Natural rubber in the age of high oil prices: a plantation crop with a future

Here at the Biopact we think about ways to help people in the developing world to get access to basic energy services, to boost their food security and to enter a more global market where they get a fair price for the goods they offer. We are of the opinion that investments in biofuels, bioenergy and 'environmental services' in the tropics, made by those farmers, by governments or by socially responsible companies, are one way to achieve these aims. In an era of high energy prices, it makes economic sense to produce biofuels and feedstocks there where they yield most. But it also makes social sense to involve people who stand to benefit most, and who need need an economic impulse more than anyone else.

One topic that we haven't analysed yet, but that follows a similar logic, is that of the production of natural rubber - a major third world industry employing millions of poor people and small farmers in South-East Asia and Africa. In this introductory text, we have a look at some basic facts and numbers about the rubber industry and its Hevea plantations. In later articles we will analyse this sector and its potential more in-depth.

High oil prices, high natural rubber prices
The world's rubber needs stand at around 21 million tons per year. They are met through both natural and synthetic sources, each supplying roughly 50% of the market. Synthetic rubber requires petrochemicals as a feedstock for its manufacture, using roughly 3.5 times more oil than what is required for a rubber tree plantation. Given soaring oil prices, this dependence on oil has led to a dramatic price increase in synthetic rubber over the last few years. Not surprisingly, this has also fuelled an increased demand for natural rubber.

Rapidly growing economies like China and India are boosting global rubber demand, despite high oil prices. Projections show that this demand will increase by a steady 5.6% annually over the coming three years, and by roughly 40% over the next 10 years. Prices for natural rubber have already doubled over the past 18 months and increased by 300% since 2001 (for prices, see the International Rubber Study Group). Not surprisingly, small rubber farmers are optimistic again for the first time. Since nothing indicates that oil prices will be declining seriously anywhere soon, the optimism is well-founded. Rubber is a crop with a bright future.

Millions of families depend on rubber production
According to the International Rubber Research and Development Board, not less than 20 million people are directly dependent on rubber as their primary source of income. These farmers' Hevea smallholdings make up the bulk of rubber plantations. Smallholdings are typically less than 2 hectares in size. Until recently, most smallholders were unable to earn sufficient income to invest in higher yielding materials, or to adopt less labour intensive harvesting methods, which is why most of the rubber producing countries have adopted schemes to assist them to improve their practices and output.
But given record oil (and hence natural rubber) prices, and no indication that petroleum prices will decline soon, these smallholders now face a much brighter future. The estate sector (large, quasi-industrial plantations) makes up only a minor share of the natural rubber hectarage.
Most of the world's natural rubber is produced in South-East Asia, with Thailand (3 million tons), Indonesia (2.5 million tons) and Malaysia (1 million ton) supplying more than 60% of the market.

No rubber, no cars
Without the humble rubber tree and without the harvesters who wake up early in the morning each day to tap the tree, modern transport would be unthinkable. The 1 billion cars and trucks on this planet's roads are all dependent on them. Not only does natural rubber give vehicles their tires, it is also a key component in all essential vehicle systems. Rubber is used in the hoses, engine mounts, bushings and gaskets. The fuel-efficient radial tire requires a significant amount of natural rubber for added strength. Industrial and military tires are made from nearly 100% natural rubber for this very same reason.
While it is encouraging to note that rubber is one of the only materials used throughout the automotive industry that can be supplied from a renewable resource, it turns out there are some very significant problems to notice here:
biomass :: bioenergy :: biofuels :: energy :: sustainability :: Africa :: Asia :: rubber ::

The millions of Hevea trees in Asia are all clones coming from only a handful of seeds originating from the Amazon, and descendents are taken as cuttings from these trees. A huge population of species supporting an extremely small genetic base causes any weaknesses to be greatly amplified. These rubber trees are all known to be very susceptible to the fungal disease known as leaf blight. If one were to become infected, the risk of it spreading is very high. A major outbreak leading to a pandemic and a major supply disruption, would have an immediate impact on global transport.

The rubber tree, a valuable bioenergy crop in itself
Despite these risks, the rubber tree is a plant that is being recognized more and more as an interesting bioenergy crop in itself. When a plantation's rubber yield starts to decline after some two decades, the wood from the trees can be used for a range of purposes. Until recently, rubberwood was considered to be a waste stream. Today it finds a purpose in construction, flooring, furniture (especially in Europe) and as a source of chipboard and pulp for papermaking.

But it has also become a source of energy. Depending on the site and management of the plantation, one hectare of rubber trees yields between 140 to 200 m3 per cycle, or between 84 and 120 tons of wood. On an annual basis (taking a life-cycle of 25 years for a plantation), this comes down to between 3.4 and 4.8 tons per year. (Compare this to wood energy crops that are considered to be major bioenergy feedstocks for the future: hybrid poplar yields around 5.4 tons per hectare, with top clones yielding as much as three times that amount; eucalyptus yields 10.5 tons and up.) Rubberwood has a higher heating value of around 18GJ/ton (bone-dry).

Given the fact that rubberwood is still considered to be a mere byproduct, the market and the potential for it as a biomass feedstock for combustion, pyrolysis or gasification looks promising. To give an idea of this potential, consider the following: in Thailand, the world's leading rubber producer, about 15 million tons of rubberwood become available each year, of which a mere 12% is processed into finished goods. That leaves 13.2 million tons of rubberwood, worth around 237 Petajoules of green energy.


This concludes our very rudimentary overview of the natural rubber industry and its potential. In the future we will analyse some topics more exhaustively, such as: the connections between petroleum prices and rubber, the social conditions under which smallholders work and how they can be improved and the potential for the integration of rubber production and bioenergy production.


More information:

IRRDB.net: The International Rubber Research and Development Board - basic information portal about the industry.

The International Rubber Study Group: in-depth information and statistics about the production, consumption and price of natural and synthetic rubbers.

FAO, 2000: Asia-Pacific Forestry Sector Outlook Study: The Utilization, processing and demand for Rubberwood as a source of wood supply

The Current Status of Biomass Utilization in Malaysia [*.pdf], which gives an interesting overview of the potential of rubberwood as a feedstock for bioenergy.

The Edge Daily: Rubber hard to find as China, India devour supply - August 2, 2006

Energy Bulletin: Rubber is critical, and vulnerable - April 16, 2005; a look at the (natural) rubber industry seen from the perspective of 'Peak Oil'.