Why Sabah rubber fetches lower?

Larry Ralon

Kota Kinabalu: The difference in rubber prices between Sabah, Sarawak and Peninsular Malaysia is caused by the additional transportation, processing and purchase service costs.

Deputy Chief Minister cum Agriculture and Food Industry Minister Datuk Yahya Hussin said the rubber price at farm gates offered by the Sabah Rubber Industry Board (LIGS) to smallholders in Sabah is lower than in the peninsula because the costs are much higher in the State.

"These are caused by additional transportation (logistics) cost, much higher rubber processing cost and much higher direct rubber purchase service cost," he said, in response to Bingkor Assemblyman Datuk Justin Guka.

He said the State logistics condition has caused LIGS to sell processed rubber (Standard Malaysian Rubber) to the buyers in Port Klang or Singapore at an additional cost of 36 cent per kg.

This is due to the absence of international shipping companies doing direct shipment service from Kota Kinabalu port to overseas, he explained.

He said there are no such additional costs affecting those rubber sellers in the peninsular, while for Sarawak the additional transportation cost is much lower from Sabah because of the closer distance factor.

"Because of this they can afford to pay much higher to the rubber smallholders in the peninsula and Sarawak," he said.

In terms of processing cost, he said in Sabah it is much higher by 10 cent per kg or RM100 per metric tonne, compared to the peninsula.

This is because nearly all the replacement tools, chemicals, packaging materials and so on need to be imported from the peninsula at higher prices and LIGS cannot enjoy the offpeak tariff as offered in peninsula. Thus, the frequent power outages caused it to suffer losses apart from production time.

Apart from that, he said the diesel fuel price for industries in Sabah is 7 cent higher per litre than in the peninsula.

On the rubber purchase service cost, Yahya said raw rubber produced by smallholders in Sabah is more moist, citing that the dry rubber content (KGK) for non smoked rubber sheet in the State is about 68-70pc compared to Sarawak where it is 85-90pc.

He said in order to ensure the rubber price rate in Sabah, the Federal Government will need to give price subsidy to bear with the additional cost that needs to be shouldered by the smallholders in the state.

On the move taken by Government to pay cash to the smallholders, he said the State Government has approved a RM60million loan to LIGS for this purpose.

"With this RM600million loan, LIGS will buy direct in cash from smallholders," he said.