Thai govt to buy rubber for less than price demanded by farmer

Thai govt to buy rubber for less than price demanded by farmer
PHOTO: The Nation/ANN

Govt to buy only 100,000 tonnes of rubber at a price well below the Bt60 (S$2.40) per kilo demanded by farmers; no room for middleman in the deal.

THE GOVERNMENT will tomorrow finalise the buying price of rubber sheets totalling 100,000 tonnes from planters hit hard by the record low price of this commodity after planters demanded a minimum price of Bt60 per kilogram to cover their production cost.

Kraiboon Suad-song, chairman of the state-owned Public Warehouse Organisation (PWO), met representatives from 16 government agencies from eight ministries that would buy rubber sheets. He said the buying price would likely be less than Bt60 per kilo.

At Bt60 per kilo, it will cost the government about Bt6 billion to implement |this programme aimed at alleviating |the economic hardship of planters in southern provinces and other parts of the country.

Kraiboon said deputy premiers Prawit Wongsuwan and Somkid Jatusripitak would hold meetings tomorrow and announce the official buying price and details of the programme.

The National Farmers' Council (NFC), meanwhile, has proposed that the government buy latex at Bt55-Bt56 per kilo and rubber sheets at Bt60 per kilo. Prices have plummeted to a 10-year low of Bt30-Bt31 per kilo while production cost is more than Bt60 per kilo. This has resulted in widespread despair among owners and workers at rubber plantations, especially in 14 southern provinces.

In addition to price intervention, the NFC has suggested that the government support local communities to invest in |the construction of small rubber-processing plants by providing low-interest loans from Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives.

This will be part of the government's policy to promote small and medium enterprises (SMEs) at the tambon level.

Kraiboon said the government will also set quotas for rubber planters to sell their rubber sheets to state agencies via the PWO based on the size of their plantations and registration with authorities when owners apply for state subsidy.

Previously, the government provided a subsidy of Bt1,500 per rai for workers and owners of rubber plantations following the rubber price slump. Natural rubber prices are also under pressure due to the sluggish crude oil prices, which have dropped to a low of US$30 per barrel.

Thailand at present has an annual output of 4 million tonnes of rubber, while the domestic demand is just over 1 million tonnes. Exports have also declined due to the sluggish global economy.

Kraiboon said the programme for government agencies to buy rubber sheets from planters should start around the end of this month after the buying price and other conditions are finalised.

Meanwhile, Prasit Mee-sen, director of Rubber Authority of Thailand, said the programme would be based on each ministry's needs. For example, the Public Health Ministry will buy latex from planters to produce rubber gloves, while the Transport Ministry may buy a lower grade of natural rubber for use as an ingredient for road construction.

He said the programme is expected to help shore up the domestic rubber price, even though 100,000 tonnes are not a large amount compared to the country's overall supply.

According to Kraiboon, Prime Minister Prayuth Chan-o-cha wanted the government to buy rubber sheets from farmers, not from merchants. PWO officials would work with personnel of the 4th Army Region in southern Thailand, for example, to help screen planters who are eligible to sell rubber at a subsidised price to government agencies.

This will help prevent middlemen from gaining from this programme, which will dip into taxpayers' money. In addition, there would be specific buying conditions and quotas.

However, the NFC said the PWO may run into problems because it has no experience in intervening rubber market intervention. In addition to small planters, NFC suggested that the government should also buy from farmers' organisations that currently have a large inventory.

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