The Ivory Coast is steadily gaining on southeast Asian nations as a major rubber producer, buoyed by pending sustainability rules in Europe.
The West African country produced 1.55 million tonnes of natural rubber last year, according to the International Rubber Study Group. That is nearly double the 815,000 tonnes produced in 2019 and puts the Ivory Coast ahead of Vietnam in becoming the world’s third-largest producer, after Thailand and Indonesia.
The growth has been fuelled partly by Ivory Coast farmers who shifted from cacao beans to rubber in hopes of earning a more stable income. The European Union Deforestation Regulation (EUDR), which is expected to take effect in late 2025, has contributed as well.
The proposed regulation will require proof that products on the EU market do not contribute to deforestation. Jungle rubber plantations in Ivory Coast have received assistance with adopting the new standards so that European tire manufacturers and other clients can source EUDR-compliant products.
[Jungle rubber refers to single or small clusters of rubber trees planted inforest openings that over time become integrated into the forest’s biodiversity. Rubber trees can restore and rehabilitate deforested areas while also contributing to the livelihood of local communities]
Still, meeting EUDR requirements is a challenge. There is concern that buyers will flock to large-scale farmers with more traceable supply chains, forcing smaller farmers out of the industry.
“Some are considering switching orders to farmers and companies that can comply with regulations,” said Takahiro Saito, partner at the PwC Japan Group’s Sustainability Centre of Excellence.
“There are also concerns about future unemployment and a decline in the industry in countries that have lost business,” Saito said. On the other hand, farmers who successfully conform to EUDR rules could enjoy a major advantage.
“The implementation of the EUDR is triggering a major shift in where we source our natural rubber,” said a representative from a major tyre manufacturer.
Indonesia and Thailand currently produce about half the world’s natural rubber. But Indonesia, the world’s second-largest producer, saw output drop 20% from 2019 to 2.65 million tonnes last year. Unlike Ivory Coast, Indonesia is seeing a decline in the number of farmers producing natural rubber.
“Because the government did not actively support farmers, there was a rush to convert to palm oil and other products during the slump in rubber prices three to four years ago,” said Shinichi Kato, president of a Tokyo-based rubber trading company.
“There has also been limited progress in replacing old [rubber] trees with new ones,” Kato added.
Indonesia has been slow to prepare for the EUDR, leading the country to pursue exports to non-EU countries such as China and India.
In Thailand, the world’s largest rubber producer, the rubber authority announced a data platform that tracks the locations of rubber plantations and data relating to rubber processing operations throughout the country in compliance with the EUDR.
Supply concerns are also on the rise. Thailand has been experiencing heavy rains and flooding since the summer. In early September, Typhoon Yagi caused extensive damage to rubber-producing areas in China’s Hainan Island and northern Vietnam.
The most heavily traded rubber futures on the Osaka Exchange, an international benchmark, touched around US $2.70 per kilogram last month, about 60% higher compared with the end of 2023. Market prices are expected to remain high.
“Weather concerns and the decline in inventory is expected to persist,” said Tsutomu Kosuge, head of commodity research company Marketedge.
EU Regulation 2023/1115 is expected to come into effect at the end of 2025. Its modest name belies its potentially industry-transforming impact. The World Wildlife Fund has described it as “historic,” “groundbreaking,” and “changing the rules of the game.” The ‘Deforestation Regulation’, as it is better known, will become one of the world’s first-ever laws to tackle deforestation on a global scale.
- To learn more about the EUDR and how global rubber is using forest certification to become “EUDR-ready” click here for Wood Central’s special feature.
