Although expectations for a strong rubber price rally remain moderate, recent price increases have eased concerns among Vietnamese rubber farmers. However, to fully benefit from the post-pandemic recovery in the automotive and industrial sectors — and to stay competitive against regional rivals — Vietnam’s rubber producers may need to move more decisively and adopt international certification standards.
Labor Shortages and Rising Challenges
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About an hour’s drive from Pleiku, the capital of Gia Lai Province in Vietnam’s Central Highlands, lies Ia Kha Town, home to more than 8,000 residents. Once dominated by subsistence farming, many locals have transitioned to rubber tapping under the management of Company 74, part of Corporation 15.
Rubber tapper Ro Mah Kiu starts work at 3 a.m., collecting latex before sunrise. “It wasn’t easy to learn proper tapping techniques,” he recalls. “Taking care of mature rubber trees requires skill, and learning to tap correctly is even harder.”
The Covid-19 pandemic caused severe labor shortages, disrupting tapping and processing operations. Colonel Hoang Van Sy, commander of Company 15, said:
“Hiring new workers is difficult. Many people lost jobs in other sectors and returned home, but training them to become skilled rubber tappers takes a long time.”
Between 2018 and 2019, nearly 3,000 workers reached retirement age, leaving a large labor gap that remains unfilled. Moreover, rubber tapping depends not only on markets but also on weather conditions, which strongly affect costs. “We had to cut production costs drastically from over VND 50 million (USD 2,175) per ton to VND 32 million (USD 1,400)per ton,” Sy added.
Global Price Recovery Driven by Supply and China’s Imports
After nearly a decade of price declines, rubber prices staged a rebound in late 2020. On the Osaka Exchange, the benchmark for Asian and European natural rubber, April 2020 contracts climbed 20 JPY (7.9%) to 274.3 JPY/kg (USD 2.65/kg) — the highest level since early 2017.
This rally was not solely driven by economic recovery but also by China’s market intervention.
According to Chinese Customs, rubber imports reached USD 9.76 billion in the first 11 months of 2020, up 4.5% year-on-year. Meanwhile, China’s domestic rubber output fell 30% due to typhoons in Hainan and droughts in Yunnan, prompting a surge in imports.
Vietnam’s Ministry of Industry and Trade reported that during the same period, China imported USD 4.34 billionworth of mixed natural and synthetic rubber — a 35.2% increase compared to 2019.
Despite the global slowdown, China’s automotive sector, one of the world’s largest rubber consumers, remained resilient. The China Association of Automobile Manufacturers estimated that 2020 sales fell only 10%, much less than earlier forecasts.
Supply Deficits Supporting Global Prices
The Association of Natural Rubber Producing Countries (ANRPC) projects global rubber output will recover to 13.7 million tons in 2021, up 8.6% from 2020, but still slightly below 2018–2019 levels. Southeast Asia — accounting for two-thirds of global supply — continues to face production disruptions due to labor shortages, weather events, and Covid-related constraints.
ANRPC estimated that 2020 output fell 6.8% year-on-year to 12.9 million tons, mainly due to declines in Thailandand India. Thailand’s production dropped by about 332,000 tons, consistent with forecasts from the Rubber Authority of Thailand, which cited heavy rainfall in southern provinces.
Vietnam’s Industry Adjusting and Diversifying
In Vietnam, major suppliers have started reducing latex tapping operations.
Dong Nai Rubber Company Ltd. plans to cut 40–50% of its harvesting and processing activities by 2025, shifting toward higher-margin business segments.
General Director Do Minh Tuan noted that latex extraction still accounts for 70–75% of company revenue. In 2020, despite hiring 250 new local workers, production targets were not met.
According to the Vietnam Rubber Association (VRA), Vietnam’s rubber plantations cover nearly 1 million hectares, with about 70% under tapping, yielding roughly 1.1 million tons annually. This makes Vietnam the third-largest natural rubber producer globally.
However, around 80% of Vietnam’s output is exported in raw or semi-processed form, making the country highly dependent on global rubber prices.
Sustainability and Certification: A Competitive Advantage
The EU–Vietnam Free Trade Agreement (EVFTA) opened new opportunities, but Vietnamese producers have yet to take full advantage. The European market demands high-grade, certified rubber, yet Vietnam currently supplies mostly raw material. In the first nine months of 2020, the EU accounted for only 5.1% of Vietnam’s natural rubber exports.
Mr. Huynh Tan Sieu, Head of Technology and Environment at the Vietnam Rubber Group (VRG), emphasized that many local companies are losing ground by not adopting FSC (Forest Stewardship Council) certification, which validates social and environmental responsibility.
According to John Heath, Commercial Director at Corrie MacColl Ltd. (London),
“The European market is increasingly focused on FSC-certified rubber. Our company distributes around 500 tons per month to Europe — a fraction of the rising demand.”
Heath added that consumer and NGO pressure is pushing firms to ensure responsible sourcing, saying Corrie MacColl “refuses to purchase rubber from suppliers that clear tropical forests for plantations.”
By implementing sustainable standards and certification, Corporation 15 has successfully diversified beyond the Chinese market, attracting buyers from Russia, Sweden, India, and Japan.
Outlook: Sustainable Growth Through Better Practices
Colonel Sy noted that sustainable solutions must provide mutual economic and environmental benefits. With over 40,000 hectares of plantations, the company aims to boost revenue by 10–15% and secure jobs for more than 10,000 workers.
In 2020, Corporation 15 achieved VND 1,500 billion (USD 65.2 million) in revenue. Industry experts believe that with stronger sustainability commitments, improved labor policies, and broader market access, Vietnam’s rubber industry can consolidate its position among the world’s top producers.