Conceptual framework:

Sustainable development of rubber industry

Dr. N. Yogaratnam, Chairman, Tree Crops Agro Consultant

Sharp declines in NR prices from record highs and then again, the boom/doom cycles within few months, reflect the inherent characteristic of extreme price volatility historically associated with the rubber industry.

The producers largely made up of smallholders, about 60 percent in Sri Lanka, have no control over the vagaries of the rubber market which is normally assumed to be influenced by supply/demand equations and market forces involved in rubber trading.

The producers can to some extent minimize the impact of price volatility by ensuring that NR fetches a premium above that of the basic price of RSS1/Crepe, determined by market forces, and earn additional income for its established environmental services primarily, NR’s role in sequestering carbon from the atmosphere thus reducing the effect of carbon dioxide on global warming.

A key criterion to qualify for such incomes under the Clean Development Mechanism (CDM) of the UNFCCC, is sustainable cultivation and hence the pressing need to develop a framework if NR is to be accepted under the CDM.

Environmental benefits

It is known that Natural Rubber can sequester significant quantities of Carbon Dioxide from the atmosphere. The quantities sequestered range from 139 to 318.7 tons per hectare over a lifecycle of 27 to 29 years. Rubber seems to be uniquely suited from an evolutionary point of view for its role in ensuring a clean and sustainable environment for future generations.

Existing stands of nine million plus hectares of rubber trees in the rubber growing world, have the capacity to absorb 90 million plus tons of Carbon Dioxide per year. Thus a rubber plantation is nearly as effective as a virgin forest in consuming Carbon Dioxide and giving out life sustaining Oxygen.

Also, rubber is an end-product that is not re-used in the metabolism of the plant thus implying it’s possible role as a carbon sink. Since isoprene is an effective counter reactant to Ozone injury, it has been argued that a principal function of this photochemical is to overcome or combat destruction of plant tissues by Ozone.

The quantity of carbon contained in a specific volume of isoprene is five times that found in either Carbon Dioxide or Methane and the carbon sink provided for by plant latex and isoprene is most significant in the carbon balance. Both latex and isoprene serve as defense mechanisms of an atmospheric nature which could be recognized as being perhaps of greater value to the earth’s eco-systems than serving to deter herbivory .

Potential earnings

The potential earnings from sale of CERs (certified emission reduction) under CDM per hectare of planted rubber has been worked out on the basis that one ton of Carbon Dioxide sequestered is equivalent to one CER and that one hectare of rubber over a twenty-one year lifecycle can sequester 165 tons of carbon Dioxide equivalent to 605 CERs.

The average cost of one CER currently is assumed to be USD 30 and thus the potential income from one hectare over twenty-one years from sale of 605 CERs is USD 18,150 or USD 864 per hectare per year for 28.8 CERs. Thus industries in the developed world who have to meet their quantified emissions limitations and reduction commitments (QELRCs) by purchasing CERs will have to pay a rubber smallholder with one hectare a sum of USD 864 per year. This will provide the smallholder an additional income of USD 0.66 per kilogram of rubber produced assuming that his annual production is 1300 kg/ha/yr.

It is therefore, incumbent upon all stakeholders to strongly push the agenda for NR, so that existing NR plantations, which are presently not eligible, qualify under the CDM. This will make the above projected potential earnings from environmental services provided by sustainably cultivated NR plantations a reality. Sri Lanka’s 124,000 ha of rubber would benefit immensely. Capturing carbon is the only option if it is accepted that the growth of carbon emissions is an inescapable fact of the 21st century.

The case for NR is overwhelming and compelling when compared with other technologies available or being developed for capture of Carbon. These include, the process of Carbon capture and storage (CCS) which involves isolating Carbon Dioxide when produced in large quantities as in coal powered plants, compressing it and pumping it underground.

It has been estimated that a full scale CCS plant will cost USD 1.3 billion and with a possible leakage rate of 1 percent per year, 63 percent of the trapped Carbon Dioxide will be released within 100 years .

Sustainable development

Sustainable development is defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

It contains within it two concepts namely, the concept of “needs”, in particular the essential need of the poor, to which overriding priority should be given, and the limitations on the environments ability to meet present and future needs. It is particularly notable for its insistence on the treatment of social, economic and environmental pillars of sustainability in an integrated and coherent manner.

Other major crops

Rubber is one of the few crops for which the principles and criteria for sustainable cultivation has not been worked out jointly by the stakeholders across its value chain.

