The cabinet on Tuesday approved a 15 billion baht budget to shore up rubber prices, Deputy Agriculture and Cooperatives Minister Nattawut Saikuar said.
Of the total budget, 10 billion baht will come from the state Rubber Estate Organisation and the remaining five billion baht will be an extra allocation, he said after the weekly cabinet meeting.
"If the price situation does not improve, the ministry will ask for an additional budget of 15 billion baht from the cabinet," Mr Nattawut said. "The money will be used to buy at least 200,000 tonnes from farmers."
Photo by Muhamad Ayub Pathan
He said the prices for state purchases from farmers will be increased.
After the government intervenes, prices of raw rubber sheet would be 100 baht a kilogramme and smoked rubber sheet at 104 baht, he said.
If the National Rubber Policy Committee also approves the proposal today, the ministry can start purchasing rubber tomorrow. Purchases will start this month and continue to March next year, the deputy minister said.
Chaiwat Muenmee, an analyst at Bangkok-based commodity broker DS Futures Co, said the new measures show the government is serious in shoring up rubber prices.
Thai rubber free-on-board gained 0.6 per cent to 99.2 baht a kilogramme on Tuesday, according to the Rubber Research Institute.
The price touched 98.6 baht a kilogramme on Monday, the cheapest since Jan 5, 2010, data compiled by Bloomberg show.
Rubber for September delivery dropped 1.4 per cent to 24,270 yuan (US$3,808) a tonne on the Shanghai Futures Exchange.