Lukewarm response from Thai farmers to government rubber scheme

BANGKOK, Jan 25 (Reuters) – The Thai government’s scheme to buy 100,000 tonnes of rubber at above-market prices kicked off on Monday but the farmers targeted by the state purchases showed little interest in selling at the terms on offer.

Farmers in the world’s biggest rubber producer and exporter threatened protests and demanded government help after a slowdown in top consumer China pushed rubber prices to a seven-year low.

Thai rubber farmers from the conservative south are a politically powerful group. They were among the first to protest in 2013 against the civilian government led by Yingluck Shinawatra that was overthrown by the military in 2014.

In response, the Thai government said it would buy up to 100,000 tonnes at 45 baht ($1.25) per kilo for unsmoked rubber sheet (USS3), above current market rates but well below the 60 baht the farmers wanted.

The government has set up more than 800 buying points nationwide, said Chao Songarvut, acting director of the Rubber Authority of Thailand.

The government, with a budget of 5.48 billion baht ($152.1 million), will buy rubber until the end of June, or until the amount purchased reaches 100,000 tonnes, he said.

Deputy Minister Prawit Wongsuwan said the government will buy a maximum of 150 kg per farmer.

The measures have already helped push prices higher. Thai USS3, which farmers sell to factories, was quoted at 39.62 baht ($1.10) per kg on Monday. That was up from 33.80 baht two weeks ago, when Thailand’s cabinet approved the state buying programme.

But rubber farmers would rather sell to traders at lower prices than travel to buying stations because the government procedure is time consuming and complex, Sunthorn Rakrong, a leader of rubber farmer groups in the south, told Reuters.

“Driving across districts just to sell 150 kilos is ridiculous,” he said, adding that farmers usually sell hundreds of kilos at a time.

“The government has good intentions. They’ve already raised market prices just by saying they’d buy rubber from farmers. But they don’t give us a strong enough incentive to sell,” he said. (Editing by Simon Webb and David Clarke)