The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) has extended a 6-billion-baht loan to the Rubber Estate Organization (REO) to fund the buffer stock scheme as part of government measures to shore up falling rubber prices.
The REO can draw down the loan from November-April as a fund to purchase smoked rubber sheet No.3 from planters, executive vice-president Pradermchai Chansena said.
He said the loan was in line with recent efforts by the cabinet to assist rubber growers following sagging prices by targeting to push up the price to 60 baht a kilogramme from 49 baht.
The Finance Ministry has guaranteed the loan and promised to subsidise interest costs to the state-backed farm bank at 1% on top of the floating deposit rate.
Other measures to aid rubber farmers include another 10-billion-baht loan from six commercial banks — Bangkok Bank, Krungthai Bank, Kasikornbank, Siam Commercial Bank, TMB Bank and Thanachart Bank — to buy rubber latex and a cash handout of 1,000 baht per rai to rubber farmers, with a maximum amount of 15,000 baht per farmer household.
To avoid repeating the disaster of the now-defunct rice-subsidy scheme that contributed to the May 22 ouster of the previous government, this administration has indirectly subsidised the rubber industry by absorbing the glut to balance supply and demand.
Thailand produces 4.5 million tonnes of rubber sheet annually, of which 500,000 tonnes are used domestically.
Under the buffer stock scheme, the REO has bought and sold rubber from spot and forward markets to create a rolling stock of 200,000 tonnes from October-March.