Strategy for smallholder rubber development in South Sumatra

Abstract

Rubber production is a major source of income for smallholder farmers in South Sumatra. In addition rubber produced by smallholder farmers is the major raw material for the region's rubber processing industry and an important foreign exchange earner. The general neglect of the industry over the last 30 years has been an important factor in deterioration of the industry in the province. Current government strategy towards the improvement of rubber smallholdings is concentrated on the 'integrated' schemes which are styled after those of Malaysia. Economic and financial analysis indicates that the schemes are feasible and given the availability of the planned amounts of finance, the author of this study does not doubt that the schemes would be successfully implemented. The cost to government for the implementation of the schemes, however, will be so high that the replanting target of 3 percent per annum would be hard to achieve. In this study, therefore,the use of a 'low- cost' planting model which is similar to that in Pelita I and Thailand's approaches is emphasized. This model will spread the improvement over more smallholders, although the individual benefit secured by them would be less than it is in 'integrated' schemes. It is also likely to give a better return on capital investment. Even using this model, however, the government still has to increase the flow of investment, strengthen the Dinas Perkebunan staff for the implementation, and strengthen the research on smallholding problems. Other factors which would appear to be crucial in bettering the position of the South Sumatra Rubber Smallholdings are: improving the quality of rubber produced by smallholders in conjunction with improving marketing and transportation systems. No attempt has been made to analyse these factors in detail owing to data and time constraints. Nevertheless , from broad discussions, this study also raises several suggestions on these matters. Show more