Lower Global Rubber Demand Leaves Thailand With a Massive Surplus

[Jacob Maslow]

Thailand is facing yet another surplus that may be worse than the rice surplus seen earlier in the year. Currently, rubber prices have tumbled from their 2011 highs as well as overall demand for the country’s rubber exports. Domestic prices for rubber have increased in Thailand, but global prices have not.

The Rubber Study Group states that Thailand has not done anything to put down on its global production surplus. For the fifth year in a row, the country has had a surplus of rubber.

China, the world’s top buyer of rubber, has slowed demand for the material. Prices of rubber today are 70 percent less than they were in 2011. A research group in London states that by keeping up production levels, Thailand is simply masking the bigger issue it will face in the coming years. Much like the major rice surplus that was seen this year, the country is amassing too much rubber that will sit in warehouses.

Thailand's government has been attempting to help the 1.6 million rubber plantation owners in the country as demand slows. The government has limited exports to try and slow the amount of supply in the market and drive up prices. The government is also urging farmers to get rid of aging trees and turn some of the land to palm oil to reduce rubber output.

-- 2015-04-03

[jerojero]

Consequences of domestic farm support, overproduction. Consequences of Thai centric mindset in an increasingly global economy. The king 75 years ago brought in foreigner to guide the Thai economy and country. Thailand prospered. Time for that again methinks.

[alant]

Rice surplus, pay the farmers loans for them. Rubber surplus, assist the farmers. Many will blame the farmers but is it really their fault?

[selftaopath]

Rice surplus, pay the farmers loans for them. Rubber surplus, assist the farmers. Many will blame the farmers but is it really their fault?

Isn't it another example of "cause and effect" of which Thailand and the Thai people appear not understand.

[DLock]

At what point do people realize they have surfed this wave all the way to the beach and get off?

It's not like the price went down overnight. They watched, and waited, and went to the temple and prayed...

[recycler]

Maybe someone will have to stand trail over the rubber subsidy scheme in the future ;-)

[maoro2013]

When did the domestic price increase, certainly not to the farmers.

[jerojero]

Thai governors, whether military or voted in, or elitist have to get past the mindset that Thailand can operate indefinitely or indiscriminately outside the global economy. The competition is relevant and exports internationally competitive. Wake up rulers of this country! Wake up!

[selftaopath]

It appears to me that most Thais do not understand or accept the "Universe's" message of NO. Sometimes business ventures say NO; relationships say NO; elections say NO to one party or the other. But.... unlike the teachings of religions like Buddhism and others many refuse this and get angry/ blame/ resent/ harbor grudges etc. when a resounding NO is just that.

[englishoak]

I feel a handout coming on

Edited April 4, 2015 by englishoak

[Anthony5]

I'm sure catch article 44 will fix this.

[deckape]

I feel a handout coming on

Depends on how many Sino Thai, and 5 star generals have rubber plantations.

Edited April 4, 2015 by deckape

[chainarong]

The world commodity market revolves around tomatoes, over supply of Tomatoes price drops , shortage of tomatoes price rises, look at iron ore price from $150 ton 12 months back to $48 tone yesterday, go figure.

[Thaddeus]

Rice surplus, pay the farmers loans for them. Rubber surplus, assist the farmers. Many will blame the farmers but is it really their fault?

Has it ever crossed your mind to open another mobile phone shop in Pantip Plaza.

Mine neither.

Yes, it is their fault in essence.

But it is crucially the fault of the educational system not teaching critical thinking and looking beyond today.

Edited April 4, 2015 by Thaddeus

[oneday]

The current government better be careful.

A future junta/NACC may be taking them to court and possible jail for "Negligence" in the 2015 rubber fiasco.

[wabothai]

supply and demand don't change that quick in the rubber trade.

There may be some rubber names on the 100-list.

Can't wait.

[rubl]

Well, let me thank posters here for their valuable input. I'm sure the problem can be solved real quick now.

Mind you, even the previous government in September 2013 approved a 21.2 billion Baht funds to improve the rubber price and increased subsidy from 1260 to 2520 Baht per rai for the period September 2013 till end of March 2014. Some export tax was also dropped for four months. The rubber farmers weren't too happy, but still got about 70 - 90 Baht / kilo.

