A government panel agreed Friday to expedite subsidy payments to rubber farmers in exchange for them dropping planned street protests while policymakers work to reform the industry.
Kanchana Jan-on, 22, collects rubber on a rubber plantation in Phunpin, Surat Thani province, in this file picture taken Sept 5, 2013. A government panel agreed Friday to expedite subsidy payments to rubber farmers in exchange for them dropping planned street protests while policymakers work to reform the industry. (Reuters photo)
The Natural Rubber Policy Committee, chaired by Prime Minister Gen Prayut Chan-o-cha, said it would work to get 3 billion baht in subsidies into the hands of farmers who have had trouble providing proper documentation to get the government hand-outs. The subsides constitute the last 10% of a 30 billion baht package approved earlier to aid farmers, who have been hit hard by tumbling rubber prices.
In addition to payments of 2,520 baht per rai, farmers also will get access to five billion baht in loans being made available to two dozen cooperatives by the Bank for Agriculture and Agricultural Cooperatives to support rubber processing.
The BAAC will start lending next month to 24 high-potential cooperatives that have experience in collecting rubber and primary processing. They will create a network covering five rubber-plantation regions in provinces including Chon Buri, Buri Ram, Surat Thani and Yala.
The pledge to continue financial support came amid requests by the rubber-policy committee that the industry have patience as it works get the nation's "rubber train" back on track. Thailand's huge stockpile of rubber has pushed down prices and the industry needs reform if the market is to rebound, policymakers said.
Gen Prayut said industry leaders agreed to call off a planned Oct 8 protest.
Among the reforms, the industry needs to cut down old rubber trees and slow rubber tapping to reduce the supply, Gen Prayut said. The Ministry of Natural Resources and Environment has been tasked with using satellite imagery to survey the plantation areas to determine where trees need to be culled.
"We have to check whether the rubber plantation encroaches on national forest area or not. If we get the information, we can calculate and set the correct policy. Thailand currently has no consistent data," Gen Prayut said.
A southern rubber farmer collects buckets of latex. Government policymakers say the industry has to remove excess trees and reduce tapping if it hopes to see prices rise again. (Bangkok Post photo)
Thailand will expand the area it will clear of aging trees by 33% to 400,000 rai a year in the season starting in October, Prasit Meadsen, acting director of the Office of the Rubber Replanting Aid Fund, told Bloomberg News Sept 4. The programme, to be implemented for seven years, will cut supply by 27,000 tonnes annually, he said.
The country, meanwhile, laid plans to unload all the rubber it holds in state stockpiles, starting with 100,000 tonnes which it already agreed to sell. However, the head of Thailand's rubber industry group complained to Bloomberg that the published terms of the sale were unclear. The government did not name the buyer and gave a sales price above the spot market.
"We are afraid that the deal could be just a political ploy to tell the market that the stocks have been slashed," Perk Lertwangpong, head of the Rubber Growers Cooperative Federation of Thailand, told Bloomberg Tuesday. "But the rubber may not have gone anywhere and could still keep pressuring prices, with the government still paying burdensome storage costs."
After Friday's meeting, Gen Prayut acknowledged that the committee has not yet reached a decision whether to sell the stockpile, which was built up under the previous government's rubber-support scheme.
Gen Prayut said the government will try to push prices, which sit around 60 baht a kilogramme, back toward their February 2012 peak of 170 baht a kg by working with foreign governments and increasing domestic demand.
He assigned the Agriculture and Cooperatives Ministry to talk with Indonesia and Malaysia on cooperative measures to boost rubber prices.
Rubber tumbled to its lowest prices in five years early this month amid the Thai glut, and rising stockpiles in China, the world's largest user. Futures on the Tokyo Commodity Exchange, down 64% from the 2011 record, will climb to 205 yen a kilogramme ($1,910 a tonne) by the end of the year, according to analysts based in Tokyo, Singapore and Bangkok surveyed by Bloomberg News on Tuesday.
While international analysts expect overseas stockpiles to shrink while demand ticks upward, the Thai government will work domestically to use of its stockpiles by requiring higher rubber content in such things as road paving and mattress manufacturing, Gen Prayut said.