How to improve the quality of life of rubber farmers in Thailand?
Why did we choose the rubber industry?
Millions of Thai rely a lot on rubber. The farmers in the rubber sector have no security and stability as they have no power to control the price nor the chance to upgrade the industry. In these few years, the rubber price could be low to 30–40 baht per kilogram which is not substantial at all considering the living cost. After several discussions about the rubber industry situation in Thailand, we agreed on the mission to: “Achieve long-term price trend that is stabilized and sustainable to rubber farmers and maintain a supply-demand balance that will ensure adequate supply of natural rubber in the market at a fair price”. We believed that success in the mission statement would effectively improve the life quality of millions of Thai people whose lives depend on rubber since they were born.
Goals and mission
The problem that we are trying to address is the rubber industry in Thailand in which there is an inconsistent price for rubber farmers. Since the rubber farmers may not have enough data about marketing price, our mission is to achieve a long-term price trend that is stable and sustainable to rubber farmers. We also want to maintain a supply-demand balance that will “ensure adequate supply of natural rubber in the market at a fair price.” Our goal is to focus on SDG goal number 8 which is to “promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”. We aspire that the farmers could get the profit when selling the rubbers out and it meets the standard marketing price. This is very important because not only does it help the owner of the rubber farms, but it will create more job opportunities for other farmers. It also creates a higher level of productivity.
Current Situation of Thai natural rubber
According to อดุลย์ฐานานุศักดิ์ & สังสะนา, Thailand is the world’s biggest rubber producer, but we are struggling to compete with other countries. Malaysia decreases the plantation area by around 18% to be consistent with high labor wages. Vietnam increases the plantation area up to 1.2 times due to the low labor wage. For Thailand, despite the higher labor wage than Vietnam, the plantation area still increases 0.7 times. Moreover, Thailand has a lower proportion of downstream value to upstream and midstream than Malaysia and Vietnam. Furthermore, Thailand’s rubber might be the most expensive in the market; therefore, the importing countries might decide to buy rubber from other countries which generate higher profits.
Second, China is appealing to the rubber demand and is trying to rule the game. China is not just the biggest buyer but also owns a lot of rubber factories in Thailand. Chinese investors invest in big processing factories in Thailand in order to control materials and prices. If there are any problems in the Chinese market, then the Thai market will also be affected.
Third, the Thai government policies can only partly increase the price. Even though many policies to support the farm were promoted, for example, โค่นยางเก่า (topple old rubber trees), and จำกัดการส่งออก (export limitation); however, due to other relevant factors, the policies are not very effective. The most significant factor is that rubber price is set from the global market, meaning the Thai rubber producers do not have a voice to price their own products, the supported policies are not as effective as they should be.
The next fact is that there is a lower relevance of rubber price and oil price. In the past, oil was the material for producing synthetic rubber. When the oil price increased, there was more demand for natural rubber, causing the rubber price to increase. Nowadays, synthetic rubber could be produced from more materials, and new technologies have improved its quality and properties. Thus the dependence on oil has inclined, leading to the deduction of rubber and oil price.
Many farmers are hoping for a higher rubber price in the changing circumstances. Despite the fact that the price used to reach an extremely high point in the past, for example, in 2011–2012 due to China’s growth of the vehicle industry. However, the current circumstance is different. The world economy is in the downturn with an oversupply of natural rubber and the substitute of synthetic rubber; the future rubber price will be likely to fall further compared to the past.
Opportunities and Challenges in upgrading Thailand’s rubber industry
According to Doner & Abonyi (2013), Thailand’s natural rubber has contributed to high economic growth for decades with millions of people employed in this sector with high levels of capital investment. However, the rubber industry lacks upgrading and raising value based on innovation and linkages among firms. Thailand has to face market instability, China’s role, and greater competition from other producing countries.
The natural value chain starts from the upstream product, which is natural rubber, and the next stage is midstream, for example, dry/solid rubber and latex concentrate. Upstream and midstream value chains are what Thailand is currently familiar with. To create stability in Thailand’s rubber industry, the downstream sector has to be developed. The downstream includes the industrial sector, medical sector, and transportation sector. The last stage in the value chain is sales, marketing and branding. Also, capital equipment (assembly lines and machine tools) and intermediates (chemicals/ carbon b, carbon black) are essential in building midstream and downstream value chains. In terms of upgrading, it is referred to as “raising value-added efficiently based on innovation and linkages among local (Thai) firms.” with many key players, importantly the Ministry of Agriculture and Cooperatives and National Rubber Authority.