Prices have dropped further. New government continued subsidy for a while, but leaving farmers with less than 60 Baht / kilo at times. Farmers grumbling again. Their production costs are said to be around 65 Baht /kilo.

So, what to do? Of course help them, but a little bit only. Don't try to overdo it, that would only make matters worse. Farmers should understand that the prices they get or not related to what the want, but what others are prepared to pay. Diversification might be a good idea, assuming their land supports other type of crops.

2013-08-16

"Thailand has offered 30 billion baht ($959 million) in aid to rubber farmers to help offset a plunge in the price of the commodity, the latest in a string of costly populist policies the government has aimed at rural communities."

http://www.wsj.com/articles/SB10001424127887323639704579016230980881004

2013-09-30

"A previous intervention from the Thai government in 2012 saw them spend 22 billion baht (USD690m), purchasing 198,000 tons of Thai rubber at above market prices. This led to a build up in stocks, which the government found difficult to sell."

http://spendmatters.com/2013/09/30/thailand-rubber-prices-bounce-back/

2014-12-13

"The Thai government is buying rubber from the market through a 6 billion baht ($183 million) buffer fund to support prices, the deputy farm minister said on Friday, while another fund will support domestic rubber futures with help from private firms"

http://www.reuters.com/article/2014/12/12/thailand-rubber-idUSL3N0TW2R920141212

Edited April 4, 2015 by rubl

[Thailand]

u

I feel a handout coming on

I think that happened already. I think it depends who is doing the handout as to whether it is OK or not?

[Srikcir]

u

I feel a handout coming on

I think that happened already. I think it depends who is doing the handout as to whether it is OK or not?

2014-10-12

Yingluck tried to placate the rubber farmers following violent protests in the south in summer 2013. She doled out $80 per 0.4 acres (0.16 hectares) to help ease dropping prices. It obviously wasn't enough.

2014-12-09

“Many rubber farmers live in the nation's south, a region home to the ultra-royalists who backed the May coup that brought the military to power.”

The Nation 2014-10-19

"Rubber farmers in Surat Thani said yesterday the [Prayut] government's goal to push for a price of Bt60 per kilogram while also providing farmers Bt1,000 per rai, for up to 15 rai as in a fertiliser subsidy, was acceptable....The rubber price is currently under Bt50."

The Nation 2014-10-29

"LEADERS OF rubber farmers in the South have expressed disappointment with the government subsidy of Bt1,000 per rai, limited to a maximum of 15 rai each."

2014-12-09

"farmers were demanding 70 baht ($2.12) for a kilogram of latex rubber and 80 baht per kilo for rubber sheet....latex rubber was selling for 33 baht per kilo while ...the sheet rubber Monday was at 51.65 baht a kilo."

The Nation 2014-12-10

"DISGRUNTLED RUBBER farmers said yesterday that they were giving the government a few more weeks to push the price of rubber up to at least Bt80 per kilogram, or they would kick off massive rallies....the Cabinet had approved a Bt10-billion budget to shore up the price of concentrated latex."

When a PM has unrestricted access to the Thai treasury and absolute power, there is nothing that can't be accomplished.

Edited April 4, 2015 by Srikcir

[Srikcir]

The current government better be careful.

A future junta/NACC may be taking them to court and possible jail for "Negligence" in the 2015 rubber fiasco.

No.

The NCPO has written into the Interim Charter and the draft 2015 Constitution both amnesty and legal relief from any of its present and future actions and decisions. It would take a new government that could circumvent the military's armed forces to negate such provisions. And certainly the military will be watchful that no one will have that capability, under the guise of national security of course.

[Sealbash]

The world commodity market revolves around tomatoes, over supply of Tomatoes price drops , shortage of tomatoes price rises, look at iron ore price from $150 ton 12 months back to $48 tone yesterday, go figure.

Agree. You can also use oil as another example. The drop in price took oil companies, and the entire energy sector by surprise. None of the so called experts predicted that severe of a drop in price. But one thing is certain, as oil is a commodity, the price will eventually rise again.

[rubl]

u

I feel a handout coming on

I think that happened already. I think it depends who is doing the handout as to whether it is OK or not?

2014-10-12

Yingluck tried to placate the rubber farmers following violent protests in the south in summer 2013. She doled out $80 per 0.4 acres (0.16 hectares) to help ease dropping prices. It obviously wasn't enough.

