The Adoption of Smallholder Rubber Production by Shifting Cultivators in Northern Laos: A Village Case Study - Smallholder Tree Growing for Rural Development and Environmental Services - page 125

Table 5.9 OLS regression of rubber output on selected variables (n = 67)
Definition Mean Estimated coefficients t value

Constant na 561.97 1.03

No. of rubber trees tapped in 2004 460 2.25 5.13***

No. of full-time equivalent workers 3.0 38.09 0.34

Total area of rice cultivated in 2004 (ha) 1.0 −84.17 −0.61

Age of household head (years) 46 −11.48 −1.05

Education of household head (years) 3.4 34.56 1.11

Second year of tapping (yes = 1, no = 0) 0.7 −44.18 −0.13

Third year of tapping (yes = 1, no = 0) 0.2 503.87 1.29

R 2 = 0.39, F = 5.61, p = 0.000; ***significant at 1 percent level

Chinese traders, every month the village authorities contact the buyers in Yunnan
by mobile phone and search for those who offer the highest price. So far there is
not seen to be a marketing problem because there is strong demand for rubber from
China. However, there is a concern among farmers that if they could not sell their
rubber to China, they would have few alternatives and might get a lower price. In
2004 the Lao-SINO company established a rubber processing factory in
Luangnamtha Province, but the company offered a lower price than the Chinese
traders so farmers continued to sell to the traders.
About 28 percent of households reported that their only source of cash income
was selling tub-lump rubber; 29 percent only earned income from other sources
(livestock, other cash crops, selling rubber seedlings, working for wages, and from
relatives in the USA); the remaining 43 percent received income from both rubber
and other sources. About 69 percent of the households mentioned that their highest
ranking income source was rubber. Hence rubber had clearly become the major
source of income in the village.

5.6.4 Economic Appraisal

In another paper (Manivong and Cramb 2007), we present a discounted cash flow
(DCF) analysis of smallholder rubber production in Hadyao. The aim was to assess
the long-term profitability of investing in a hectare of smallholder rubber in the
conditions faced by a typical farmer in Hadyao. This required modelling the yield
of latex over the life of the rubber enterprise, as well as other outputs (intercrops
and rubber wood), using the Bioeconomic Rubber Agroforestry Support System
(BRASS) (Grist et al. 1998), which was parameterised and calibrated as far as pos-
sible to Hadyao conditions. These simulated yields were combined with data on
costs and benefits obtained from group discussions with experienced rubber farm-
ers in Hadyao, household survey data, and other relevant sources.
Figure 5.3 shows the predicted latex yield over the likely productive life of a
hectare of rubber in Hadyao conditions. It can be seen that the yield increased in
the initial period, then levelled off, and finally entered a long decreasing phase.