The dynamics of rubber production in Malaysia: Potential impacts, challenges and proposed interventions

Abstract

The rubber industry is one of the largest contributors to Malaysia's GDP and is economically important for the country. However, production has been declining over the last few decades. Similarly, this has also occurred in other crops such as cocoa. The decline in production adversely impacts the livelihood of local rubber smallholder farmers. To understand why this decline in rubber production has occurred, we used a systems thinking approach to analyze the underlying feedback mechanisms controlling rubber production. In addition to secondary data, we conducted focus group discussions and in-depth interviews with various actors and experts in the rubber supply chain across Peninsular Malaysia in order to develop a dynamic hypothesis that explains the decline in rubber production over time. Our analysis shows that feedback loops between global demand and supply, national rubber price, and smallholder farmer income determines rubber production at the local scale. In general, the lack of compliance and participation in the global exports restriction policy, insufficient national price incentives, and the absence of national import regulations have kept rubber prices low, leading to low profitability for smallholder farmers. This has caused smallholder farmers to reduce tapping activities and farm maintenance. Some have left rubber farming altogether. This has reduced rubber plantation area and rubber production. We propose several policy improvements to address the issue: (1) enhance the monitoring of rubber supply in the global market through international collaboration; (2) increase domestic rubber consumption through government projects and incentives and eventually follow this up with strict rubber import regulations; and (3) increase smallholder farmer income through the enhancement of government incentives and R&D, formation of co-operatives, application of crop diversification, and obtaining support from the private sector. The findings of this study are also applicable to other rubber-producing countries due to the similar dynamics that exist in the rubber production system globally. The approach adopted in this study can better facilitate engagement with rubber stakeholders, especially smallholder farmers, and inform the formulation of effective smallholder-oriented policies.