"We expect to produce 35,000 tonnes of dry rubber this year, that's lower than last year because some farmers have cut their trees," the director of the office in charge of state rubber plantations, Ly Phalla, told Reuters.

"They didn't expect to make money from rubber as prices were low so they cut their trees instead. We couldn't stop them," he said. Most rubber in Cambodia is grown on state plantations but authorities have been trying to encourage smallholder production in recent years. Production next year is expected to remain at 35,000 tonnes, Ly Phalla said. Output last year totalled 38,000 tonnes. Cambodia has some 55,000 hectares of rubber, including state plantations and smallholder plots. Ly Phalla said it was not known exactly how much had been cut down but his department was still encouraging farmers to plant rubber. Cambodian rubber is exported to Singapore, Malaysia and Vietnam. Asian rubber prices fell sharply when economic crisis struck the region from mid-1997 but have rallied of late.

On Friday, Malaysian RSS1 rubber for November delivery was bid at 273 Malaysian cents (72 U.S. cents) per kg. Cambodia's rubber industry has suffered from years of conflict and neglect. In 1970, as the country slipped into two decades of war and bloody revolution, rubber covered 70,000 hectares and was the second largest export earner after timber. But now, a quarter of Cambodia's rubber trees are more than 40 years old, well past their production prime. Few modern techniques are used. Another chronic problem is the theft and smuggling to Vietnam of some latex from state-owned plantations. The potential area for rubber cultivation in Cambodia is about 300,000 hectares which could produce more than 200,000 tonnes of dry rubber a year, industry officials say.