BANGKOK (Jan 7): The Thai government threatened on Thursday to cut rubber export quotas if traders did not play their part in stemming a slide in prices that has taken the value of the raw material to a seven-year low.
Thailand has rolled out several measures to support farmers struggling as their incomes are hit by the slide in global commodity prices. But rather than more hand outs, this time the government in the world’s top producer and exporter of rubber has asked for help from industry players.
“We’ve asked traders to not buy rubber from farmers at prices lower than today’s, and they have agreed to cooperate starting tomorrow,” Amnuay Patise, an adviser to the Thai agriculture minister, said after a meeting with industry associations on Thursday.
Benchmark international rubber futures hit a seven-year low on Thursday as financial markets were roiled by concern of an economic slowdown in China.
Physical market prices in Thailand reflected the global market weakness. Thailand’s benchmark unsmoked rubber sheet (USS3) was quoted at 33.14 baht (US$0.9137) per kg on Thursday, the lowest since dropping to 32.7 baht (US$0.9016) on Dec 17, 2008, according to data from the Rubber Authority of Thailand.
“We’re definitely going to cooperate. There shouldn’t be a problem, since this price is already low,” said Suthep Dechanurak, a member of industry group Thai Latex Association.
If traders continued to drive down prices to export at a profit then the government may cap their exports, said Jintana Chaiyawannakarn, assistant to the minister of agriculture.
“If prices still continue to drop, we might need to use harsher measures such as cutting export quotas to deal with exporters who fail to cooperate,” she said.
The government last year approved a US$365 million aid package to farmers, paying a direct subsidy based on the area of land farmed. That gave farmers 1,500 baht (US$41.36) per rai (0.17 hectares) for up to 15 rai per household.
Farmers have called on the government to do more to help them, including increasing the use of rubber as an ingredient for road building.
Before the meeting on Thursday, Prime Minister Prayuth Chan-ocha said his government did not have enough money to assist rubber farmers with another direct subsidy, but was looking for a sustainable solution to the problem.
“The government has a lot of burdens. Rubber farmers have to help themselves, too,” he said.
(US$1 = 36.2700 baht)
