Thai Cabinet meets to discuss rubber prices

[webfact]

Cabinet meets to discuss rubber prices



BANGKOK: -- The cabinet met this morning to discuss how to address drastically low rubber prices which has badly affected rubber planters.

Prime Minister Gen Prayut Chan-o-cha chaired the meeting today.

The prime minister earlier said the most effective measure for the time being will be through direct government purchase but at what price that is most appropriate will be discussed.

He has earlier rejected a price of 60 bath a kilo as suggested by former Surat Thani MP and former PDRC leader Suthep Thaugsuban as the affordable price for rubber planters.

Yesterday the prime minister publicly assured rubber planters that the government was considering the problem of low rubber prices a priority and planters had nothing to be worried about.

He stated that the government was in the process of trying to solve all the problems related to the matter and a major government purchase was imminent.

Gen Prayut stated that the purchase will be made at prices which are fractionally higher current market price so as to alleviate the problems currently being faced by rubber planters.

By the end of the week, the exact figure should have been determined, he said.

He also reminded everyone that the first priority is to lessen the burden on rubber planters and that this was only the first step towards finding a permanent solution to the problem.

He stated that after buying the rubber, it will become the government’s responsibility to find alternative uses for them such as entering into production processes to increase their value by processing them into other, more conveniently marketable products.

Source: http://englishnews.thaipbs.or.th/cabinet-meets-to-discuss-rubber-prices


-- Thai PBS 2016-01-12

[NeverSure]

Rice scheme 2.0. Who gets prosecuted for "negligence" when it loses big money?

[TheCruncher]

He stated that after buying the rubber, it will become the government’s responsibility to find alternative uses for them such as entering into production processes to increase their value by processing them into other, more conveniently marketable products.

May be they are looking to make leather from the rubber?

[Estrada]

Rice scheme 2.0. Who gets prosecuted for "negligence" when it loses big money?

No one as the prosecution was a ploy to get rid of the PT party. It is ironic that Suthep is now leading the push to give the rubber farmers a subsidy that is at a higher percentage than the rice scheme subsidy. Although the powers that be say that they will not give subsidies, they are telling 8 Ministries to buy rubber at the highly inflated market prices. So in effect the Government would be subsidizing farmers from tax payers money which includes myself.

[JAG]

Suthep delivered in 2014. Now the Junta must return the favour.

[stickyrice2000]

Rice is more of a necessity than rubber. At least it can be eaten and sustain life.

[sawadee1947]

also he confirmed NO subsidies whatsoever....

"Why should I care about the rubbish I talked yesterday?"

[LannaGuy]

follow the money in 'Rubbergate'

[rubl]

Rice scheme 2.0. Who gets prosecuted for "negligence" when it loses big money?

It's not a 'self-financing' scheme but a subsidy and subsidies are allowed to lose money some here told me.

[rubl]

Getting real difficult. Oil price approaching US$ 30 a barrel.

[Srikcir]

“The prime minister earlier said the most effective measure for the time being will be through direct government purchase … at prices which are fractionally higher current market price”

A fraction is simply a percentage less than 100%. As of 01-12-2015 market price for rubber sheets RSS3 is 33.8 Bt/kg. So if Prayut pays 60 Bt/kg, he is paying 77% or a fraction of 77/100 over market price.

Since 2014, Prayut has been paying the rubber farmers a combination of cash subsidies (similar to what Yingluck paid out to rubber farmers) and forgiveable soft loans to lower their production costs while paying them 60 Bt/kg under the rubber buffer stock program – all designed to give farmers a profit margin.

However, the cost of production is 65 Bt/kg which probably explains why farmers want 70-80 Bt/kg.

Prayut will have to devise a substantial bundle of benefits for the farmers and a way to pay for it if he wants to keep them loyal. And he’s not going to have China and Russia as foils this time for overpriced rubber purchases with the state of their own economies now. We might see Prayut borrow more funds to pay rubber farmers as he did with the rice farmers. In the name of national reconcliation of course.

