Thai agriculture ministry to launch overall rubber reform

[webfact]

Thai agriculture ministry to launch overall rubber reform
By Digital Content



BANGKOK, Nov 25 -- Deputy Agriculture and Cooperatives Minister Amnuay Patisae promised to launch a national rubber reform program and seek cooperation from neighboring countries to increase the global rubber price.

He made the promise while receiving a complaint from growers opposing the Rubber of Thailand Bill on setting up a Rubber Organization of Thailand to manage the resource, the rubber development fund, define the powers of the Rubber Board of Thailand, and set fees for rubber export.

Mr Amnuay said the reform would cover rubber growing, operators, latex processing, rubber exports and joint rubber marketing efforts with neighboring countries.

The minister said Thailand agreed with Indonesia, Malaysia, Myanmar, Laos, Cambodia and Vietnam to increase the natural rubber price to Bt60 per kilogram in 18 months.

Chinese operators' purchase of Thai rubber was a good sign, he said.

Tha government was speeding up financial aid to 8,700 rubber grower families.

The subsidy is set at 1,000 baht per rai of plantation and is estimated to cost the state Bt8.7 billion. Payments began Nov 1.

Opponents of the Rubber Authority of Thailand bill see it not protecting everyone in the rubber business, that it left out farmers with no land rights documents and latex collectors who always paid a rubber duty.

They also demanded actual representatives of rubber growers comprise the majority of the rubber authority board and that a rubber farmers' fund be raised from the so-called Cess duty to cope with the rubber price crisis. (MCOT online news)


-- TNA 2014-11-25

[BigBadGeordie]

Aha a Rubber Cartel, did the last government not suggest something similar with rice? And we all know how well that went!

[Chang_paarp]

Aha a Rubber Cartel, did the last government not suggest something similar with rice? And we all know how well that went!

At least they are involving the neighbours this time. Just wait till the free marketeers start to jump up and down, there will court cases and all sorts of fun.

On the other hand it could just be an expulsion of hot air by a Thai government minion.

[Gulfsailor]

Farmers in Ivory Coast swapped cocoa and coffee for rubber en masse since around 2010. Millions of hectares will be ready to start producing between 2015 and 2018. Unlikely the rubber price will get significantly higher for the foreseeable future.

Best if rubber farmers in Thailand switch to cocoa, as that will likely go up in price the next few years as supply will diminish and demand keeps growing rapidly.

[LuckyLew]

"The minister said Thailand agreed with Indonesia, Malaysia, Myanmar, Laos, Cambodia and Vietnam to increase the natural rubber price to Bt60 per kilogram in 18 months."

Silly me ... I always thought price was set by the market ... supply and demand ...

I smell another mess or they are just talking nice to appease the rubber farmers

How about telling them to grow a more lucrative crop? one that is actually in more demand

[chainarong]

About time that the administration realised there are more than rice farmers out there, however giving handouts is not the way to go , incentives are more productive, dependence on the handout mentality farmers will not try to progress or be inventive and what happens if economics dictate you can no longer support farmers , as for seeking neighbouring countries to set a price , I think price fixing is illegal in international trade. and you could find yourself in The Hague facing court.

[Mosha]

Farmers in Ivory Coast swapped cocoa and coffee for rubber en masse since around 2010. Millions of hectares will be ready to start producing between 2015 and 2018. Unlikely the rubber price will get significantly higher for the foreseeable future.

Best if rubber farmers in Thailand switch to cocoa, as that will likely go up in price the next few years as supply will diminish and demand keeps growing rapidly.

Ghana started to harvest this tear.

[Bosse137]

"The minister said Thailand agreed with Indonesia, Malaysia, Myanmar, Laos, Cambodia and Vietnam to increase the natural rubber price to Bt60 per kilogram in 18 months."

Silly me ... I always thought price was set by the market ... supply and demand ...

I smell another mess or they are just talking nice to appease the rubber farmers

How about telling them to grow a more lucrative crop? one that is actually in more demand

How about YOU telling us which crop you have in mind! Surely you must know,right?! I mean,before we are uprooting all the trees we waited seven years for to mature,we like to be sure we choose the correct crop this time.But what if everybody choose the same one,what will happen to the price on that..?!

