RUBBER, MANUFACTURERS NEED LATEX
According to Department of Statistics Malaysia (DOSM), natural rubber production in July had increased 24.7 per cent to 41,801 tonnes, from 33,531 tonnes in June.
However, DOSM noted that this was a 30.4 per cent decrease compared to July 2019, a fact also noted in the Rubber Board’s statistics.
Zairossani explained that when buying cup lumps from smallholders, dealers would refer to the latest processed rubber prices, namely Standard Malaysian Rubber (SMR) 20 on the Malaysian Rubber Exchange, published by the Rubber Board and used as a reference for licensed dealers and manufacturers’ purchasing arms.
One of the reasons for the low prices offered to smallholders is because latex production has been on the decline, which the board is attempting to remedy through soft loans, replanting grants and improving collection technologies for smallholders.
While smallholders are mostly producing cup lumps, glove manufacturers depend on liquid latex for their products.
Currently, Malaysia imports latex from all over the world, to make up for the shortfall in local production. This is borne out by Rubber Board statistics, which showed a constant drop from over 200,000 tonnnes in 2006 to 36,193 tonnes of latex in 2019.
“The total latex needed by the industry, or total consumption is about 435,000 tonnes. But local production is only at 36,000 tonnes. To make up for the gap, we need to import,” Zairossani of the Rubber Board explained.
“The import duties for latex is zero, as part of the government’s support to industry players to expand downstream activities,” Dr Zairossani said, adding that most raw materials are imported into Malaysia at zero tariff rates, which help bring down production costs for manufacturers.
While there are no import duties for all natural rubber, whether raw or processed, there are duties levied on products, such as tyres and condoms.
This means that the level of price correlation between smallholders and glove manufacturers was very limited.
The production of latex has been shrinking in Malaysia. From the perspective of the rubber tappers, it is much easier to collect and transport cup lumps as compared to liquid latex extraction, or even latex sheets, Manap said.
There is a gap between prices listed on the Malaysian Rubber Exchange (around RM5.50 per kg for the lowest grade and around RM8.30 for the highest grade currently), as compared to what smallholders were being offered.
However, it is noteworthy that what is publicly listed is merely a reference for licensed rubber merchants and manufacturers’ purchasing arms.
“The licensed dealers in the field, those going out to meet the smallholders, have their calculations as to the cost of production. For example, if they’re covering smallholders in more rural areas, then you need more effort and expenditure to transport the harvested rubber,” Zairossani said.
A MANUFACTURER’S PERSPECTIVE
In a written interview with Ian Leong, a representative for Karex Berhad, a glove and condom manufacturer, he said that the consumption of rubber for medical products actually pales in comparison to the automotive industry, where much of the world’s rubber production is used to make car parts and tires.
“(The prices) have been relatively low in recent years, as the industry has benefitted from ample supply from growers in Southeast Asia,” Leong noted.
He also said that Thailand is now the largest producer of rubber globally, as not a lot of rubber has been planted in Malaysia in recent years.
“It’s proximity to Malaysia and the general oversupply in the market that have contributed to prices in Malaysia being relatively low in recent years,” Mr Leong said.
Mr Leong corroborated that the prices as listed on the Malaysian Rubber Exchange were merely for reference purposes.
“The prices quoted, especially for bulk latex, affect the price at which we and similar manufacturers purchase latex around the region,” he said.
He added as Karex’s production line depends on fresh latex, this meant the company was not able to keep large inventories of latex over a prolonged period.
“As a result of this, most pricing for the latex that we utilise in our factories will be priced at spot rates or only locked in a couple of months at a time by the supplier,” Mr Leong explained.
A FUTURE FOR RUBBER SMALLHOLDERS?
For Manap, his aim as a retiree is to continue working and earn his own keep.
“As long as we are still able, we’ll work,” he said, adding that tending to his smallholding, his herd and other odd-jobs kept him and his wife active.
But as to whether his children might continue tapping rubber after he passes on, Manap said once he passes on, what his children and his heirs did with the land would be their own issue.
Manap said his only son, who works as an electrical technician and has a side business with his daughter-in-law running a cafe, is able to earn much more than a tapper.
“These days, tapping rubber for the younger people, they feel it is not worth it. Anyway, my smallholding is so tiny. If we were talking 10 acres or more, then maybe it would be different,” he said.