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Thai govt sets out measures to aid rubber farmers after price slump

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Thailand's government announced a series of measures on Thursday to help rubber farmers, who have been hurt by a drop in global prices to five-year lows, but some farmers' leaders said the policies would do little to support the market - PHOTO: AFP

[Bangkok] Thailand's government announced a series of measures on Thursday to help rubber farmers, who have been hurt by a drop in global prices to five-year lows, but some farmers' leaders said the policies would do little to support the market.

Deputy Prime Minister Pridiyathorn Devakula, who oversees economic issues, told reporters the measures, including subsidies to farmers and some buying in the market by a state body, would have to be approved by cabinet next week. "We believe they will increase rubber prices within the next couple of months so they do not fall below 60 baht per kg," he said.

Natural rubber was quoted at 48 baht per kg on Thursday.

Thailand is the world's biggest producer and exporter of rubber. It produced 4.2 million tonnes in 2013, of which around 86 per cent was exported.

Demand is slack at the moment because of a slowing Chinese economy and lacklustre growth in the developed world.

Pridiyathorn said small farmers would receive a direct subsidy of 1,000 baht (US$31) per rai (0.16 hectare), capped at 15,000 baht.

He estimated that around 850,000 farmers would receive the handout, which would cost approximately 8.5 billion baht (US$262 million).

The military-led government in power since May has ruled out the sort of intervention schemes used by previous administrations, which are costly and have led to a build-up in stockpiles that have proved hard to sell this year.

However, Pridiyathorn said the state agricultural bank would provide a fund of around 20 billion baht to the Rubber Estate Organisation (REO) to buy rubber from the market for resale.

A further 10 billion baht would be given to rubber cooperatives to buy rubber from farmers and then sell it to the REO. "Once they start buying, farmers' minds can be at ease as we already have sale orders for next month and every other month. I guarantee we will not have any left in our stocks," Pridiyathorn said.

Soft loans will also be made available to rubber companies and to farmers with smallholdings.

However, some farmers were unimpressed. "It's nonsense," Perk Lertwangpong, head of the Rubber Growers Cooperative Federation of Thailand told Reuters. "This does not work, it does not address the right issue." Soft loans to help rubber companies and cooperatives were announced last month after farmers had threatened to stage protests because of the collapse in prices and a lack of government aid.

Rubber farmers took to the streets earlier this year, joining in the demonstrations that undermined former Prime Minister Yingluck Shinawatra, whose government was finally ousted by the military in May.

Coup leader and Prime Minister General Prayuth Chan-ocha has promised fiscal discipline and an end to what he sees as the populist vote-buying policies of the previous government. REUTERS