Thailand to implement rubber price guarantees

Thailand’s Natural Rubber Policy Committee has agreed to set minimum and maximum prices for natural rubber as part of a range of measures intended to stabilise the industry and prevent major fluctuations in price. The Bangkok Post reported on July 22 that a task force chaired by the country’s Agriculture and Cooperative Ministry has been appointed to lay out these price guidelines within one month.

According to the paper, deputy agriculture minister Supachai Phosu has described the Thai government’s short-term solution to recent fluctuations; the government is said to have asked for cooperation from the Bank of Thailand to “support commercial banks in lending to entrepreneurs who buy rubber and keep their stocks when the rubber price is below 120 baht a kilogramme.” Rubber prices increased to 150 baht a kilogramme last week from 80 baht and the trend will most likely continue due to the dry season.

Supachai also said Thailand wishes to cooperate with Indonesia and Malaysia in establishing a minimum price of 120 baht a kilogramme, while the maximum price should not be, reports the Bangkok Post, so high that it drives users to synthetic rubber. Apichart Jongsakul, director of the Office of Agricultural Economics, said the production cost of rubber was about 40 baht a kilogramme, and therefore 120 baht was the ‘appropriate’ price. He added that the price drop late last week was caused by unrest in Libya and the Middle East, the Japanese earthquake and tsunami, along with recent high prices deterring purchases from entrepreneurs in China.

On March 16, Suthep Thaugsuban, Thailand’s deputy prime minister and chairman of the National Rubber Policy Committee, reported implementing a temporary stop on rubber exports in response to declining prices; at the time he said the current decline was not ‘in line’ with the commodity’s trading nature. “Rubber is one of the country’s major sources of foreign exchange and therefore the government must give it special attention,” he said.