Thai govt to buy rubber, but below price farmers want

by Reuters
Thursday, 14 January 2016 07:26 GMT

(Adds government and farmer quotes, details)

By Patpicha Tanakasempipat and Pracha Hariraksapitak

BANGKOK, Jan 14 (Reuters) - Thailand's government said on Thursday it will buy 100,000 tonnes of rubber to help support farmers hurt by a price slump to near seven-year lows, although it set an offer price well below the level demanded by the politically powerful group.

Farmers in the world's biggest rubber producer and exporter have demanded a guaranteed price of 60 baht ($1.65) per kilogram from the government, after a slowdown in top consumer China pushed the price of unsmoked rubber sheet (USS3) to around 35 baht.

The government set a price of 45 baht for USS3 and said it would initially buy 100,000 tonnes, including smoked rubber sheets and latex, and could buy more if needed.

"We will propose this to the cabinet. If this measure still doesn't raise market prices high enough for farmers, the government can buy more," Deputy Prime Minister Prawit Wongsuwan told reporters.

The government planned to start purchases next week, with a budget of 4.5 billion baht ($124 million).

Some rubber farmers reacted positively to the move.

"This will certainly raise market prices for rubber in Thailand and affect global rubber prices," said Sunthorn Rakrong, a leader of rubber farmer groups in Thailand's south.

The moves came after protest threats by rubber farmers galvanized a military government that draws much of its support from Bangkok and the south, the country's main rubber-growing region.

The government has already rolled out a series of measures to please farmers, including more than $1 billion in rural subsidies last year.

Thailand has been broadly split along north-south political lines for more than a decade.

The north and northeast holds support for ousted former Prime Minister Thaksin Shinawatra and his sister, former Prime Minister Yingluck Shinawatra, whose government was ended by the army in 2014.

Rubber farmers in the conservative, military-royalist southern Thailand were among the first groups to protest in 2013 against the civilian government led by Yingluck.

"This measure is a satisfactory effort," said Saksarit Sriprasart, a leader of a group of smallholder rubber farmers who threatened a hunger strike this week.

"But if the government fails to reduce our living costs and drive down rubber production, the strike will go on as planned," he said.

($1 = 36.3000 baht) (Writing by Patpicha Tanakasempipat; Editing by Richard Pullin)

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