The principles and criteria for sustainable cultivation of most other agricultural crops through various initiatives have been worked out. These crops among others, includes cocoa, cashew nuts, citrus, tea, banana, coffee, forest products, Horticultural produce, oil palm and soya bean. The principles and criteria for sustainable cultivation/production of selected crops may have a bearing on rubber .

Based on other major agricultural crops, economic, environment and social will be the basis for drawing up the framework for sustainable cultivation/production of rubber.

Potential framework

The framework should have a broad perspective that can be equally applied to both plantations and smallholders with full participation of all stakeholders across the value chain in a transparent and consensual process. This process will cultivate a sense of belonging and wide acceptance among all stakeholders. A potential framework of principles and criteria for sustainable cultivation/production of rubber indicates that the four key principles identified are economic and marketing, environmental, social and cultural and technical.

Economic and marketing

Market Information: There should be free and continuous dissemination of comprehensive market information to all sectors of the industry, including the smallholders in a transparent, accurate and timely manner.

Market Access: Smallholders and small dealers should have direct and extensive market access to cooperatives, material collection centres and well established marketing network to ensure optimum returns.

Quality: The producers should continuously improve their tapping hygiene while the processors their processing technology to conform to international standards set by various organizations.

Quantity: The NR growers agree to a balanced and structured development of the NR industry to ensure adequate supply and avoid over production in order to minimize price volatility.

Prices: All stakeholders should strive for prices that would be fair and remunerative to the producers and fair and equitable to the consumers.

Substitution: NR producers are committed to ensuring that NR prices do not reach a level that could trigger substitution of NR with synthetic alternative. Likewise, consumers are committed not to seek synthetic alternatives through intensive research that could affect the consumption of NR in various end uses.

Trading: All stakeholders in the value chain will always ensure that bulk of the rubber is traded through accepted agencies.

Transient Imbalance of supplies and demands: All stakeholders agree to devise appropriate measures to cushion and minimize the impact of the possible short-term imbalance of supply or demand.

Data on supply and demand: All stakeholders agree to accept the data and statistics of supply and demand of all elastomers produced by a recognized body.

Biodiversity: Mixed farming through integration of other high value economic crops under rubber should be promoted particularly among small growers both to maintain biodiversity and diversify the income base while efforts must be made to conserve wildlife and endangered species in the plantation environment through maintenance of conservation corridors.

Use of agrochemicals: Integrated pest management techniques should be through adoption of techniques of biological control and minimizing use of inorganic pesticides and fungicides, which have minimum effects on human health and environment.

Soil fertility and soil erosion: Agronomic practices which enhance soil fertility and minimize soil erosion should be adopted with maintenance of adequate leguminous cover crops, mechanical means of weed management, reduced usage of inorganic fertilizers and increased use of organic fertilizers through incorporation of microbes in the soil that have the capacity to fix atmospheric nitrogen and plant humus produced from fallen leaves and branches.

Water sources: To protect water sources by avoidance of practices that involve excessive application of chemicals, which through residues present in the soil could contaminate ground water and harm sources of water for resident populations.

Energy: To implement measures that will reduce usage of energy with preferential use of renewable sources of energy and minimal use of off-farm non renewal sources.

Environmental services: To promote an active carbon off-set market among NR producers through sale of CERs by producers at the supply end of the value chain and purchase of CERs to off-set Carbon Emissions by stakeholders at the consuming end of the value chain.

CDM under Kyoto Protocol: All stakeholders should actively strive to move agenda for Existing Natural Rubber Plantations ( currently not eligible) to be included under CDM scheme for trading in the carbon off-set market and accreditation for issuance of Carbon Emissions Reduction Certificates so that environmental services provided by rubber can be used by parties outside the rubber community.

The RRI Sri Lanka, Rubber Development Dept and the Regional Plantation Companies should liaise with IRRDB, ANRPC and IRSG through the Ministry of Plantation Industries for effectiveness.

Social and cultural

Capacity and Skill Development: Tappers, smallholders and workers are entitled to receive training to improve their skill and capacities.

Living conditions and education: The cooperatives, unions, associations and government agencies should work towards improving living conditions and support the basic education of growers and workers and their dependents.

Uneconomic land size in smallholdings: The uneconomic land size due to land fragmentation has been a major cause of poverty in the NR sector, which should be addressed through land consolidation and land reform policy.

