Thai govt to buy rubber from growers at 45 baht/kg

[webfact]

Government to buy rubber from growers at 45 baht/kg



BANGKOK: -- The government has decided to buy rubber directly from rubber growers at 45 baht/kg for up to 100,000 tonnes.

Deputy Prime Minister Prawit Wongsuwan, chairman of a panel tasked with resolving rubber price problem, said today (Thursday) that the panel agreed to set the purchasing price at 45 baht/kg for rubber sheets.

The prices for the other rubber products such as latex and cup rubber will be determined based on the price for rubber sheets, said the deputy prime minister, adding that he didn’t know whether rubber growers would be satisfied with the price or not but he hoped they should.

He hinted that the government might, in the future, buy more rubber from the growers.

The Public Warehouse Organisation will be responsible for buying rubber from the growers with funding drawn from the Rubber Fund.

Source: http://englishnews.thaipbs.or.th/government-to-buy-rubber-from-growers-at-45-bahtkg

-- Thai PBS 2016-01-15

[NeverSure]

"...with funding drawn from the Rubber Fund."

Will that be with a rubber check like the rice scheme?

There's nothing populist about this rubber scheme, oh no, no, no. No one goes to jail for being "negligent" by buying rubber above market prices will they? Only if it's rice?

I thought the coup was to save the country from things like this. Oh wellllll....

[LannaGuy]

"The Rubber Fund"? is this part of Rubl's newly created National Rubber Budget which keeps morphing and changing at 'someone's' will?

[Melyn]

And the rice farmers shall surely follow....

[daoyai]

This not the same as the rice scheme at all ! Big difference, the rice purchase was a benefit for the North and the rubber is from the South, BIG difference.

[englishoak]

BOING !

[chainarong]

Last week the DPM announced to all that would listen ( 6 ) that the government had no money to help the Rubber farmers and neither they should , let the market forces decide the price, same goes for all other products , now we find a complete turn around , one could be excused of thinking that this Junta is no better at financial management than their predecessors ..........................................

[diehard60]

Isn't this almost the same as the rice scheme? It will be interesting to see how this pans out.

[DP25]

Isn't this almost the same as the rice scheme? It will be interesting to see how this pans out.

All Thai government subsidize agriculture, the details are important. They are buying a tiny amount of subsidized rubber that they will actually use for development projects. They are only buying 100k tons, which they will use, for a total subsidy cost of a bit over $100 million. Yingluck bought the entire rice crop for over $20 billion dollars, with a loss of $15 billion. This is a very small program that will have no affect on the financial health of the nation.

[LannaGuy]

Isn't this almost the same as the rice scheme? It will be interesting to see how this pans out.

All Thai government subsidize agriculture, the details are important. They are buying a tiny amount of subsidized rubber that they will actually use for development projects. They are only buying 100k tons, which they will use, for a total subsidy cost of a bit over $100 million. Yingluck bought the entire rice crop for over $20 billion dollars, with a loss of $15 billion. This is a very small program that will have no affect on the financial health of the nation.

evidence of $15 Billion loss? and Yingluck did NOT buy it the government did much like this one and 'Statuegate', 'Tanoygate' 'Subgate' and the rest!

[deckape]

a panel tasked with resolving rubber price problem

I believe that is up to the market.

[smutcakes]

Isn't this almost the same as the rice scheme? It will be interesting to see how this pans out.

All Thai government subsidize agriculture, the details are important. They are buying a tiny amount of subsidized rubber that they will actually use for development projects. They are only buying 100k tons, which they will use, for a total subsidy cost of a bit over $100 million. Yingluck bought the entire rice crop for over $20 billion dollars, with a loss of $15 billion. This is a very small program that will have no affect on the financial health of the nation.

If rubber is so important for the developments why did they not buy it before? Or they just realized they need rubber?

So only small groups are allowed to be helped? That sounds fair.

[Lung Mike]

A partial payback to their supporters?

[smutcakes]

A partial payback to their supporters?

That is exactly what it is. You only need to look at the people at the top of many of this 'agencies' like the TAT to know where their affiliations lie.

[Hawk]

The paper tiger PM!

[Srikcir]

Market rubber prices as of Jan. 12, 2016 for Songkhla RSSS3 sheet:

ribbed smoked 42.95 bt/kg (FOB Feb. 2016) (FOB Mar. 2016) 43.15 bt/kg

ribbed smoked 37.78 bt/kg (auction)

unsmoked 35.19 bt/kg (auction)

Prayut's price subsidy is about 20-30% over current auction price but only about 5% above future contract price. So the subsidy is not a great financial burden in the short-term. However, farmer's cost of production is 60-65 bt/kg and even two months out will continue to lose money. The farmers will again demand further subsidy increases within 60 days.

Maybe it's time for another G2G sale of rubber to China at 60 bt/kg. For China it would be viewed as foreign aide to keep a political ally in power.

Note that when Prayut was asked whether rubber growers in other regions besides the South will be given help, he said "southerners would get help first although he was fully aware that all growers are suffering all the same." (2016-01-14) Very clear that this rubber subsidy is politically motivated, no less than Yingluck's rice pledge program.

