Rubber Industry in Thailand: Navigating the EUDR Challenge

Understanding the EUDR and Its Impact on Thailand's Rubber Sector

The European Union Deforestation Regulation (EUDR) presents both challenges and new opportunities for Thailand's rubber industry. By adhering to these regulations, the sector can position itself for sustainable growth and access broader markets. Although the initial adjustment may impact operations, the long-term benefits of compliance are crucial.

Thailand plays a significant role in the global rubber market, being the second-largest exporter of rubber products to the European Union, following China. According to a recent report by Krungsri Research, rubber products account for 90% of Thailand's total exports to the EU, showcasing the country's commitment to sustainable business practices, particularly in the rubber industry (Rijksoverheid: 2024).

The enforcement of the EUDR is a critical driver urging stakeholders to adapt and comply urgently. This regulation mandates that products must not originate from deforested or degraded areas. Businesses must conduct thorough checks to ensure compliance, promoting responsible sourcing of raw materials and sustainable land use. This presents both challenges and opportunities for Thailand's rubber industry.

Since the regulation took effect on June 29, 2023, it has raised significant concerns within Thailand's rubber sector. In response, the government, the Rubber Authority of Thailand (RAOT), and key stakeholders have initiated comprehensive efforts to meet the new requirements. Simultaneously, they are leveraging this opportunity to enhance the potential of Thailand's rubber market in the EU. Research indicates that the Thai rubber sector is proactively aligning with the EUDR, supported by a robust legal framework for forest protection, land rights verification, and traceability of rubber sources. This is a strength for Thailand. Additionally, up to 90% of rubber farmers have registered with the RAOT, a state enterprise under the Ministry of Agriculture and Cooperatives, to ensure the legality of their rubber products (Rijksoverheid: 2024).

The Economic Impact of EUDR Compliance

Six months before the full implementation of this regulation, the adoption of EUDR-compliant practices in the rubber industry began to yield significant results. According to Pattaya Mail, the RAOT reported that Thai rubber prices soared to a 12-year high due to EUDR-compliant auctions through the Thai Rubber Trading System (TRT) (Pattaya Mail: 2024). The RAOT noted that the rising demand for EUDR-compliant rubber has driven the price of raw rubber sheets to 96.66 baht per kilogram, marking the highest price in over a decade (Pattaya Mail, 2024). Furthermore, the RAOT has encouraged rubber farmers to adopt sustainable and environmentally friendly farming practices to align with EUDR and international standards. The TRT system has also enhanced data collection and traceability of rubber sources.

According to the European Forest Institute (EFI), Thailand's systematic efforts to support EU operators in complying with the EUDR while addressing potential challenges for domestic producers, traders, and processors are based on the following key strategies:

Mapping Rubber Production in Thailand

The National Rubber Committee has categorized rubber cultivation areas into two types: existing rubber plantations and new rubber plantations. The existing rubber areas, located in the south and east, account for 64% of total rubber cultivation, primarily situated in areas previously used for fruit orchards. Meanwhile, new rubber plantations make up 36% of the total area, covering 60 provinces nationwide, mostly in areas previously cultivated with cassava, sugarcane, and previously deforested forests.

One of the key initiatives by the RAOT to support compliance with the EUDR is comprehensive mapping of rubber production areas. Currently, the RAOT has mapped over 3.1 million hectares of rubber cultivation, representing 79% of the total rubber area in Thailand. This effort includes collecting geographic coordinates for 1.98 million rubber plots, recorded in a centralized database.

The RAOT's system can compare mapped rubber areas with forested and conservation areas to identify rubber production locations, verify the position of each rubber plot, and provide verifiable evidence that rubber produced in these areas is not linked to deforestation. Utilizing forest mapping that aligns with the EUDR's definitions and the Food and Agriculture Organization (FAO) will play a crucial role in confirming that rubber exported to the EU does not contribute to deforestation after December 31, 2020, the cut-off date specified by the EUDR (EFI: 2024).

Registering Smallholder Rubber Farmers

One of the challenges in implementing the EUDR is the risk of smallholder farmers being excluded from the market. However, Thailand has accelerated measures to protect farmers in the supply chain from this risk by using farmer registration as a crucial tool. As of March 2024, the RAOT has registered over 1.6 million rubber farmers, including 958 farmer groups and rubber processing units, gathering information on farmers, plot coordinates, and product details. A significant challenge is land rights, as many households lack land ownership documents, which are required for registration with the RAOT, especially in newly opened areas (EFI: 2024). This measure helps protect farmers from exclusion.

Ensuring Traceability in the Rubber Supply Chain

Mapping and registration are foundational for compliance with the EUDR, which requires geographic and legal data to be collected and transmitted throughout the supply chain. Therefore, having a comprehensive system that includes intermediaries is essential, as the rubber supply chain is complex and informal. If executed correctly, these efforts will enable smallholder farmers to participate in the market, prevent trade disruptions, and ensure compliance with relevant laws and regulations. Thailand's initiatives in mapping and registering rubber plots, particularly in national reserved forest areas, are key to ensuring that rubber exported to international markets has a legitimate source.

Capacity Building Initiatives

Implementing mapping and registration systems requires extensive capacity building for farmers, intermediaries, and processors. The RAOT has promoted national capacity by deploying agricultural extension officers to support farmers, intermediaries, and processors nationwide. These officers play a vital role in verifying the accuracy of data in the RAOT's registration system. Additionally, the RAOT is developing specialized training curricula and creating a centralized data-sharing platform to provide operators with access to legal information and geographic coordinates of rubber cultivation for the EU market, enhancing stakeholders' understanding of the new market requirements under the EUDR.

