Wednesday, March 24, 2010

Making Money with Rubber Trees

Tapping a Rubber Tree
The world consumes in excess of 18 million tons of rubber annually. Rubber is either natural or synthetic. Natural rubber provides nearly half of the world rubber market. Natural rubber is produced from rubber trees, grown in tropical areas by over 30 million small landowners and farmers, making it an important source of employment and socio-economic development. In contrast, synthetic rubbers all have one problem in common: they depend on the price of crude oil and are a petro-chemical industry product. The ParĂ¡ rubber tree (Hevea brasiliensis) is originally native to the Amazon basin, but grows well in a variety of tropical climates. Amazonia Reforestation is planting rubber in the Orinoco basin of Vichada, Colombia. Rubber tree latex production starts within 5 to 6 years of planting.

Rubber Tree Plantation
As the standard of living improves around the globe, the price of rubber has been rising. There is increasing demand for rubber products, with 70% of natural rubber being used in automotive and motorcycle tires. Items like medical gloves, tubing and hoses, condoms and mats are other typical examples of other everyday rubber products. Just like wood, rubber plantations face the same pressures from urbanization, high land costs and short term demand for other commodities that are sometimes planted instead of rubber. Reflecting the world’s increased demand for latex, it is interesting to note that China has reduced its import tariffs on natural rubber, confirming China’s intention of becoming more aggressive in the global automotive industry.

Rubberwood or Parawood
Natural rubber is unique in that it is produced as an agricultural product but consumed as an industrial raw material. This has prompted some producing countries, like Thailand, Malaysia and Indonesia, to set up a rubber cartel, much like OPEC for crude oil, to try and control natural rubber sales and withhold stocks in order to maintain price levels. Vietnam, which has doubled its production in the last 10 years, may join. This opens up considerable opportunity for plantations outside of those countries to benefit from relatively high prices and growing demand. Amazonia Reforestation also benefits from parawood or rubberwood having a verified international market for the manufacture of furniture. It is a hardwood with a dense grain, attractive color that accepts a variety of finishes, and is subject to only minimal shrinkage. Rubber wood is considered "environmentally friendly", because latex production causes the tree to sequester a lot of carbon, while productive use of the tree’s wood can be made at the end of its latex-producing years.

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