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THE INDIA RUBBER WORLD 



Sei'TEMber 1, 1921 



The Plantation Rubber Crisis 



TiiF. world-wide industrial depression has brought about a 

 most critical situation in the plantation rubber industrj'. 

 The Rubber Growers' Association, London, and the Inter- 

 national Association for Rubber Cultivation in the Netherlands 

 Indies, The Hague, are endeavoring to make effective a plan to 

 temporarily reduce production by 50 per cent, regulate the quan- 

 tities, time and price of sales, and assist producers with loans. 



PRODUCTION AND CONSUMPTION 



Approximately 70 per cent of all rubber consumed in recent 

 years has gone into tires. War requirements accelerated the de- 

 velopment of motor transportation, and the post-war boom led 

 everyone to believe that the peace requirements of the world 

 were greater than h.as proved to be the case, partly because of the 

 greater economy of peace over war uses, and also by the devel- 

 opment of the cord tire, from which a much greater mileage is 

 obtained than from the ordinary fabric tire. The new uses to 

 which rubber is being put do not promise to increase materially 

 the consumption in the immediate future. The stabilizing of the 

 price of rubber would undoubtedly be beneficial in expediting 

 manufacturing developments. 



In 1914 the total rubber production of the world was 126,000 

 tons, of which 77,000 tons were plantation and 49,000 tons wild 

 rubber. Unrestricted production in 1921 would amount to 360,000 

 tons of plantation and 30,000 tons of wild rubber. Existing plan- 

 tations are capable of yielding at the rate of 500,000 tons per an- 

 num within a comparatively short time. Notwithstanding the 

 voluntary restriction of output agreed to last fall, stocks of raw 

 rubber in London and Liverpool have increased from 56,000 tons 

 January 1, 1921, to 79.000 tons at the end of June, 1921. 



The present world stocks of rubber are estimated to be about 

 300,000 tons, which figure includes all rubber on estates, in transit 

 at port of shipment, afloat, in warehouses at ports of arrival in 

 consuming countries, and in the hands of manufacturers. The 

 stocks necessary for the normal working of the industry may be 

 taken as seven months' consumption. At the present rate of con- 

 sumption, 20,000 tons a month, such stocks would amount to 

 about 150,000 tons. There would thus appear to be 150,000 tons 

 of surplus rubber in existence. 



PRINCIPAL FACTORS 



With regard to the whole question of combination and control, 

 the principal factors to keep in mind are: (1) the existing world 

 stocks of 300,000 tons; (2) the potential 1922 output of over 

 400,000 tons; (3) the potential 1922 consumption, which is un- 

 likely to exceed 250,000 tons ; (4) the labor situation in the pro- 

 ducing countries; (5) the vitality of the rubber tree which, after 

 rcachins maturity, remains a jiotential source of rubber, even 

 though upkeep is entirely neglected. 



As stated by the Dutch Commission appointed by the Inter- 

 national Association for Rubber Cultivation, the huge supply of 

 crude rubber hanging over the market, and the necessity, in 

 which many producers are placed, of realizing on their product 

 at any price, have depressed the prices of rubber to such a low 

 level that practically every company is working at a loss. As a 

 result producers who have not at their disposal the necessary 

 financial resources arc doomed to speedy ruin and their estates 

 will gradually come into the hands of financially powerful groups 

 for mere trifles. Continuation of the existing situation will entail 

 considerable immediate money loss for shareholders and the in- 

 dustry will become entirely disorganized. Improvement in the 

 price of rubber within a reasonable time is highly improbable, 

 even with an improvement of the general economic situation. 

 By means of drastic curtailment of production, a gradual dimin- 

 ishing of stocks will be effected. 



SUCCESS DEPENDS ON COOPERATION 



The plan o\ilHned is believed to be a practicable method of 

 achieving the desired rehabilitation of this great industry, but 

 the task of securing the adhesion of 2,200.000 acres, about two- 

 thirds of the existing planted area, the minimum deemed neces- 

 sary- to make the scheme effective, can be accomplished only by 

 a spirit of cooperation. In arriving at this figure it is antici- 

 pated that no substantial acreage of native holdings can be 

 brought into the proposed corporation. Owing to excessive tap- 

 ping in the past the major portion of these holdings acre for acre 

 is inferior in yielding power to the European owned estates, 

 while their product is primitively prepared and not of standard 

 quality. Only about one-half of the 2,200,000 acres is controlled 

 in the United Kingdom, and the cooperation of the Dutch inter- 

 ests and of the principal local producers in the various Eastern 

 countries is essential. 



THE RUBBER PRODUCERS' CORPORATION, LIMITED 



The plan proposed by the Rubber Growers' Association, Lon- 

 don, is designed to combine the interests of all plantation rubber 

 producers for the accomplishment of the following objects: 



OBJECTS 



The primary objects of the corporation are: (1) control of 

 the rubber output of its members ; (2) fix the selling price and 

 regulate the sale of rubber produced by its members; (3) regu- 

 late the opening of further lands by its members ; (4) purchase 

 or make advances on the rubber harvested or to be harvested by 

 its members; (5) if demand desirable, to make advances on se- 

 curity and on terms to be agreed upon to approved rubber estates 

 belonging to its members. 



The corporation will not exercise any functions in regard to 

 the management or control of estates belonging to its members 

 except in regard to the matters above mentioned. 



CAPITAL 



The nominal capital is placed at £2,000,000, in 2,000,000 shares 

 of £1 each, with provision for borrowing up to £8,000,000, either 

 by debentures or otherwise, of which a minimum of £3,000,000 is 

 to be raised at once. The ordinary shares are to be allotted to 

 members in the ratio of one share for each planted acre of rub- 

 ber they possess. 



MANAGEMENT 



Control of the Corporation's affairs is to be in the hands of 

 a court of directors, approximately one director for each 100,000 

 acres, a total of 21, of whom 18 represent estates and three the 

 debenture holders. The executive board for carrying out the 

 instructions of the court of directors w-ill consist of four direc- 

 tors together with a manager and a secretary. 



OUTPUT AND SALES 



1. The output of rubber by members, including provision for 

 young areas on their reaching maturity, will be regulated equit- 

 ably by the court of directors and may be varied from time to 

 time to meet market conditions. 



2. The court of directors shall i\x from time to time the prices 

 at which the rubber controlled by the Corporation may be sold. 



3. On all sales of rubber controlled by the Corporation there 

 shall be paid to the Corporation a sum per pound to be fi.xed by 

 the court of directors, which must be sufficient to enable the 

 Corporation to pay the expenses of management, debenture in- 

 terest and sinking fund, and accumulate funds at the credit of its 

 several members as surety for the due fulfilment of their obliga- 

 tions to the Corporation. It is estimated that one penny per 

 pound, together with interest on advances, will yield sufficient 

 annual income for these purposes. 