Assumption
Through our planning towards a better change, we initially held three assumptions. First, the government and public institutes have not done any effective policy or influence. (National Rubber Authority and Ministries). Second, there is the neglect of potential links between developing rubber industry in each stage in the natural rubber value chain (downstream and upstream) due to institutional fragmentation. The Ministry of Agriculture works on controlling and developing the upstream process. The Ministry of Commerce focuses on exporting. The Ministry of Finance is involved in price support. Finally, rubber prices have been traditionally set by Singapore for many decades. Despite being the biggest producer and exporter of natural rubber, Thailand has no power to set its own prices.
Enablers
In order to run our plan, what we have within our control is how we connect directly with rubber farmers. It’s very important to have connections with them so that we can exchange information with others. We need to know all of that information so that we can find the solutions to help them. By that, we will be able to connect farmers to more market information to direct to the sellers. We take part in the industry as the middleman that facilitates sharing the information to different stakeholders, mainly the rubber providers and the customers. This intervention allows the farmers to have access to market price information so that they can get the profit from what they sell. However, there are still some external factors that are out of our control. First if all, rubbers farmers may not have the necessary tools or background knowledge about market trends. We can not teach them about marketing unless they learn by themselves. Another uncontrollable factor is the demand for rubber. We don’t really know how much rubber is demanded in the market whether it is national or international. It depends on how much buyers are willing to buy.
Our solution: Rubberity Application & Youtube channel
Activities
Our services will take place on a digital platform via our application called “Rubberity”. For our first service, we will connect rubber farmers to various customers through our digital marketplace. Our mission is to find a reasonable price deemed profitable for both farmers and buyers. We will act as a middle man who will monitor and control the whole transaction process to make sure that rubber producers will gain the highest benefits as they should. As a result, farmers don’t have to suffer from the inconsistency of the rubber price and can improve their quality of life and well-being.
For the second service, we will produce an easy-to-understand documentary to make the farmers know how to grow the rubber sustainably, properly manage their product, and be more socially responsible. Moreover, the video content will offer know-how for both downstream and upstream products as well as their production life. Besides, we will raise awareness of the rubber producers about environmental impacts. Rubber farmers and producers will gain more knowledge in their field of work.
Thirdly, we will provide a comprehensive, reliable, and up-to-date database for rubber producers, so that the rubber producers can access information about the quantity of the rubbers in the market
- the current and past rubber price
- the average price of rubber price in the past
- demand for rubbers in the market
- trustable buyers
Moreover, the application will update the latest news and articles around the globe about rubber innovation, prices, and ideas. Our application will provide a translated version of the article. It will notify the important event that might affect the rubber industry and may give advice or recommendation to the users (rubber farmers).
The Rubberity application will be designed as simply as possible to make it more friendly for every user. There will be a 24-hour support center to keep interacting with the user that may be facing the difficulty of using the application. The application will be free for download. However, it required a registration fee for the rubber producers, and we will collect the commission fee from the transaction between rubber producers and buyers. However, if the rubber producers become a part of our community, we will take full responsibility for the transaction process and guarantee higher profits for them.
Outcome
At the end of the day, we look forward to generating a sustainable solution that creates both social and financial values. There are 4 specific outcomes of social benefits including improving work prospects, increasing social access to quality products, education to the locals on necessary market knowledge, and social awareness of rubber production life. The digital marketplace will create profitable economic opportunities for rubber farmers to sell rubber products with their own price to customers across Thailand. By this, the locals have power and autonomy to set prices for their products without being intervened by any foreign agents.
Next, we target to create a large network of rubber providers to connect the customers and sellers from distant places. This network will be helpful for customers who might never be able to reach out to the raw rubber products directly planted in the field before. We might open the trading networks for rubber farmers in other parts of Thailand such as Northern and Northeastern parts to support their income if the app runs efficiently in the next 3 years. These parts have rubber plantations but not as wild and long tradition as the Southern, we believe, all Thai rubber farmers should come together to offer our Rubberity marketplace a diversity of products and enjoy fluid product exchange.