Wages: Workers should be paid remunerative wages, which are competitive enough when compared to other sectors of the National Economy.

Labour laws: Workers should be protected by respective national laws and ILO Conventions regarding age, working hours, pensions, working conditions and occupational safety.

Technical

Transfer of technology: There should be expeditious transfer of new technologies coming on stream to the smallholders so that they can rapidly enjoy the benefits of higher productivity and enhanced profitability from adoption of these technologies.

Networking of transfer of technology: The delivery system used for transfer of technologies to the smallholding sector should be further improved and refined so that the desired results can be achieved.

Clone diversification: There is an urgent need to broaden the number of clones planted to overcome the dependence on a limited number of clones which could be potentially disastrous to the natural rubber industry.

Alternative cultivation: During the process to consolidate the rubber smallholder sector, farmers must be encouraged to move into alternative agriculture if their smallholdings are not edaphically and agroclimatically suited for effective and productive cultivation of natural rubber.

Extension programs: Extension programs must be implemented through workshops and extension activities for the benefit of target groups namely the NR growers, processors and dealers.

It cannot be overemphasized that the proposed framework is only a basic outline for sustainable cultivation/production of rubber.

It is essentially a first step in a long journey which will have to be discussed in depth in a consensual and transparent manner among all stakeholders across the value chain.

An appropriate forum to discuss and develop the framework on sustainable cultivation/production of rubber could be a Working Group on Eco-Rubber hosted by the MPI, with full participation from all stakeholders across the entire value chain.

NR easily amenable

Several inherent attributes and technologies made available through extensive R and D activities over the years has made NR easily amenable to sustainable cultivation based on principles and criteria outlined in the proposed framework.

Eco-rubber label

Background: An Eco-Label is a seal or logo indicating that a product has met a set of environmental or social standards. Eco-labeling is a voluntary approach to environmental performance certification that is practised around the World.

Environmental labeling and notably eco-labeling have begun to be recognized as a potentially effective marketing tool and as a means to promote trade.

In particular this marketing advantage has been proposed for exports to countries where the environmental values of consumers are such that they will prefer products that are less damaging to the environment. Whether mandatory or voluntary, eco-labels are generally considered to provide certain fundamental benefits to their stakeholders such as producers, suppliers and consumers .

The organizations among others that currently award logos or seals are the Fairtrade Labeling Organization (FLO) for Coffee and Tea, Rainforest Alliance Seal, International Federation of Organic Agriculture Movements (IFOAM) seal and Forest Stewardship Council (FSC) label.

These seals can be categorized into those that facilitate market entry, create market preference or choice and price premium above non-labeled similar product.

Thus the FSC label which may be necessary for entry into certain markets allows consumers worldwide to recognize products that support the growth of responsible forest management worldwide.

The IFOAM seal will increase market access for organically grown farm products via the IFOAM International Organic guarantee system. Rainforest alliance (international secretariat of the sustainable agriculture network) certified seal of approval assures consumers that they are buying products and using services that are third party guaranteed to be environmentally and socially friendly.

FLO certified coffee will fetch a fair-trade premium of USD 0.05 above the fair-trade minimum price and for certified organic coffee an additional premium of USD 0.15 will be payable per pound of green coffee.

Eco-Rubber Label: Plantations and Smallholdings after they have been certified by relevant auditors as sustainably cultivated based on the principles and criteria for sustainable cultivation of rubber will be entitled to use an Eco-Rubber Label on rubber produced by them.

Consumers who use rubber with an eco-rubber label will be entitled to use the label on products manufactured by them. The producer will be paid a premium above that of the market price, while the consumer is expected to gain competitive market advantage relative to products manufactured from rubber that does not have an eco-rubber label. The premium to be paid will have to be worked on mutually agreed terms among all stakeholders but based on trends elsewhere it could range from 5 to 10 percent above that market price per kilogram.

The Eco-Rubber Label would be duly registered internationally as a trade mark to protect its interest and value.

The goal is to gain worldwide acceptance by relevant international organizations such as the “ Global Eco-labeling Network “ (GEN) which is an association of several eco-labeling organizations from around the world geared towards promoting eco-labeling of products and services.

It is important to ensure that stakeholders at the consuming end of the value chain become partners so that their commitment to pay a premium for eco-rubber can be secured.

It is hoped that eventually governments of consuming countries in the interests of the global environment will enact the necessary laws to mandate that tyre manufacturers and others only use Eco-rubber.