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November 04, 2020 09:06 AM

NR sustainability challenging, but essential

Erin Pustay Beaven
Rubber & Plastics News Staff
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    Just because sustainability is essential doesn't mean it's going to be easy.

    During a technical presentation offered Oct. 23 as part of the ACS Rubber Division's International Elastomer Conference, Whitney Luckett, president of Southland Rubber Inc., broke down the challenges faced by the natural rubber industry as it moves steadily and purposefully toward sustainability.

    "The only real reason people are paying attention is because of the end consumer," Luckett said of recent sustainability efforts made industry-wide. "They are asking for things like traceability all the way back to the farmer. … They want to know the environmental impact of what we do on a day-to-day basis, and they are looking for certain things from third parties."

    Meeting those demands across the entire industry is a task that requires buy-in at all levels, from farmers to OEMs. It also means bringing everybody's voice to the table to ensure sustainability aims remain focused and that the industry is positioned to thrive, even in the face of great challenges.

    Tamera L. Goldsmith/Click Photog
    Industry veteran Whitney Luckett says consumer expectations are driving NR sustainability efforts.

    Luckett pointed to the Global Platform for Sustainable Natural Rubber—a 92-member organization established in 2017 by the World Business Council for Sustainable Development's Tire Industry Project—as key in ensuring that all players in the industry remain focused on their goals.

    The group's membership includes tire makers, tire industry associations, auto makers, environmental organizations and smallholders.

    "They are doing phenomenal work out there," Luckett said. "What we see is an organization that brings together producers, processors and traders along with governmental members. What we are hearing is everybody's voice at the table."

    The aims of the organization are multiple, and they include forest sustainability and water management, labor rights and child labor, fair pay for higher standards of living and supply chain transparency.

    Addressing many of these issues, Luckett said, means working to ensure fair and reasonable pricing for natural rubber.

    "The cost of rubber," she said, "is not really reflecting the cost of production in any number of ways."

    While the pricing for many supplier contracts has remained fairly stable, business costs continue to rise. Shipping costs, for instance, have increased about 70 percent this year compared to last year, Luckett said.

    To maintain industry viability, especially in the short term, financial investment will be key.

    "Without funding, natural rubber won't make its way to the market," Luckett said. "There has to be financing all along that 15,000-mile supply chain (from Southeast Asia) to the U.S. I think trade finance will rear its ugly head as one of the (biggest challenges)."

    The underpricing of natural rubber also is compounding problems for farmers. Natural rubber pricing lags the pricing of other commodities by about 36 percent, Luckett said. That underpricing forces smallholders to make decisions about their crops and livelihoods that have lingering impacts on the industry.

    Sometimes, those decisions leave the natural rubber plantations vulnerable.

    "If a tapper has to choose between feeding his family and feeding his trees," Luckett said, "I think he is going to feed his family. He is not going to buy the fertilizer to stave off root problems or leaf disease."

    At other points, those decisions could lead to the loss of plantations altogether. If natural rubber prices fall too low, farmers may determine it is more lucrative to focus on a different commodity.

    Those decisions, she said, weigh heavily on the industry down the road, tightening a supply stock that already faces myriad challenges.

    A number of factors could lead to a further decrease in supply, and some of those hinge on the impacts of the COVID-19 pandemic. Getting skilled tappers to the plantations has proven difficult this year, especially as borders between countries close as the coronavirus spreads.

    Moreover, climate change has played a significant role in diminishing crops as flooding and typhoons threaten some plantations in Southeast Asia. In some cases, extremely dry weather has slowed NR production.

    There's also the question of who controls the supply.

    China, Luckett said, controls a bulk of the natural rubber available right now because it purchased the excess NR that importers had. Following that purchase, importers have not been able to replenish supplies, so many companies in the U.S. are struggling to find adequate supplies of NR.

    "It is supply-chain whiplash probably worse than I have ever seen," Luckett said.

    Related Articles
    Conti using electronics to help Indonesian NR farmers
    International sustainable rubber group gives voice to 'smallholders'
    GPSNR expands membership, establishes sustainability framework
    Women in Tire & Rubber: Whitney Luckett
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