STA banking on 'traceable rubber'
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STA banking on 'traceable rubber'

Mr Veerasith says STA will earn more revenue from rubber sales this year.
Mr Veerasith says STA will earn more revenue from rubber sales this year.

Rubber manufacturer Sri Trang Agro-Industry (STA) has launched "traceable rubber" to support its exports to the European Union (EU) which demands products that meet environmental and human rights standards.

Traceable rubber refers to rubber which can be traced back to plantations and the manufacturing process in order to know whether the products involve deforestation, illegal land grabbing and labour rights violations.

The company needs to make its rubber traceable as the EU Deforestation Regulation (EUDR) is scheduled to be enforced this year to fight deforestation, said Veerasith Sinchareonkul, chief executive of STA.

The EUDR covers seven product categories -- rubber, palm oil, wood, coffee, cocoa, soy and cattle.

"We set a target to produce traceable rubber from 3 million rai of land in Thailand, representing 70% of total capacity production of 1.3-1.5 million tonnes a year," he said.

STA operates rubber plantations in Thailand and Myanmar, but because of the West's economic sanctions against Myanmar following the military coup in 2021, the company will only export rubber from Thailand to the EU.

Mr Veerasith stressed that the production of traceable rubber is crucial to his business as customers in other countries are expected to follow the EUDR.

"We believe the US and Japan will follow suit, so we have to invest in making traceable rubber to serve this global trend," he said.

Global demand for rubber currently stands at 13 million tonnes, with China accounting for half. Some 30% of rubber is bought by the EU with the US representing the remaining 20%.

STA has gained a market share of 10-12% of the global market.

Mr Veerasith said the development of traceable rubber incurs higher costs than regular rubber.

"This means customers in the EU market will pay higher prices for our rubber this year," he said.

STA expects its sales in 2024 to increase by 15% to 1.5 million tonnes, up from 1.3 million tones last year.

The company believes it will earn more revenue this year as rubber prices are increasing.

STA's revenue decreased by 12.9% to 84.2 billion baht in 2023 because of impact of the drought on rubber plantations.

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