[Ulic]

Falling oil prices mean falling rubber prices. All these guys have to do is

get the oil prices back over 100$ a barrel and all will good.

[Thai at Heart]

Aha a Rubber Cartel, did the last government not suggest something similar with rice? And we all know how well that went!

It's more doable with rubber. The Thai companies have operations throughout SE Asia.

[rickirs]

"Deputy Agriculture and Cooperatives Minister Amnuay Patisae promised ..... to seek cooperation from neighboring countries to increase the global rubber price."

Is he aware that Thailand is already a member of an organization with Indonesia and Malaysia called the International Tripartite Rubber Organization which operates the cartel International Rubber Consortium established in 2002? So the IRCC adds a couple new asian members. Big deal.

Commodity cartels are not new in the world and for the most part their ability to manipulate world prices has been debatable. Some cartels having success include de Beers (diamonds), OPEC (oil), and the Indonesian & Grenada Cooperative Nutmeg Associations (98% of world's nutmeg).

However, to a large degree:

''Cartels sow the seeds of their own destruction by driving prices to levels that cause new increases of output from new sources'' ... ''Over the shorter periods cartels in some products can work, and even have done so spectacularly. But over the long term they fail.'' - C. Fred Bergsten, Director of the Institute for International Economics.

Examples of failed price fixing are typically in raw commodities such as potash, lead, zinc, sugar, cotton, and timber. The major reason for failure is the adequacy of supply, ease of market entry by competitors, nonexclusiveness of the products, and availability of substitutes.

So while expanding the Indonesian rubber cartel to include Myanmar, Laos, Cambodia and Vietnam may provide a nominal short term increase market price for rubber, there is no guarantee that its members will not rebel for their own national interests as do the OPEC members. Nor does it prevent new competition from other countries such as Ghana and Liberia that have the climate and resources to produce rubber with the same cost of production as does the IRC cartel et al.

In fact South America comes to mind as an major potential supplier. Brazil only harvests rubber from wild rubber trees and trees introduced by the British in the 1800's from Asia in the Amazon Valley. Increase in plantings and production has only been restrained by LOW RUBBER PRICES and a leaf disease. Labor is not an issue for South American rubber plantations:

"The labor available in the Amazon Valley and nearby states of Brazil is reported as being probably as good as any body of tropical workers in the world ... " - Foreign Affairs

Meanwhile India remains the world's fifth-biggest natural rubber producer, but must import rubber from Indonesia, Vietnam, Malaysia and Thailand largely because of monsoon disruptions. Again a rise in rubber market prices might provide motivation for India to invest further diversify and increase its rubber manufacturing centers.

What Amnuay proposes may only be a "feel good" plan to show his ministry is doing something / anything about Thailand farmers' financial plight. But short of provinding the rubber farmers more Prayuth government subsidies and other financial forms of support, the solution isn't that clearcut. Ironically, the IRCC met in February 2014 to discuss actions needed to reverse rubber prices declines. Recommendations were to cut exports, reduce tapping frequency, or buy the

commodity from farmers in a co-ordinated fashion. I don't think Amnuay will dare to make those first two suggestions to Gen. Prayuth.

Edited November 26, 2014 by rickirs

[bangon04]

Aha a Rubber Cartel, did the last government not suggest something similar with rice? And we all know how well that went!

At least they are involving the neighbours this time. Just wait till the free marketeers start to jump up and down, there will court cases and all sorts of fun.

On the other hand it could just be an expulsion of hot air by a Thai government minion.

Perhaps they got tired waiting for the rubber price to rebound on its own, and decided this way would be less of a stretch....

[paymaster]

"The minister said Thailand agreed with Indonesia, Malaysia, Myanmar, Laos, Cambodia and Vietnam to increase the natural rubber price to Bt60 per kilogram in 18 months."

Silly me ... I always thought price was set by the market ... supply and demand ...

I smell another mess or they are just talking nice to appease the rubber farmers

How about telling them to grow a more lucrative crop? one that is actually in more demand

You mean like OPEC, diamonds and several other commodities where supply is controlled to enable the price to be artificially controlled.