Natural Rubber output has decreased due to heavy rains in many areas and flooding in some areas. Even though the container shortage issue starts to improve as well as the freight rate, there are other risk factors such as Pestalotiopsis leaf fall disease and the prolonged Russia-Ukraine war. These factors affect energy and commodity prices and the volatility of the global financial markets. Furthermore, trade partners' economies slowed down. Inflation and production costs rise, particularly in Asia and Thailand, due to rising raw material prices and imported product prices following rising transportation costs. The increased inflation rate in many countries affects consumers’ purchasing power; as a result, significant trading partners slow down their imports. Besides, foreign demand declines. In addition, foreign tire purchasers slow down their order receiving of rubber-based products. In 2022, rubber export value is expected to increase by 5%; meanwhile, rubber volume is stable.

Other risk factors that need to be monitored are as follows: 1. The first factor is the EU Carbon Border Adjustment Mechanism (CBAM). The Thai Rubber Association (TRA) considers that rubber planting is one of the ways to help reduce global warming. Importantly, rubber is also a major source of carbon dioxide absorption or storage in the world, close to tropical forests. According to the Rubber Authority of Thailand (RAOT), rubber trees can store 4.22 tons of carbon dioxide per rai, thereby reducing carbon in the air, which is an important greenhouse gas. Therefore, natural rubber is a green product. 2. The second factor is the EU Deforestation-Free Products. In July 2022, the relevant parties have proposed to consider expanding the scope of products to include pigs, sheep, goats, poultry, maize, rubber, charcoal, and printed paper products. As a result, the smallholders will be affected by the high expenses. In addition, the due diligence process with 2 million smallholders in Thailand can be extremely time-consuming and difficult to implement because there must be mechanisms, tools, and technology, and abundant funding from the government is required. Moreover, Thailand is confronted with economic problems due to COVID-19 and geopolitical issues. If the EU Parliament includes rubber products within the law, it will severely affect Thailand's smallholders, causing them to be unable to sell rubber. Besides, it might cause trade barrier issues, which affect low rubber prices as a whole.

However, the Thai Rubber Association (TRA) considers that natural rubber still has positive economic fundamentals, especially with the increase in demand for rubber gloves globally due to the COVID-19 outbreak. The demand for EV cars increases as well. Moreover, Thailand, Indonesia, and Malaysia strong cooperated under the International Tripartite Rubber Council (ITRC) to roll out significant measures to handle various situations. In addition, Thai government has rolled out measures to help smallholders and entrepreneurs as well.

Mr.Chaiyos Sincharoenkul

President

The Thai Rubber Association