State-run ZNAC Rubber Estate Corp (ZREC) is fertilizing a 500-hectare rubber plantation in Zamboanga which may raise productivity by 40 to 60 percent and perhaps boost revenue that stood at 12.88 million in 2012.
The government has a 70:30 revenue sharing commitment in the rubber farm. The 30 percent goes to Tampilisan farmers as an assured source of livelihood.
“We started fertilization this year. That is the way to properly increase harvest and income for the government and for our farmer-partners,” said ZREC President Allan Q. Umali.
Umali, also Department of Agriculture (DA) assistant secretary for administration, said the government has sustained net earnings from ZREC even if the company stopped receiving PDAF since 2011.
This is amid current inquiry by the Commission on Audit (COA) into ZREC’s alleged turnover of PDAF fund to an allegedly non-existent non-government organization. PDAF stands for Priority Development Assistance Fund, more commonly referred to as “pork barrel.”
“ZREC is self-sustaining. Its revenue even increased to P21 million in 2011 even if we withdrew from receiving PDAF since the new government took over,” said Umali. “We’re complying with the recommendations of COA regarding its audit report.”
Umali said the alleged turnover of ZREC’s PDAF fund to an NGO named Pangkabuhayan Foundation Inc. occurred prior to his holding office at ZREC. The PDAF fund held by PFI, reported to be totaling P199.6 million, was identified to have come from the 2009-2010 PDAF of three senators led by Senate President Juan Ponce Enrile.
Aldrin P. Mejares, ZREC plantation manager, said fertilization should help reverse any ongoing weakness in the price of rubber in the market.
Average selling price of rubber by ZREC declined from P78 per kilo in 2011 to P49 per kilo from 2011 to 2012, according to Marianne Ebio, ZREC finance officer. This primarily caused a decline in the net income of ZREC from P21.332 million to P12.875 million in the period.
ZREC is further instituting reforms in operations in order to raise the quality of the rubber in Tampilisan. This should raise the company’s own rubber selling price.
“The poor quality of rubber at Tampilisan makes selling price lower. Wrong practices have rendered the products unclean, so prices dropped,” said Mejares. “Asec Umali wanted us to be business-focused, so we’re working on improving production and rubber quality.”
Selling price in Tampilisan decreased even if production of coagulated rubber increased to 184,089 kilos in 2012 from 131,287 kilos in 2011.
ZREC’s buyers of coagulated rubber are Standeco (Standard Rubber Corp), DCL Rubber, and NJ Rubber.
Among the reforms in cleaning up rubber operations is the use of formic acid, a cleaning and antibacterial agent in rubber.
“In Cotabato, they produce a cleaner rubber which commands a higher price from buyers. People in Tampilisan have been using battery solution (in coagulated rubber preparations). The use of formic acid makes the product cleaner,” said Mejares.
The use battery solution makes the raw rubber product retain water, bringing down selling price, according to Mejares. Poor quality raw rubber makes finished products like tires become easily defective. Tires may become brittle, causing tires to explode easily.
ZREC is eventually implementing a system that will use ethril on rubber trees. Ethril is an antibiotic that has an effect of raising rubber latex production from trees. It is appropriately applied when the trees are up for slaughter. The ZREC trees are at the tailend of their productive life as these are now around 30 to 35 years old.
The fertilization program in Tampilisan is not expected to immediately raise production. It may have a minimal positive impact in 2013, perhaps a 10 percent increase in income.
But government hopes to reap the fertilization benefits for the rest of use of the rubber land in the next five to15 years.
“We want to replant rubber. But the only option we have now is to fertilize to maximize yield. The land owner disapproved our request for extension in the usufruct (land lease),” said Umali.
With fertilization, a higher yield may be achieved perhaps by 2014.
“Maximum yield is 20,000 kilos,” said Mejares.
Coagulated rubber, a raw form of rubber, is stocked up by buyers for several months. It is required to be stored in clean condition in order to retain good quality before milling.
So far, only five percent of the ZREC’s rubber plantation has been fertilized. But a fertilization rate of 100 percent on the entire area covering 61,661 trees (of which 50,000 trees are productive) can raise yield to the maximum 20,000 kilos per month.
Another reform is the transfer of rubber preparations on tiled areas.
“Some of the workers used to work on the rubber right on the soil which made the product dirty,” said Mejares.
ZREC just ended an agreement with a contractor that exhausted the capacity of rubber trees to produce latex at a certain time period. The contractor practiced in 2012 an indiscriminate tapping of rubber latex from the trees just to maximize yield even if this practice makes yield unsustainable.
ZREC stopped receiving PDAF since 2011 as the governing board believes in the financial independence of the company that enjoys satisfactory earnings from coagulated rubber .
Its last PDAF receipt was P1.65 million in 2010. Yet the company’s net income was at P2.637 million in 2011. This dropped to P883,255 million in 2012 due largely to softer rubber price.
Coagulated rubber production in Tampilisan may fluctuate at between 8,000 to 15,000 kilos per month.
ZREC has a current 50-year lease agreement over a total of 1,000 hectares with the former Zamboanga National Agricultural College-Western Mindanao State University (presently Jose Rizal Memorial State University.)
Half of the area, 499 hectares, is being turned over to holders of CLOA (certificate of land ownership and authority).
The Philippines continues to face bright prospects in rubber.
Despite price volatilities, the outlook for natural rubber has remained positive due with new investments in tire manufacturing worth $10 billion by Hankook, Bridgestone, Continental, Michelin, Pirelli, and Goodyear, among others in 2011 alone, according to Dr. Kamarul Baharain Basir in Rubber Asia.
As of 2011, global natural rubber production was at 10.342 million MT. The world demand for natural rubber was previously estimated to reach to 12.4 million metric tons (MT) by 2020.
“The price of rubber is expected to increase because of tight supply in the world market,” said Mejares.
China is foreseen to have a continuing demand for rubber as rising consumer income is propping up spending for more expensive goods such as automotives that extensively use tires.
There is currently an estimated 150,000 hectares of rubber land in the country.
Rubber is also eyed as an erosion control, reforestation, and environmental preservation crop as it is biodegradable and is not petroleum-based, unlike synthetic rubbers.
Aside from income from sales of coagulated rubber, ZREC’s other income comes from interest income and miscellaneous income.
For any questions, please call Mr. Aldrin Mejares, 0926-139-7616; for interview requests, 0906-239-2362.