2014-12-09

“Many rubber farmers live in the nation's south, a region home to the ultra-royalists who backed the May coup that brought the military to power.”

The Nation 2014-10-19

"Rubber farmers in Surat Thani said yesterday the [Prayut] government's goal to push for a price of Bt60 per kilogram while also providing farmers Bt1,000 per rai, for up to 15 rai as in a fertiliser subsidy, was acceptable....The rubber price is currently under Bt50."

The Nation 2014-10-29

"LEADERS OF rubber farmers in the South have expressed disappointment with the government subsidy of Bt1,000 per rai, limited to a maximum of 15 rai each."

2014-12-09

"farmers were demanding 70 baht ($2.12) for a kilogram of latex rubber and 80 baht per kilo for rubber sheet....latex rubber was selling for 33 baht per kilo while ...the sheet rubber Monday was at 51.65 baht a kilo."

The Nation 2014-12-10

"DISGRUNTLED RUBBER farmers said yesterday that they were giving the government a few more weeks to push the price of rubber up to at least Bt80 per kilogram, or they would kick off massive rallies....the Cabinet had approved a Bt10-billion budget to shore up the price of concentrated latex."

When a PM has unrestricted access to the Thai treasury and absolute power, there is nothing that can't be accomplished.

Absolutely.

Fortunately the PM also has common sense, so he helps a bit only and makes sure farmers understand he's not going to subsidize them into wealth or for a long time.

[manarak]

At what point do people realize they have surfed this wave all the way to the beach and get off?

It's not like the price went down overnight. They watched, and waited, and went to the temple and prayed...

Can you please show the 30 year chart?

Watched and waited... yes, but what to do except send the workers do something else?

The trees need around 6-7 years to reach maturity and become harvestable.

What alternatives are there for rubber tree fields?

[apetley]

When did the domestic price increase, certainly not to the farmers.

It did increase 4 or 5 years ago but nowhere near a correlation with the graph above. For a while several people in the village left to go rubber tapping as the reward was pretty good but didn't last long.

[GaryB1263]

Rice surplus, pay the farmers loans for them. Rubber surplus, assist the farmers. Many will blame the farmers but is it really their fault?

Has it ever crossed your mind to open another mobile phone shop in Pantip Plaza.

Mine neither.

Yes, it is their fault in essence.

But it is crucially the fault of the educational system not teaching critical thinking and looking beyond today.

Education for the masses is the number 1 problem facing this country.

[BigBadGeordie]

Rice surplus, pay the farmers loans for them. Rubber surplus, assist the farmers. Many will blame the farmers but is it really their fault?

Has it ever crossed your mind to open another mobile phone shop in Pantip Plaza.

Mine neither.

Yes, it is their fault in essence.

But it is crucially the fault of the educational system not teaching critical thinking and looking beyond today.

Education for the masses is the number 1 problem facing this country.

Nope wrong....

Happiness

Thainess

And section 44

So the Big Boss said....

And if you check the polls 98.78675% of Thai people agree

[Thaddeus]

Rice surplus, pay the farmers loans for them. Rubber surplus, assist the farmers. Many will blame the farmers but is it really their fault?

Has it ever crossed your mind to open another mobile phone shop in Pantip Plaza.

Mine neither.

Yes, it is their fault in essence.

But it is crucially the fault of the educational system not teaching critical thinking and looking beyond today.

Education for the masses is the number 1 problem facing this country.

Correct, and it is also the largest threat to the status quo (not the band)

[BSJ]

It was only 3 or 4 years ago the government was giving a subsidy to help with the cost of establishing a rubber plantation!

[hansgruber]

Time to grow hemp. It has many more uses than just smoking it.

Hub of hemp has a nice ring to it.

[mikemac]

It was only 3 or 4 years ago the government was giving a subsidy to help with the cost of establishing a rubber plantation!

Must have been the only scheme they created that ever worked, judging by the surplus.

Don't know why there are any agricultural problems in Thailand at all, with such an abundance of farang farming experts at hand. Wonder the government has not snapped them up and put them on the payroll.

Or perhaps the government thinks they are just nasty Thai bashers who know how to use Google good enough to dig up charts and figures to push their anti-Thai cause.

Edited April 4, 2015 by mikemac