Thailand's plan to buy 200,000 tonnes of rubber from farmers is expected to be delayed again to April while a process is put in place to ensure money goes to the people supposed to benefit, agriculture sector officials said on Monday. They said the authorities could afford to take their time since prices were supported at the moment by normal seasonal factors.
"We are still in the process of checking that all those getting money are farmers, and that the money the government pays will go through the right channels, which are local rubber co-operatives," said Somchai Charnnarongkul, head of the agriculture department at the Ministry of Agriculture. Perk Lertwangpong, chairman of the Rubber Growers Co-operative Federation of Thailand, was relaxed about the delay.
"There's no point buying now as there's no rubber to buy, because farmers have stopped tapping. We should start buying when they resume tapping around mid-April," Perk said. Farmers in Thailand, the world's biggest rubber producer, usually stop tapping in the dry season from February to April, when rubber trees shed their leaves and stop producing latex.
On January 20 the government approved 8 billion baht ($223 million) to buy 200,000 tonnes of rubber from farmers and keep it in stock to shore up prices. The plan was expected to start in February but had already been pushed back to March.
PRICES HALVED Traders were not surprised, saying prices should be lifted automatically during the period of delay as tight supply in the dry season should provide support. "The measure is pointless, as we can see the price of unsmoked sheet rebounding due to lower supply, not some government measure," said a trader at Thailand's Hat Yai rubber centre.
Unsmoked sheet (USS3), the raw material for export-grade rubber sheet (RSS3), was quoted at 46 baht per kg on Monday, up sharply from around 30 baht per kg in December, when the top three producing countries agreed to cut exports to shore up prices.
The three countries - Thailand, Indonesia and Malaysia - have started cutting first-quarter exports in line with that plan, but worries about weak demand due to an intensifying global recession are still hanging over the market. Cash prices for smoked sheet for export have halved from a 56-year high of $3.25 a kg last July due to falling demand from tyre makers, which consume about 70 percent of the world's natural rubber production.
Farmers and traders said they would be satisfied if the government implemented the buying measures by mid-April as that should prevent prices from falling when supply rises after farmers resume tapping. "If the government's measure helps peg prices at around 45-50 per kg when tapping restarts, I think farmers and traders would be happy," said Prapas Euranontat, secretary-general of the Thai Rubber Association.