September 9, 2013 / 8:02 AM / in 4 years

Thai government rethinks rubber plans as farmers threaten more protests

Protesters face riot policemen as they come close to the airport in Surat Thani September 4, 2013.Athit Perawongmetha

BANGKOK (Reuters) - The Thai government is looking at additional measures to help rubber farmers struggling with low prices after some rejected a deal offered last week, the agriculture minister said on Monday, although he ruled out direct intervention.

"We are looking at ways to meet farmers' demands. We could take measures to support them, but we have no plans to buy rubber at high prices again as that has not had any impact on market prices," Yukol Limlaemthong told reporters on Monday.

The government said on Friday it had reached a deal with tens of thousands of farmers protesting over low prices in the country's south, and would aim to push up the price of unsmoked rubber sheet (USS3) to 90 baht ($2.78) per kg.

The populist government of Prime Minister Yingluck Shinawatra had come under pressure to resolve the dispute after violent clashes between police and a group of protesters who hurled rocks and bottles filled with an acidic liquid.

Unsmoked rubber sheet, which farmers sell to factories, stood at 81 baht per kg on Monday, close to levels of around 84 baht seen in mid-2012, when the global economic slowdown cut demand for rubber and forced the government to set up an intervention scheme to support farmers.

The price has picked up from around 75 baht in late 2012, helped recently by the prospect of government intervention, but it remains far below the 180 baht touched in February 2011, when benchmark smoked rubber sheet (RSS3) hit a record $6.40 per kg.

Thailand is the world's biggest producer and exporter of natural rubber, with around 90 percent of its output going overseas.

The government has not said how it will push prices higher. Some farmers want direct intervention and said they wanted a price of 95 baht per kg rather than the 90 baht proposed last week.

"That was not a fair agreement. We are bound to what the government wanted and we don't accept that," Amnuay Yutitham, a protest leader, told Reuters on Monday.

After the drop in prices last year, the government spent 22 billion Thai baht ($690 million) buying rubber from October 2012 to May 2013 and built up stocks of 210,000 tons of rubber sheet without making much impression on prices.

"There will be another big protest on September 14 if the government doesn't come up with what we demand," Amnuay said.

The protests have had little impact on rubber prices, but have disrupted distribution systems and delayed some shipments.

($1 = 32.3950 Thai baht)

Editing by Alan Raybould and Richard Pullin

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