Greening Vietnam's rubber industry: Breaking through the export value chain

Green transformation is no longer an optional standard but has become a mandatory technical barrier for Vietnam's main export agricultural products. In a context where the rubber industry is under dual pressure from declining raw supply and strict standards on sustainable development, restructuring the supply chain towards a circular direction is the only key to protecting global market share. The article below summarizes the analysis of the current situation, barriers to new standards and a comprehensive transformation roadmap for rubber businesses.

Current status of Vietnam's rubber export supply chain

• Consumer market segment:

  • Thị trường Trung Quốc:Importing more than 70% of Vietnam's total raw rubber, mainly serving the tire manufacturing industry and supporting industries.

  • EU and North American markets:Consuming high quality technical rubber lines, centrifugal rubber and deeply processed products, accompanied by strict conditions for sustainability certification.

  • Indian and Southeast Asian markets: Là các khu vực tăng trưởng mới, có nhu cầu lớn đối với cao su nguyên liệu sơ chế.

• Structure of domestic supply:

  • State-owned enterprises and corporations:Holding large-scale farms, convenient in synchronizing infrastructure and applying for international certificates.

  • Smallholder rubber block:Contributing about 50% of total national output, the supply is still fragmented, causing difficulties in quality synchronization and traceability.

• The bottleneck on added value:

  • The majority of export output is still concentrated in the form of raw materials (SVR 3L, SVR 10, SVR CV60), subject to strong price fluctuations according to international commodity exchanges and oil prices.

Current status of Vietnam's rubber supply chain

3 International technical barriers directly impact exports

1. European Anti-Deforestation Regulations (EUDR)

• Require 100% verification of shipments not related to acts that cause deforestation or forest degradation after the specified time.

• Requires accurate geolocation (GPS) data for each plot of farmland for both businesses and smallholders.

2. Set of ESG assessment criteria from global corporations

• Major tire manufacturers (Michelin, Bridgestone, Continental) require rubber suppliers to comply with Environmental (E), Social (S) and Governance (G) indicators.

• Requires possession of FSC-CoC chain of custody certificate or National Forest Certification System (VFCS).

3. Carbon border adjustment mechanism (CBAM) and green tax

• The risk of incurring carbon tax costs for processed industrial rubber products with high greenhouse gas emissions during factory operation.

6-step roadmap to restructure production according to a green model

• Step 1: Digitize and map garden coordinates (GIS Mapping)

• Bước 2: Chuẩn hóa chứng chỉ quản lý rừng bền vững (VFCS/FSC)

• Step 3: Convert clean energy in processing

• Step 4: Promote deep processing technology and special rubber

• Step 5: Apply circular economy to waste treatment

• Step 6: Measure reserves and commercialize Carbon Credits

Roadmap of steps to restructure rubber production

Chain link solution between Enterprises and Smallholder Rubber

• Establishing sustainable rubber cooperatives:Group smallholder farmers into cooperative groups to easily deploy collective green certification, reducing inspection costs per hectare.

• Signing a contract to purchase products with green conditions:The enterprise commits to purchasing rubber latex at preferential prices higher than the market for farmers who comply with the correct farmer diary recording process and do not violate the forest.

• Support for technology and technical transfer:Enterprises send experts to guide smallholders on sustainable tapping techniques (reducing tapping frequency, protecting tree bark) to prolong the life of the garden and optimize productivity.

Harvesting Vietnamese rubber

Guide businesses to access green credit capital

Guide businesses to access resources

Frequently asked questions about greening the rubber industry (FAQ)

Does converting green production increase business costs?

In the short term, businesses need initial investment costs for processing systems, GIS software and certification fees. However, in the long term, this helps reduce energy costs, avoid tariff barriers and increase sales value per ton of product.

How to verify that smallholder rubber latex meets EUDR standards?

Purchasing businesses need to coordinate with local authorities to collect GPS coordinates of households' gardens, check and compare with satellite image data on changes in forest area before and after the EU regulatory milestone.

What is the difference between regular rubber and FSC/VFCS certified rubber?

Certified rubber is harvested from sustainably managed forest areas, ensuring labor rights and not causing environmental degradation. This type of rubber is prioritized for import into developed markets at a higher price.

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