We ensure that the Southern rubber farmers stay updated with the latest market information, know-how guidelines, and sell products at a fair price. Updates will be context-related and well-crafted in the form of short articles and Youtube videos since the challenges of access to the right data as well as the farmers not being accustomed to reading.
Along with the fair trade, in 2022, Rubberity Youtube channel in collaboration with the local farmers will produce at least 50 videos on local life of the farmers at work to spread the working conditions and related environmental impacts to the audience. These videos will be in the form of vlogs or documentaries to capture the most authentic moments of rubber immersion, snapshots of the laborers in an important industry of Thai economy.
Social Values Indicator
During our research process, we collected primary data on the interest of people in the online marketplace as well as their needs. We discussed our idea with an owner of a rubber plantation and a few farmers. They found the idea fascinating because they can access data easily like one-stop service. The participants expect Thailand’ rubber industry to have wider opportunities, more factories for downstream products for example, so that they can share their products to larger societies. According to the first outcome of economic growth, we will calculate the amount of profits the local farmers gained through the transactions connected by the Rubberity app, compared to their conventional income. To measure the effects of information, we analyze social media statistics, App data and views of Youtube videos. These statistics are indicators to interpret the success of awareness increase, accessibility to information, knowledge transfer, social engagement and community building. However, the limitation is how we can maintain and expand our reach in the long run.
Key Channels
Recognizing that communication is a key factor in enabling all stakeholders to be aware of the issues and find a common solution, a multitude of platforms are chosen as key channels for spreading essential information. More and more people, especially farmers, have greater access to technology compared to decades ago. Mainstream media enables many Social Enterprises to propose and project their values and missions similar to our project.
Facebook and Instagram are some of the platforms that can be used to convey our information and essential research. Anyone can have access to this information and the platforms allow for greater information sharing. Another platform that has been used with similar topics is Youtube. There are existing Youtube Channels that have attempted to spread more information about the Rubber industry.
Even better, to connect with our beneficiaries and customers, having an expert from the rubber industry itself is a great way to connect with other rubber farmers. Moreover, we can work alongside existing governmental agencies that have contacts with rubber industry stakeholders to find more potential customers from the industry itself. The people who use the app are not limited to farmers but anyone who wants to find out more about the industry. With technology and mainstream media as means of communication, we can reach out to more people over the internet.
Immediate Actions
The Rubberity app proposed is just a short-term plan to help farmers find a fairer price for rubber. Giving farmers real-time information about rubber price, market data, and direct contact with buyers would help farmers sustain themselves in the short run. However, in the long run, we would have to find better implementations to expand our audience and traffic to generate sustainable revenue. Our next step would be to focus on generating traffic for the app to maintain a sustainable flow of income. That would include further improving the user experience of the app as well as attractive features and information that would enable users to want to subscribe and invest.
The rubber farmers in the South have a long tradition of planting rubber which makes them outstanding with hands-on experience, yet they need access to better production techniques to craft out more advanced rubber products. To further solidify our goal of maintaining a consistent supply-demand balance of rubber and maintaining a fair price for rubber farmers, further research is needed in the industry as a whole. The focus should be on research and development on rubber technology and manufacturing such that some part of the process of manufacturing stays in Thailand.
References
Doner, R., & Abonyi, G. (2013). Upgrading Thailand’s Rubber Industry: Opportunities and Challenges. Thammasat Economic Journal, 31(4).
อดุลย์ฐานานุศักดิ์ นายณรงค์ฤทธิ์, & สังสะนา นราพร. (n.d.). 5 ความจริงยางพาราไทย : อดีตที่หายไป ความท้าทายใหม่ที่เข้ามา. Bank of Thailand. https://www.bot.or.th/Thai/ResearchAndPublications/articles/Pages/Article_23Dec2019.aspx.
About our team — Learnism:
We are a team of 5. We are from different parts of Thailand, Cambodia and Vietnam. This project is dedicated to tackling issues of social justice and sustainability of agriculture and economic growth. We conducted this project also to learn the Psychology of Global Organizations instructed by Prof. Paul Apivat Hanvongse, School of Global Studies, Thammasat University.
Learnism includes:
1. Suchanuch Sinvaraphan
2. Nguyen Than Thuy Linh
3. Veasna Vunn
4. Soka Koun
5. Kanthapat Nantavisetrat
