(PLO)- Experiencing many ups and downs, rubber known as “white gold” in Vietnam is recovering and growing again.
After a long period of continuous downward trend in rubber prices, the rubber industry is entering a new cycle with the price trend recovering again starting in 2021, rubber prices are now back at around 42 million. VND/ton. And after 10 years, rubber exports have returned to the US$3 billion mark in 2021. Accumulating nine months of 2022, rubber has been exported with a value of more than US$2.3 billion.
In 2022: Trillions of billions of profits from “white gold”
Facing the COVID-19 epidemic, supply chain disruption, geopolitical influences as well as high inflation in the world, rubber companies still have very good profit margins. Typically, thanks to the good price of rubber, the Vietnam Rubber Group (VRG) has made a profit of thousands of billions of dong.
In the financial report of the second quarter of 2022, VRG said revenue reached 5,558 billion dong and profit after tax was 1,068 billion dong, up 26% over the same period. It should also be noted that due to the characteristics of rubber, the last six months of the new year is the main harvest, so VRG’s profit continues to increase strongly.
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Workers collect rubber latex. Photo: Q.HUY |
According to VRG’s management, the group’s rubber latex production is mostly sold to fastidious markets such as the US, Europe, Korea and a very small part is sold to China. The price of rubber latex is selling at more than 40 million dong/ton and profit margin is 6-7 million dong/ton.
Mr. Nguyen Quoc Viet, General Director of Dau Tieng Rubber One Member Limited Liability Company, said that thanks to the economic recovery under the control of the epidemic, rubber prices reversed to rise again, customers continuously ordered and money back not only helps to erase previous loss, even more profit over the same period.
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A big man in the rubber industry, Dong Phu Rubber Joint Stock Company, has continuously set higher revenue and profit next year than the previous year. Accumulated in the second half of 2022, Dong Phu has achieved revenue of more than 500 billion dong, up 117% over the same period last year and profit after tax reached more than 17 billion dong.
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After harvesting, rubber latex is brought to the factory. Photo: M.PHUONG |
Luu Minh Tuyen, Deputy General Director of Dong Phu Rubber Company, said that 2020 is extremely difficult due to the epidemic, but fortunately the rubber growing areas are located in remote areas, so they are not affected much. On the other hand, rubber workers often work in a separate, fairly large area, unlike factories with a high concentration of workers, so they maintain good production activities.
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Latex com is ordered by many export markets. Photo: MINH PHUONG |
And when production output stabilized, the price of rubber suddenly increased sharply. If at the beginning of 2020, the price of rubber is only 28 million VND/ton, then by the end of the year, it will increase again to exceed more than 30 million VND/ton and is now over 40 million VND/ton. According to Mr. Tuyen, the price of over 40 million VND/ton is enough for farmers to get rich and rubber companies to make good profits.
Transformation to increase sustainable income
The rubber industry has grown well again, but still needs a strong transformation to be resilient in the future. Many rubber companies have achieved positive results when converting some existing rubber plantations into industrial parks, helping to increase profits quickly, sustainably and quite stably.
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The advantage is that rubber companies own a large area of land and prime areas for industrial park infrastructure, especially in the context that more and more multinational corporations choose Vietnam as a production place, build a new supply chain.
Labor shortage
Mr. Nguyen Van Thanh, General Director of Binh Thuan Rubber Company Limited, said that rubber prices are very good, helping to improve the company’s business efficiency. However, at present, the most difficult challenge is the lack of labor for rubber latex extraction. With rubber, shaving in D3 mode (every three days) is the most effective in terms of productivity but due to lack of people, it has to be switched to D4, even D5 mode.
According to Mr. Nguyen Minh Doan, Chairman of the Board of Directors of Ba Ria Rubber Joint Stock Company, from 2017 to now, the number of workers exploiting directly in the orchard has always been in short supply, with an estimated shortage of 200-300 people each year. The company must conduct the D4 shaving regime. In addition, when the orchards reach the age of exploitation, they will be tendered and outsourced to compensate for the labor shortage.
According to Mr. Nguyen Quoc Viet, the company plans to convert 15,000 hectares in an area of nearly 30,000 hectares of rubber plantations for the development of high-tech agriculture, industrial clusters and industrial parks by 2030. Currently, Dau Tieng Rubber is also cooperating with a leading company in banana business in the US, all products are exported and qualified for sale in US supermarkets. Although it is only a trial planting, it has brought a profit of 50-60 million VND/ha.
“We will spend 3,000 hectares to deploy high-tech agriculture. And the point of view when investing in other businesses, we do not plan to do everything, but cooperate with the best people and must have a market and an available output. This method is effective and profitable right away, “- Mr. Viet revealed.
Not out of the transition, Dong Phu Rubber has also cooperated with a high-tech banana growing company that exports to China. Mr. Luu Minh Tuyen said that although he has only joined this field for a short time, his income is over 30 million VND/ha. The company has planted up to 300 hectares of bananas but sales are not enough. And the company has planned to expand to 1,000 hectares of banana plantations.
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According to Mr. Tran Cong Kha, Chairman of the Board of Directors of VRG, in order to ensure rapid growth and sustainable development of the group, the group is developing a plan to restructure the group in the period of 2021-2025, in the direction of continuing to divest capital for the Group. With inefficient companies, it is not necessary to hold even efficient companies. Merger of small-sized companies in the same industry to save operating costs.
“Divesting capital, reducing capital in the rubber sector to focus resources on developing industrial park projects, industrial clusters on rubber land, wood processing projects are the profitable areas of the corporation. position. From there, ensuring the balance of investment capital and revenue between the three pillars of rubber – industrial park – wood processing “- Mr. Kha shared.
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VRG leaders also said that in order to increase stable revenue and high profit margin, the group will convert a part of its rubber area to develop a more efficient production and business industry. At the same time, maximize the capacity of rubber plantations to ensure efficiency, maintain and improve the quality of rubber products, and increase added value in the value chain of products.
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TS TO XUAN PHUCpolicy expert, Forest Trends organization |
Building brand and reputation
Recently, a number of state-owned rubber companies have made efforts to create rubber areas certified for sustainability according to Vietnam’s criteria (VFCS/PEFC). Other businesses are also trying to build areas with internationally certified FSC sustainable forest management. However, so far, the certified areas are still limited, not meeting the potential of the industry and the consumption demand of the world market.
To do this, in addition to the support of the State and organizations for the sustainable development of the rubber industry, businesses need to build linkage models and support smallholder rubber farmers. Thereby creating a sustainable rubber source, conquering many markets, contributing to building the brand and reputation of Vietnam rubber.
TS TO XUAN PHUC, Policy expert, Forest Trends organization
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Mr. TRAN NGOC THUAN, Chairman of Vietnam Rubber Association. |
Protecting the trademark of Vietnam Rubber in many countries
The Vietnam Rubber Association and the Trade Promotion Agency have just signed a cooperation agreement to develop the brand name of Vietnam’s rubber industry. The two sides prioritized coordination in implementing innovation in methods and diversifying trade promotion activities for businesses and rubber products. In particular, developing the brand name of the rubber industry through the certification mark “Vietnam Rubber – Viet Nam Rubber” at home and abroad, thereby improving the capacity of building and developing brands for enterprises in the rubber industry. .
By 2022, the certification mark “Vietnamese Rubber” is protected in five key markets: Taiwan, India, Laos, China, and Cambodia. In the country, 82 products of 29 factories belonging to 17 enterprises have been granted the right to use this trademark.
Grandfather TRAN NGOC THUAN, President of Vietnam Rubber Association