72r, 



THE INDIA RUBBER WORLD 



jL-r.Y 1, 1921 



estates under 100 acres in the scheme of compulsory reduction. 

 The Government contended that such a restriction would spell 

 certain death to most of these. It must be borne in mind that 

 there are thousands of small native owners in the Malay Penin- 

 sula, with allotments of from 5 to 50 acres who tap their own 

 trees and live on the proceeds. These estates aggregate almost 

 500,000 acres, so I am informed, althougJi I have not been able to 

 verify these rigures. The Planters' .Association definitely de- 

 clined to allow the exclusion of the small estates from the plan, 

 and. as no agreement could be reached, the meeting broke up. It 

 is important to note that no official reports of any kind were 

 issued here regarding the scheme. Innumerable articles have ap- 

 peared in all the local Malayan papers, giving their own views 

 and their own forecasts of the future. Most of these, however, 

 are absolutely contradictory and very misleading. 



"My own personal belief, which is that of a great majority of 

 the planters, is that the decision rests with the Rubber Growers' 

 Association in London, and that, as they represent for the most 

 part the wealthy and well-financed estates, they will prefer to see 

 the poorer and weaker estates go out of cultivation rather than 

 consent to compulsory restriction under government control. The 

 Dutch East Indies, Borneo, Ceylon and South India have not at 

 present any sinnlar proposals, and unless they also agree to gov- 

 ernment control, the Federated Malay Stales would suffer much 

 more severely than other planting countries." 



One of the principal sources of revenue of the Government of 

 the Federated Malay States is the export duty on rubber which 

 ceases when the price falls below SO cents (Straits) per pound 

 (about Is. 2./.. or appro.ximately 23 American cents"). At present 

 prices, therefore, the Government is losing a large part of its 

 income, and it is to the direct advantage of the Government that 

 the price of rubber should advance to higher levels. 



THE TWENTY-FIVE PER CENT VOLUNTARY RESTRICTION 



This scheme, wliich has been in force since November, 1920, 

 has produced very extraordinary results. In the first place, the 

 restriction is not on the crop of 1920, but upon the estimated 

 crop of 1921. The analysis of the outcome up to the present time 

 shows very conflicting results. Many estates have carried out the 

 plan according to agreement. Others have reduced as much as 40 

 or 50 per cent. Some have considerably increased their crops, 

 while, on the contrary, seme have ceased tapping altogether. 



Native estates and those owned locally are not included in the 

 scheme, as they are not under the control of the Rubber Growers' 

 Association which is responsible for its inception. A good many 

 of the locally-owned European companies registered in the East 

 are restricting — either by adopting alternate-day tapping or resting 

 less profitable areas. Some few have closed altogether, owing to 

 lack of funds. The net result seems to be that the native and 

 locally-owned estates of Malaya arc now producing approximately 

 25 per cent less than a year ago. 



It has l)cen almost impossible to arrive at any reliable data re- 

 garding the Chinese estates, but a very large portion of their crop 

 is, as is well known, of a low grade. At present, these grades 

 are almost unsalable and are probably lieiiig stored. "I have 

 learned from Chinese sources," continues the report, "that the 

 larger estates, that is, estates over 50 acres, are producing their 

 rubber at a very cheap rate — 18 to 20 cents per pound — or be- 

 tween 5d. and 6d. Singapore (approximately 8 to 10 cents United 

 States currency). The very small estates — 5 to SO acres — are 

 finding it difficult to produce below the selling price and many 

 of them are closed down. It is certain, therefore, that they 

 must, in the aggregate, show a big reduction on last year — 

 probably 25 to 35 per cent would be a fair estimate." 



On the European Malayan estates the crops show great varia- 

 tion, some are greater, some less than last year, but on the total 

 figures the net result has been a decrease of about 12 per cent. 

 This figure is arrived at by a direct comparison of the crop of 

 December, 1919. and December, 1920. .^s these estates account 



for the great bulk of the rubber produced in Malaya, it is now 

 estimated that the total reduction on all estates is about 15 per 

 cent. 



The tendency is for the crops to show greater reductions as 

 time goes on. There is no doubt that a great many of the 

 smaller and poorer estates are already greatly restricted and in 

 many cases closed down, and the acreage out of bearing will tend 

 to increase rapidly if present low prices continue. From an an- 

 alysis of the entire report it is safe to estimate total crop output 

 is now well up to the standard of 25 per cent voluntary re- 

 striction. 



COST OF PRODUCTION 



It is obvious that everything possible is now being done to cut 

 down e.xpenses. Estimates are subject to the most rigid scrutiny 

 and everything not absolutely necessary is cut out. On the Euro- 

 pean estate no capital expense is allowed for new buildings or 

 new machinery unless of the most urgent need. The directors 

 tell their managers, "We have no funds to give you. If the 

 estate is to continue, you must produce under the selling price." 

 This is the best possible incentive to economy as the manager's 

 job depends on his ability to cut costs to the lowest figure. The 

 report states that one manager, when placed in this position, had 

 actually cut his costs down to dyid. f.o.b., or about 1054 cents 

 per pound, United States currency. 



The cost of labor in 1920 was high, partly owing to the general 

 tendency to higher living costs, and partly to scarcity of help. 

 Rates of pay vary considerably throughout the Federated Malay 

 States. In Jahore and Malacca they are higher than in Selangor, 

 Perak and Negri-Sembilan. As a result of the slump many of the 

 estates have discharged the coolies and the consequent surplus has 

 resulted in lower wages all around. Chinese coolies who earned 

 60 cents a day ten months ago are now glad to get 45 cents 

 (Straits). Many of the estates are replacing their Chinese by 

 Tamils who are cheaper and less independent. The price of rice 

 has fallen enormously and all commodities, as acetic acid and 

 tapping and packing articles, show a downward tendency and are 

 more likely to become cheaper than not. 



"The average well managed estate," the report continues, "is 

 able to produce rubber at the present time, at 38 cents, Straits 

 (about llrf. per pound, 18 cents United States currency), and new 

 estimates show further reductions. I saw several estate estimates 

 of 30 to 32 cents (14 to 14-54 cents United States currency) for 

 1921, and the agents assured me that these costs could easily be 

 realized with proper care. In the Jahore and Malacca districts 

 the costs are a few cents higher, but there, also, well-managed 

 estates ought to produce at about lO^rf. (about 17 cents United 

 States currency) per pound, f.o.b. The average cost to a London 

 estate between the f.o.b., and the 'all in' cost, after adding in the 

 directors' and secretarial expenses, selling charges, freight, insur- 

 ance, etc., is 2]4d. per pound, so that the 'all in' costs of a good 

 average estate in the Federated ^Malay States, for the year 1921, 

 should not exceed one shilling per pound (about 19^ cents 

 LInited States currency). 



"As regards the Chinese estates, it is difficult to generalize, but 

 it is certain that a fairly large Chinese estate can produce as 

 cheaply as a European one. The only figures I actually possess 

 show that the Chinese estates of 100 acres and upwards are pro- 

 ducing as low as 6d. per pound, f.o.b. The smaller ones are more 

 expensive but vary so much that it is impossible to give a firm 

 figure. The fact that most of the very small native estates turn 

 out 'junk' which fetches a very low price has probably accounted 

 for many of them stopping tapping altogether. 



"It is worth noting that the slump has already caused a certain 

 amount of unemployment among both Europeans and natives. 

 The Government has the matter in hand and is arranging to em- 

 ploy tlie surplus labor on government works, like roads and 

 buildings. Otherwise, a large unemployed force in this country 

 would lead to trouble of a very serious nature like gang robberies 



