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The Rubber Business

Growing rubber brings great opportunities for the agricultural development of various regions in Colombia, due to its increasing demand both in the Colombian and global markets.

Rubber is a plant that grows in tropical areas warm lands and produces a white color liquid, called latex, that is extracted from its cortex. Latex production initiates between the fifth and sixth year after being sown and lasts for approximately 30 years.

Although, rubber (Hevea) originated in the basin of the Amazons, it has been sown in southwest Asian regions. Paradoxically countries where it is originally from like Colombia, Brazil, Ecuador and Peru are currently importers of this industrial raw material.
 

Land potential in Colombia
 

Colombia has ideal terrains and entrepreneurial capacity to take advantage of the opportunities that the global market offers for growing rubber. However, even with the increase in rubber growing that has been achieved in the last years, Colombia still imports 90% of it demand for rubber.

Especially, the Colombian plains in Meta and Vichada regions, with a potential for agricultural production of over 4 million hectares, have ideal climate conditions for the development of rubber sowing at a corporate level.

According to studies from CONIF-MADR, 889.674 hectares exist in Colombia which offer favorable conditions to grow rubber; this are, the denominated climatic escape zones from the Microcyclus ulei fungus, which is the mayor limitation for the development of this type of sows; 263.174 of them have minor terrain restrictions. In addition there are another 3.964.800 hectares with good chances of escaping the Microcyclus ulei fungus, although these have some major terrain restrictions.

There have been 6 prioritized nuclei or clusters identified in Colombia to develop rubber sowing projects (See attached map).
Opportunities offered by the global market

Global production of natural rubber is concentrated in 93% in Asia, with Thailand, Indonesia and Malaysia as world leaders; following are Africa and Latin America, with Brazil and Guatemala leading in the region. Approximately 99% of rubber plantations are located in Asia. Indonesia, with 33%, occupies the first place as global grower; followed by Thailand with 22%, Malaysia with 12%, India with 6%, African countries with 5% and Latin America with 2%.

Rubber consumption is evidenced throughout all world regions, with China and India as major consumers. In America, from Alaska to Patagonia, all countries including Brazil show a deficit in production compared to consumption. While global consumption of natural rubber for 2010 was 10,2 million tons, of which 73% were used in production of tires (see attached table), only 9,9 million tons were produced around the world for the same year.
 

Global consumption of natural rubber (Per Thousand Tons)
 

The rubber project promoted by Indupalma

Taking into account both technical and corporate experiences achieved by Indupalma for over 50 years of agro-industrial development in the growth of oil palm, which is very similar to the growth of rubber, the company decided to penetrate into this type of sows. The objective is to make the most out of growing, employment and wealth generation enormous opportunities that this type of sow offers in the Colombian Orinoquia region. For such purpose, since 2006 the company created an Investment and Project Operation Bank (IBIO) which offers specialized organizational services (technical, legal, financial and management), for structuring and operating agro-industrial projects and businesses. This new approach by Indupalma allowed identifying an important group of investors decided to invest in the sow of rubber at a corporate level, through a strategic alliance with Indupalma as project operator in the Vichada region in Colombia.
 

Location
 

The rubber Project promoted by Indupalma is located in the municipality of Puerto Carreño (Vichada), where various investors own 25.000 hectares distributed in five blocks (see attached table), located in the small towns of La Libertad y El Aceitico, bordering South with the Bita River, North with Meta River and West with the area of Venturosa.

Technical support
 

All technical orientation and research required for Indupalma’s rubber project is offered by CIRAD from France, a company with many years of experience and tradition in research and technology transfer for rubber sows globally.

Social Development
 

As part of the project, Indupalma has been developing a social and productive infrastructure that will allow proper conditions to be generated, in order to allow a working population settlement, which will bring progress and well being to the region. In a 10 year period the project should drive the settlement of 4.000 families which group approximately 20.000 people, who are expected to have decent housing and who are capable of starting new projects and businesses complementary to the activity of producing rubber (See Table).  

Workers and housing construction forecasts in the project’s area.