Guatemala’s money tree

Rubber is big business in Guatemala but complacency and underinvestment hold it back.

So developed is Guatemala’s rubber industry, it is hard to believe that the Hevea brasiliensis is not in fact native to the country. Both the seed and its cultivation were introduced in 1940 by way of an initiative of the US Department of Agriculture to stimulate economic growth in the country and take advantage of its fertile soil. The initiative worked well – Guatemala’s natural rubber exports were valued at roughly USD 146 million in 2020, placing the country in the world’s top ten exporters.

Thailand and Indonesia are also major producers. In response to growing competition, Guatemala will need to innovate to remain competitive. The country has geography on its side – an agricultural engineer and advisor to several rubber cooperatives said, “One of the advantages that Guatemala has over Asian competition is its proximity to the US and Mexican markets, both of which are major automobile producers.”

“One of the advantages that Guatemala has over Asian competition is its proximity to the US and Mexican markets.”

Agricultural engineer and advisor to several rubber cooperatives

Other challenges cannot be quite so easily overcome by its convenient location. The twin pressures of climate change and commodity prices, severely depressed by the Covid pandemic, have negatively affected crop production.

This has underscored the need for the industry to innovate when it comes to cultivation and here Guatemalan agribusiness has not made sufficient inroads. It has fallen largely to foreign clients to drive that innovation rather than by the thinking of homegrown talent. Clients, especially in the automobile sector are moving to a precision form engineering that requires more specialised tyres. To respond, rubber industries in Guatemala are devoting more resources and personnel to specialised refinement of rubber, not just its raw manufacture. Competitors had already clocked into this before Guatemala upped its game.

A specialist in agribusiness and foreign trade and advisor to various rubber companies in Guatemala, said “Important business groups such as the Western Agroindustrial Group are not keeping only the production of the raw material, but rather are seeking to create the agro-industrial chain for latex and other rubber derivatives. Our smallholders need to be able to rapidly respond to such changes in demand.”

“Important business groups such as the Western Agroindustrial Group […] are seeking to create the agro-industrial chain for latex and other rubber derivatives.”

Agribusiness specialist and foreign trade advisor

Guatemala looks set to surpass at least 500,000 tons of production in the next five years. Currently the country produces 350,000. Natural rubber, Guatemala’s speciality, is likely to sustain its appeal over cheaper synthetic alternatives derived from oil products. Investors dislike synthetics which can cause huge environmental harm.

If smallholders can meet demand for harder to produce derivatives, then the country should be able to reach 3% of global production in the next decade and provide much needed revenue for a government contending with dire fiscal constraints. The tree is parched, but with a little innovation and a lot more investment, new roots may yet sprout.

Important Notice
While the information in this article has been prepared in good faith, no representation, warranty, assurance or undertaking (express or implied) is or will be made, and no responsibility or liability is or will be accepted by Deheza Limited or by its officers, employees or agents in relation to the adequacy, accuracy, completeness or reasonableness of this article, or of any other information (whether written or oral), notice or document supplied or otherwise made available in connection with this article. All and any such responsibility and liability is expressly disclaimed.
This article has been delivered to interested parties for information only. Deheza Limited gives no undertaking to provide the recipient with access to any additional information or to update this article or any additional information, or to correct any inaccuracies in it which may become apparent.

Most recent in Commodities

The Grape Divide

The fruity battle between Peru and Chile for global dominance.

Bugging Out

Navigating Latin America’s crop protection chemicals market.

Superstar soybean in South America

Navigating challenges and embracing advancements.

Where the money grows on trees

Making sense of Uruguay’s forest boom.

The ‘berry’ best

Blueberries become Peru's leading agricultural export, surpassing coffee and grapes.

Withering wheat

Droughts affecting 75% of Argentina’s agricultural land decimate the country’s wheat crop.

Meat meeting

Livestock entrepreneurs assemble in Bolivia to consider growth of beef exports.

Agtech booms

Venture capital funds flow into Latin American agtech.

The appeal of steel

Steel production is growing in Latin America

Missing the key ingredient

Amidst inflationary pressures, Mexico could ration cooking oil.