The government proposed a 30-billion-baht budget to shore up rubber prices and promote sustainable growth for the ailing rubber industry in the long run.
The measures include providing soft loans to encourage more value-added production and supplying farm essentials to small farmers to improve productivity.
"The proposal, initiated by the National Rubber Committee, is aimed at easing the impact of declining rubber prices on planters," said Deputy Prime Minister Yukol Limlaemthong.
Mr Yukol, also the agriculture minister, said the committee will seek cabinet approval for the measures soon.
Affected by the slow global economy, the prices of unsmoked rubber sheets have tumbled to around 70-72 baht per kilogramme this week from 100 baht on average a year ago.
Under the rescue plan, 10 billion baht will be used to support small planters _ those who operate on less than 10 rai _ to improve output while using less farmland. Essentials such as better saplings will be provided.
Part of the fund will go to compensating planters who chop down rubber trees older than 25 years and persuading them to plant other crops in line with the government's farm zoning.
There are about 900,000 small planters, accounting for 76% of all rubber planters in the country.
Another five billion baht will go to the Bank for Agriculture and Agricultural Cooperatives to extend low-interest loans to farm cooperatives which manufacture high-value rubber products such as blocked rubber and compound rubber, instead of traditional raw rubber sheets.
The remaining 15 billion baht will be lent through commercial banks to companies investing in rubber-based products. The government may partially subsidise interest for these loans.
"We believe these measures would promote sustainable growth for the industry. It's better than using money to intervene prices," he said after the meeting.
Earlier, the government spent 20.2 billion baht to buy 200,000 tonnes of rubber from planters to help absorb supply and push up domestic prices.
But the persistently weak market makes it difficult for the government to release the stockpile for fear of further depressing the market prices.
The intervention has failed to push the rubber prices to 100 baht as targeted due to several negative external factors.
The minister said more supply from Laos, Vietnam, Cambodia, and Myanmar has driven down this year's prices. It is estimated the global market will see a rubber surplus of 400,000 to 500,000 tonnes this year.
China is the major buyer of Thai rubber products, and as its economy slows, rubber prices are affected.
China, which imported about 1.1 million tonnes of rubber products from Thailand last year, has delayed the purchase after it reportedly held a large stock of more than 118,000 tonnes as of Aug 4, the highest level in three years.
Rubber fell from an 11-week high yesterday as the Japanese currency strengthened after a US Federal Reserve official cautioned against excessive optimism over the economy.
Rubber for delivery in January on the Tokyo Commodity Exchange dropped 0.5% to end at 264.6 yen a kilogramme ($2,704 a tonne). Futures settled at 265.9 yen on Wednesday, the highest close for a most-active contract since May 29. The commodity used in tyres has lost 13% this year.
Rubber for delivery in January fell 0.8% to close at 19,525 yuan ($3,192) a tonne on the Shanghai Futures Exchange. Thai rubber free-on-board dropped 0.3% to 81 baht a kg yesterday, according to the Rubber Research Institute of Thailand.
About the author
- Writer: Chatrudee Theparat
Position: Business Reporter