Rubber is a minor cash crop in a limited number of PNG locations. From 2004 to 2006 rubber generated average export earnings of K19 million per year, which was 1% of the value of agricultural exports in this period. In 2007 exports were worth K24 million. The significance of rubber in the economy has declined from the 1950s, when rubber exports made up around 12% of agricultural exports.
Natural rubber is used for many household and industrial purposes, most importantly the manufacture of motor vehicle tyres and tubes. Other uses include the manufacture of window parts, various items used in engines (belts, hoses, dampeners), gloves, toy balloons, adhesives and rubber bands.
In PNG rubber is grown from near sea level up to about 700 m altitude, in environments where mean annual rainfall ranges from 1500 mm to over 5000 mm. Production is non-seasonal.
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Adoption and history
Commercial rubber was first planted in PNG in 1903. Most production was in the Australian Territory of Papua (now the Southern Region of PNG). In German New Guinea, attempts to build a rubber industry were based on assam rubber (Ficus elastica), which is inferior to para rubber (Hevea brasiliensis). Consequently, very little rubber was produced in German New Guinea.
In Papua, plantations were first developed at Galley Reach, Sogeri and Cape Rodney in Central Province and in the Kerema area of Gulf Province. They subsequently expanded into the Kokoda area of Oro Province and parts of New Ireland Province. The principal exports from Papua in the 1930s and 1940s were copra and rubber, and rubber contributed almost 30% by value in the 1930s.
Prior to World War II smallholder rubber planting was confined to a few villages in Oro Province. The Department of Agriculture, Stock and Fisheries (DASF) promoted the development of village rubber production in the 1960s, particularly in Gulf and Western provinces. Between 1964 and 1970 smallholder rubber planting was also promoted on settlement and resettlement schemes in Central Province; at Gavien near Angoram in East Sepik Province; and at Murua in Gulf Province. As a result, the number of smallholder and village rubber producers increased from less than 2000 in 1970–71 to around 3300 in 1976–77. These schemes were not associated with plantations.
Distribution of production and planting
Rubber has been grown and produced in eight lowland provinces. In 2005, 4100 ha was planted to rubber on settlement schemes, 4500 ha in villages, 9500 ha on plantations and 50 ha at the DASF Bisianumu rubber experiment station. Most production in 2007 was from Central and Western provinces, with smaller amounts coming from East Sepik, New Ireland, Gulf, Oro and Manus provinces. Currently only about one-third of PNG rubber trees are tapped.
Thus, settlement scheme and village-level rubber plantings account for about half the total area of land planted to rubber, with the plantation sector making up the rest. One settlement scheme, Cape Rodney, has 80% of the total area planted to rubber in settlement schemes. Western Province has most village plantings, almost half the total area of village rubber. The Galley Reach Holdings Ltd plantation in Central Province (owned by the Belgian company SIPEF) has 60% of the total area of plantation rubber, and is the only plantation presently producing rubber.
Levels of production
Rubber exports were in the range 1000–2000 tonnes/year between 1936 and 1951, except in 1943 when production was disrupted by World War II. After the war, rubber production continued to be dominated by the plantation sector, with production, measured as exports, rising steadily to over 6000 tonnes in 1970.
A significant decline in production followed in the 1970s due to stagnation in the plantation sector and still insignificant smallholder production. The decline of the plantation sector was attributed to the continued use of clonal seedling planting material, rather than higher-yielding bud-grafted material; increased costs of production, particularly labour costs; uncertainty caused by land disputes and the threat of compulsory government land acquisition; and a high turnover of workers and resultant poor tapping standards that reduced the economic life of trees. The area of rubber on plantations declined dramatically after 1970, with several plantations cutting out rubber in favour of other enterprises, such as beef cattle.
Smallholder production increased steadily during the 1980s and by 1990 had overtaken plantation production. Between 1992 and 1996 a sharp increase occurred in smallholder production that coincided with increasing export prices for rubber. The promotion of rubber in the Kiunga area of Western Province by North Fly Rubber Limited also contributed to the significant rise in smallholder production during this period. Total smallholder and plantation annual production reached an all-time high of 7000 tonnes in 1996.