[tbthailand]

Cabinet meets to discuss rubber prices

and here I thought that had all be "brushed aside",

Wonder what changed? yeah, not really...

[Oziex1]

So there about to do a back flip and cave in to the greedy rubber plantation owners.

That is the Juntas job of course to rubber stamp what the elites want.

[Basil B]

do not worry the price will soon bounce back...

[Dumbastheycome]

Of course the whole situation is now open for extortion. Small holding producers are selling to buyers at extremely deflated prices because they accept the pittance to pay debt etc.. It is the buyers who are behind the lobby for a Govt. guaranteed price. If the Govt. bends to the demand in any excessive way then there will be no acceptable solution long term. If an interim buy up price sufficient to satisfy the buyers is reached while insisting local r&d finds an avenue for viable added value then that would be a prudent solution. The soft loan aspect is in the interests of moving away from latex production in face of a global glut in raw material. It would be hoped tht followup on the application in alternatives of those loans is carried out. It should be noted that those loans are directed towards the producers who are in serious financial demise. The middlemen buyers in one sense have softened the impact but are left holding vast stock. And it is they who are attempting a profit margin which is unrealistic.

Negotiating a finance solution that satisfys all parties is not an easy task. As a transitional solution this can be deemed a subsidy in the real sense. Subsidization long term is almost invariably a path to extortion and wasteful manipulation (corruption)

The key to a long term solution is in convincing and supporting the primary producers to develop alternative production. That is not an overnight solution. And if successful the power niche of the middlemen is also reduced The impact of the global recession/(depression) is not singular to Thailand. But Govt. of any ilk need consider both political and economic necessity if it is responsible. Thailand has not reached the same state of debacle that Western countries have historically arrived at.....paying landowners to leave vast areas vacant in order to create shortages ! That solution is destructive in that the monies paid stay with the landowner and the people who used to work that land are 100% redundant. That doubles the effect on the taxpayer because those redundant also claim on tax payer support.

In an era where expenditure in the interest of the populace is increasing in social expectation at the same time that population is dramatically increasing the demands are massive. Thailand and Asia is a developing area. Comparisons with "advanced' nations that are now staggering is relevant only in that Thailand need avoid the same path. Difficult as that may appear to be.

[GOLDBUGGY]

Getting real difficult. Oil price approaching US$ 30 a barrel.

Good Point!

A lot of people assume that with low oil prices all people benefit from this. But low oil prices also drag down other commodities, like rubber. Rice prices are also are at new lows. What? Did people all of a sudden stop eating? With a world wide drought last year there is more rice around now then before. People are just buying less and demanding lower prices.

When oil prices drop from $100 / bbl to $30 / bbl you are not only putting hundreds of thousands of oil workers out of work but you are also taking zillions of dollars out of the market. Do you think the consumer is benefiting from all this extra money? The Saudi Consumer was paying $0.16 per liter of fuel when oil prices were at $100 / bbl. But now at $30 / bbl. he is paying 50% more and $0.24 per liter. He also has to pay more for electricity and water. Other benefits they enjoyed are also up for sale.

Governments earn a lot of tax revenue from oil in royalties and taxes. When governments lose this revenue they look for other ways to recover this lost money, and like Saudi Arabia did. In Alberta Canada (an oil producing province) they increased the Corporate Tax Rate by 5%. They plan to also increase Personal Income Taxes by the same amount. They also just increased Sin Taxes on Cigarettes and Alcohol by 5%. I am sure the next tax will be at the gas Pump. What benefit do they have now? Not to mention thousands of lost high paying jobs.

So as a Consumer and Tax Payer what are you going to gain by low oil prices. I would say Zero, as the government will find a way to squeeze that extra income out of you one way or the other. With many banks heavily indebted to oil companies, you may find your interest rate gong up to, and a higher mortgage payment, like recently increase in the USA.

But what about countries that imports most of there oil like Thailand. Perhaps the people who benefit the most from low oil prices is farmers, as this keeps there cost down, so in turn profits up. But do you see a line up of farmers buying new trucks or appliances? Perhaps Europe will benefit the most from low oil prices. But like I said, the governments there will find a way to screw that money out of your hands long before you have a chance to spend it. .

