Despite the rubber sector earnings for the first two months of 2024 increased by 14% in comparison to the first two months of 2023, the rubber industry is currently facing deforestation regulation from the European Union (the EU), The Daily Morning Business learnt.
Speaking to The Daily Morning Business, Sri Lanka Association of Manufacturers and Exporters of Rubber Products (SLAMERP) Director General Sisira Ranatunga said: “There is a big threat coming from the European Union (EU) orders from 1 January 2025 that all rubber products to Europe should be free from deforestation since they are bringing a new regulation called the deforestation regulation.
He pointed out that all the rubber land geolocation should be mapped and available digitally.
According to the SLAMERP, the multi companies have their systems to trace the end product to the rubber farmer but as far as the SME sector, the small farmers are concerned they do not have the investment to come up with the digitalisation of the entire supply chain. Therefore, the Government should intervene in this matter and come up with a proper solution, Ranatunga suggested.
However, the exporters are supposed to provide all this information otherwise, they will be subjected to a 3% penalty from the EU importers.
According to the Export Development Board (EDB) of Sri Lanka statistics, the island receives its majority of rubber sales from the EU which is 40%.
Regardless, the risk is the importers from the EU refuse to give orders to countries that are not complying with the new EU regulations.
There are two criterias to meet to fulfill the deforestation regulation; One is that every farmer should have ownership of the land if the lands are not given by the Government, the second is no use of child labour, he explained.
SLAMERP said: “On top of that, the country has to get this geolocation, in every area of the rubber plantation.”
Moreover, the rubber exporters to the EU have to feed all data into the digitised platform where Europe will trace. Yet, the small farmers cannot absorb all of this. Therefore, the Government should intervene and introduce some digital systems, he reiterated.
The export earnings from Rubber and Rubber Finished products have increased by 15.87 % Y-o-Y to $ 88.73 million in February 2024, with a performance in exports of Pneumatic & Retreated Rubber Tyres & Tubes (17.16%).
Mainly, percentage-wise the growth comes from the special rubber products. The SLAMERP can observe about an 18% increase in the tire sector, pneumatic and solid tires and the glove sector.
He said that the contribution from the Euro region is high, about 23%, meanwhile 7% from the USA in the said sector.