This was followed by a sharp decline in production in 1997, due to a fall in export prices and other factors which adversely affected smallholder production, including the closure of the processing factory at Gavien in East Sepik Province following damage by fire; low production at Kiunga in Western Province after large compensation payments from Ok Tedi Mining Limited to people living downstream of the mine; and the 1997 drought and very low water levels in the Fly River in Western Province that effectively paralysed the transport of cup lump rubber from Balimo and Lake Murray to the factory at Kiunga, a distance of more than 1300 km. Production remained 4000–5000 tonnes/year from 1997 to 2007, divided evenly between smallholders and plantations.
Although settlers on rubber settlement schemes often produce little or no rubber, they are active agricultural producers and derive significant income from the sale of fresh food and betel nut. Typical are the Murua scheme in Gulf Province, Cape Rodney in Central Province and the Gavien scheme in East Sepik Province, which produce food and betel nut for urban markets.
The average yield of cup lump rubber by village producers in the Kiunga area is about 650 kg/ha (400 kg/ha processed rubber). The best producers obtain up to 1650 kg/ha cup lump (1000 kg/ha processed rubber). Planting material with higher yield potential of over 2000 kg/ha of processed rubber has been distributed by North Fly Rubber Limited in Western Province over the past ten years. A 1949 survey of plantations in Central and Oro provinces recorded average yields of 450 kg/ha of processed rubber, a similar yield to that currently obtained at the Galley Reach Plantation near Port Moresby.
Processing, exporters and markets
Most rubber produced in PNG is initially extracted on-farm as cup lump rubber and is then processed into PNG Certified Rubber 10. Three factories currently purchase and process cup lump rubber; at Doa Plantation (at Galley Reach west of Port Moresby), Moreguina (near Cape Rodney, south-east of Port Moresby) and Kiunga (Western Province). Galley Reach Holdings Ltd buys cup lump rubber from elsewhere in PNG, transports it to Port Moresby and processes it at its Doa Plantation factory. This company produced about 85% of total rubber exported in 2006. Current government policy is that only processed rubber should be exported, but it does not have the power to ban the export of unprocessed cup lump rubber.
Old rubber trees provide high quality timber suitable for making furniture. The timber can be harvested after economic tapping ceases, which is at about 35 years after planting. Sales of old rubber trees for timber increase the economic viability of rubber production.
Most rubber produced in PNG is exported to Europe, particularly to Germany, France, the Netherlands and Belgium.
Following historical lows in world rubber prices in 2001, natural rubber prices staged a remarkable recovery. By 2007, prices were about four times as high as they were in 2001. High oil prices have increased the cost of making synthetic rubber and strong demand for vehicle tyre production has emerged, especially from China. Markets now favour natural rubber and firmer prices can be expected for the next few years. The main future uncertainty in the rubber market is the price of crude oil, which affects the competitiveness of synthetic rubber. Primary constraints on the PNG rubber industry are the poor state of transport infrastructure and the general lack of financing for new planting. Low returns to labour also limit smallholder interest in rubber.
Significant new plantings have been made in recent years only in Western Province. More than 2700 ha of smallholder rubber has been planted in the Kiunga area and over 1000 ha (out of a target of 2200 ha) in the Lake Murray area since 1999. New plantings are planned in the Bosset, Suki and Balimo areas in the southern part of Western Province. There are plans to increase plantings to a total area of 10 000 ha in the province, with new plantings in the north, middle and south Fly River areas.
The expansion in Western Province is supported by North Fly Rubber Limited, Ok Tedi Mining Limited and the PNG Sustainable Development Program. A total of almost K20 million has been provided, directly and indirectly, from the revenue of the Ok Tedi copper mine in the past decade. The transport costs of moving seedlings from Kiunga to Lake Murray, Suki and Balimo, cup lump rubber from these areas to Kiunga for processing, and processed rubber to a main port for export, is heavily subsidised. Without these subsidies, rubber production in Western Province is unlikely to be economic unless further large areas of high-yielding rubber are planted within the next decade to create economies of scale.
The PNG National Agriculture Development Plan has a goal of rubber production of 29 000 tonnes by 2016, more than seven times production in 2007. If the higher prices of 2007 and 2008 continue, it is likely that rubber production in PNG will increase, but the target of 29 000 tonnes in less than a decade is completely unrealistic. Since 1992, no significant area of smallholder rubber has been planted other than the heavily subsidised plantings in Western Province.