[GOLDBUGGY]

Yes! Make a sweet deal with a company like Good Year and build a huge Car Tire Manufacturing Plant in Thailand. You never see Tire prices going down like you do with Rubber Prices. Have high Rubber Import Duty Tax to make Thai Rubber more competitive and at a minimum price of say 60 baht / kilogram. With the many auto and truck manufacturing plants here, there would be no need to import Tires anymore either. Win Win for everyone. You just have to think outside the box. .

[rubl]

Yes! Make a sweet deal with a company like Good Year and build a huge Car Tire Manufacturing Plant in Thailand. You never see Tire prices going down like you do with Rubber Prices. Have high Rubber Import Duty Tax to make Thai Rubber more competitive and at a minimum price of say 60 baht / kilogram. With the many auto and truck manufacturing plants here, there would be no need to import Tires anymore either. Win Win for everyone. You just have to think outside the box. .

With the AEC and various other treaties it's a wee bit difficult to raise input duty taxes. It's even more likely the government is bound by treaty to further reduce tariff barriers.

[Estrada]

Yes! Make a sweet deal with a company like Good Year and build a huge Car Tire Manufacturing Plant in Thailand. You never see Tire prices going down like you do with Rubber Prices. Have high Rubber Import Duty Tax to make Thai Rubber more competitive and at a minimum price of say 60 baht / kilogram. With the many auto and truck manufacturing plants here, there would be no need to import Tires anymore either. Win Win for everyone. You just have to think outside the box. .

My friend runs Goodyear Thailand and he and the other Tyre manufactuers here, tried to explain to the PM that the price of rubber is fixed by the Singapore Commodity Exchange so it is completely out of the control of the Thai Government. They also explained that if they were forced to buy rubber at higher than market prices that they would shut down their tyre factories here in Thailand.

[tomyummer]

Instant failure. The government should instead subsidize other elements of production or indirectly such as petrol prices and supplies. Attack the PTT monopoly. Directly subsidizing by purchasing the product themselves is just throwing the money away. The government will fail trying to go against the commodity exchange and rubber market. Didn't they learn their lesson with the rice?

But at least the rubber can last longer in the warehouses than the rice!

[sawadee1947]

I guess it's time to rehab Yingluck

[rubl]

I guess it's time to rehab Yingluck

Why?

[rubl]

Instant failure. The government should instead subsidize other elements of production or indirectly such as petrol prices and supplies. Attack the PTT monopoly. Directly subsidizing by purchasing the product themselves is just throwing the money away. The government will fail trying to go against the commodity exchange and rubber market. Didn't they learn their lesson with the rice?

But at least the rubber can last longer in the warehouses than the rice!

The unsmoked sheets of rubber need to be processed to be able to last longer. That costs money, although it will make the industry and it's workers happy, plus increases the price of the sheets.

As for 'trying to go against the commodity exchange', the idea is to buy some at slightly higher than current market price using a budget put together within the National Budget. As such this is a subsidy which is allowed to cost money. The maximum loss is the total price the government pays (buy rubber, process, store). The expected loss may be less than half, no one knows yet.

[LannaGuy]

Instant failure. The government should instead subsidize other elements of production or indirectly such as petrol prices and supplies. Attack the PTT monopoly. Directly subsidizing by purchasing the product themselves is just throwing the money away. The government will fail trying to go against the commodity exchange and rubber market. Didn't they learn their lesson with the rice?

But at least the rubber can last longer in the warehouses than the rice!

The unsmoked sheets of rubber need to be processed to be able to last longer. That costs money, although it will make the industry and it's workers happy, plus increases the price of the sheets.

As for 'trying to go against the commodity exchange', the idea is to buy some at slightly higher than current market price using a budget put together within the National Budget. As such this is a subsidy which is allowed to cost money. The maximum loss is the total price the government pays (buy rubber, process, store). The expected loss may be less than half, no one knows yet.

you must be choking on your cornflakes at this reversal by your hero