Rubber production: How Brazil lost dominance?

Until the turn of the twentieth century Brazil plus countries that share the Amazon basin (i.e. Bolivia, Venezuela and Peru), were the only exporters of natural rubber.

Brazil sold almost 90% of the total rubber commercialized in the world. The reason was that the rubber plants were grown only in the Amazon region of Brazil. The Brazilian rubber industry developed a high-wage cost structure as the result of labor scarcity and lack of competition in the early years of rubber production. Since there were no credit markets to finance the trips of the workers of other parts of Brazil to the Amazon, workers paid their trips with loans from their future employers. Much like indenture servitude during colonial times in the United States, these loans were paid back to the employers with work once the laborers were established in the Amazon basin.

Costs of producing rubber was increased because tappers in the field had to be shipped in from outside the region at great expense. This made Brazilian production very expensive compared to the future plantations in Asia. Brazil dominated the natural rubber market until the first decade of the twentieth century. The Brazilian rubber market was crushed by the rapid development of the more efficient rubber plantations of Southeast Asia.

 

This was not so easy as the Rubber seeds could not survive the long Atlantic journey from Brazil. In 876, an English planter, Henry Wickham, had collected 70,000 seeds and shipped them to England. This has been a controversial issue and the Brazilians call it Rubber Theft.

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