A Modular Approach to Meet Traceability Requirements in the Rubber Supply Chain and Build Capacity for EUDR Compliance

From Thailand's experience, it is essential to address supply chain challenges to comply with EUDR requirements, which will simultaneously open new opportunities for businesses. In Thailand's rubber sector, we have supported clients in over 60 provinces, covering the south, central, east, northeast, and north, with over 38,000 registered farmers and confirmed plots and production areas exceeding 100,000 plots, aligning with the stringent standards of the EUDR.

Our solutions for EUDR compliance operate through a modular approach, utilizing the KoltiTrace (KoltiTrace MIS) data management system, a robust platform for mapping farmers and traceability that can scale according to organizational size. This allows independent suppliers to comply with the EUDR. Additionally, the capacity-building service KoltiSkills supports all stakeholders to be fully prepared for compliance. KoltiVerify, part of the modular approach for EUDR compliance, integrates the entire supply chain on a single platform, verifying supplier and processor databases to ensure consistency of field data from farms and processing facilities. API connections and direct input options ensure data accuracy, save time, and reduce risks.

Here’s how our solutions help your business effectively tackle challenges:

• We conduct comprehensive surveys of rubber farmers to map product sources, verify farm practices, and assess greenhouse gas emissions to ensure compliance with sustainability standards and new regulations like the EU's EUDR. Our field officers work closely with processors and suppliers to map smallholder farmers in the supply chain, using the KoltiTrace application to assess risks and farm data deeply, providing a clear overview of potential agricultural risks.

  
  

In Thailand, Yoswadee Luthrakulseth, our project manager, is working with clients to ensure that all smallholder farmers are accurately mapped and assessed. In one of our rubber projects in Thailand, we are committed to supporting clients in the rubber industry with a comprehensive approach, conducting user training and preparing for the recruitment of field teams to ensure our project management team is ready to effectively map over 11,000 plots.

In operational terms, we support the recruitment of Cluster Leaders (CL) and Field Agents (FA) to ensure project success. We also recruit Project Leads (PL), reporting teams, as well as additional human resources and product managers for the Thailand market to meet sustainability goals and regulatory compliance.

“During the mapping process, our field officers and cluster leaders work closely with local dealers and collectors to identify smallholder farmers in their supply chains. The data we collect will be invaluable for developing farm assessments and in-depth risk evaluations for each farmer, as well as implementing comprehensive risk reduction strategies in line with EUDR requirements,” Yoswadee stated. These efforts are crucial for complying with EUDR requirements, reducing the risk of deforestation, and promoting responsible sourcing in Thailand's rubber supply chain.

• In one of our rubber projects in Thailand, we conduct user training and prepare for the recruitment of field teams to ensure project management teams are fully prepared to effectively map agricultural plots.

  
  

We provide risk mitigation activities, such as training and consulting for farmers, including supporting farmers in obtaining land ownership documents. We leverage data insights to design interventions tailored to each farmer's challenges.

“Our training and consulting efforts in Thailand help raise awareness of sustainable practices among rubber farmers, which will be a crucial component of our upcoming risk reduction plan,” Yoswadee stated. This activity aligns with Thailand's efforts to enhance farmers' capacity to better understand sustainable practices, improve compliance with international standards, and increase their potential for EUDR compliance.

• Our approach focuses on engagement and capacity building for all stakeholders in the supply chain, including local product collectors, cooperatives, and agricultural input suppliers. Our Field Agents (FA) also work closely with local government agencies to assist rubber farmers in preparing the necessary legal documentation and getting ready for various voluntary certification standards.

  
  

This comprehensive support enables farmers to comply with EUDR requirements and access broader international markets.

• Our solutions demonstrate how we help Thai clients achieve EUDR compliance while enhancing their competitiveness in the global market. Talk to our experts today to discover how our modular approach can benefit your business!

  
  

Talk to our experts

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Author: Kumara Angkita, Content Writer

Data Contributor: Yoswadee Luthrakulseth, Project Manager

Editor: Daniel Prasertyo, Head of Public Relations and Corporate Communications

About the AuthorKumara Angkita holds the position of content writer at Koltiva, with over six years of experience in journalism, particularly in the humanities and lifestyle sectors, as well as writing in the technology industry. Her passion for gender equality and sustainability led her to participate in the EmPower Media Bootcamp by UN Women to enhance her storytelling and in-depth reporting skills. Currently, Kumara applies her talents to promote sustainable practices and gender equality through her impactful writing.

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References:

1. Rijksoverheid. (2024). Thailand advances deforestation-free agri-food system amid EUDR implementation. Retrieved from https://magazines.rijksoverheid.nl/lnv/agrospecials/2024/02/thailand 

2. Pattaya Mail. (2024). Thai rubber prices achieve record high in 12 years through EUDR. Retrieved from  https://www.pattayamail.com/thailandnews/thai-rubber-prices-achieve-record-high-in-12-years-through-eudr-461997 

3. European Forest Institute (2024). New brief released: Thailand’s natural rubber industry’s response to EU deforestation regulation. EFI. Retrieved from https://efi.int/news/new-brief-released-thailands-natural-rubber-industrys-response-eu-deforestation-regulation 

4. European Forest Institute (EFI). (2024). Thailand’s natural rubber producers are preparing for new market requirements. EFI. Retrieved from https://efi.int/sites/default/files/files/publication-bank/2024/Briefing%20-%20Thailand%E2%80%99s%20natural%20rubber%20producers%20are%20preparing%20for%20new%20market%20requirements.pdf