Prayut has furthered the divide between the North and the South.

[dominique355]

So basically if you make a speculation and that went wrong, just cry loud enough and the government will help you financially. That is so stupid.

I could understand with some effort the government subsidizing farmers who grow food for the general populace, but rubber is not food, it's part of an industrial process.

So why is the government helping a wrong speculation in an industrial process? Just because they are poor? Well, there are many other people who are poor poor who lost money in speculation. Do they get help? No, and right so.

Stop subsidizing rubber!

[Eric Loh]

Some said that this PM has no leadership skill. I think they are right. Flip-flopping on policies even to the extend of usurping his own ministers policy decisions are really signs of poor leadership. The reason that he is faced with a deluge of daily problems stemmed from his poor leadership.

[Toknarok]

When I last checked a few days ago the current price for raw latex (not sheets) was 12 baht a kilo. Rubber farmers here (up North East) are loosing money hand over fist. For the Government to prioritise subsidising the South over Issan is purely and simply political expediency. I wonder whether the subsidies will eventually be extended to the North East, probably never, after all they don't vote the correct way.

[Pib]

So the current govt which earlier said they could not buy rubber at a higher price than the world/going price is now backtracking...now shifting to a populist scheme possibly similar to the previous govt's rice buying scheme although the current govt will deny any similarity. How do your quite protesters?...you throw money at them with populist schemes.

[Eric Loh]

Wtach this space for more demands from the rubber farmers now that they got his attention and know that this guy will bend to pressures. 100,000 tons and buying at 45 Bt are just pittance to the farmer's woes. Just wait for the other farmers for other crops to join in and press for their demands. This guy attract problems with his poor leadership.

[MZurf]

Some said that this PM has no leadership skill. I think they are right. Flip-flopping on policies even to the extend of usurping his own ministers policy decisions are really signs of poor leadership. The reason that he is faced with a deluge of daily problems stemmed from his poor leadership.

"The reason that he is faced with a deluge of daily problems stemmed from his poor leadership. "

No, the reason he is faced with a deluge of daily problems stems from the fact that he overthrew an elected government and took all power into his own hands.

[SouthernMan3]

Market rubber prices as of Jan. 12, 2016 for Songkhla RSSS3 sheet:

ribbed smoked 42.95 bt/kg (FOB Feb. 2016) (FOB Mar. 2016) 43.15 bt/kg

ribbed smoked 37.78 bt/kg (auction)

unsmoked 35.19 bt/kg (auction)

Prayut's price subsidy is about 20-30% over current auction price but only about 5% above future contract price. So the subsidy is not a great financial burden in the short-term. However, farmer's cost of production is 60-65 bt/kg and even two months out will continue to lose money. The farmers will again demand further subsidy increases within 60 days.

Maybe it's time for another G2G sale of rubber to China at 60 bt/kg. For China it would be viewed as foreign aide to keep a political ally in power.

Note that when Prayut was asked whether rubber growers in other regions besides the South will be given help, he said "southerners would get help first although he was fully aware that all growers are suffering all the same." (2016-01-14) Very clear that this rubber subsidy is politically motivated, no less than Yingluck's rice pledge program.

Prayut has furthered the divide between the North and the South.

I don't get where you get "cost of production is 60-65 bt/kg.".

It doesn't cost us anything near that.

Please explain.

[ChrisY1]

I didn't think they'd listen to Suthep....but they are now buying rubber....and no doubt from his plantations in Surat Thani!!

[KarenBravo]

They smoke rubber sheets?

Does that improve the taste?

[Eric Loh]

One thing is clear that the days of small rubber holders who form the majority of suppliers are numbered. The cost of producing rubber in Thailand has been on the rise over the last few years. Labour, chemical, transportation, land and borrowing costs are quite daunting for small farmers. Some big rubber producing and processing companies like Thai Hua Rubber has already strategized well and moved over to Laos and Cambodia. Their business model is to have the plantations outside Thailand and concentrate on trading and manufacturing plus a healthy dose of R&D. The government should realize this and formulate strategies along this model and stop encouraging the farmers by subsidies which only harden their mentality to refuse change.

[BuriramDevelopers]

I am not a politician, so can somebody tell me??

I see no sceme at all, not then and not now. Just a government subsidy system (which is rather normal) that got mistreated by the lower level people in charge of handling this system. At leats that is what i understood from the farmers. Not a sceme, just a plan unable to execute because of corruption.

Subsidy is everywhere in the world right. Or is this a simplistic view on matters. ( i know the former government failed to tell about some big budget problems in this matter, but that is stupid politics , it does not change the idea of subsidising)

better than letting all farmers rot until civil uprise is there.

maybe the government now realizes it has to make someof the same choices they condemned before, because the alternative is worse.

Edited January 15, 2016 by BuriramDevelopers

[Strangebrew]

Well this will snap back in the governments face mark my words. Guess palm oil is next. Thailands scheme of making condoms Farang size fell through I would guess barely covers the head of mine. Need raincoat not rain hat. Maybe make a law about bald tires so these knuckleheads start replacing them before the thread wears through.

[rubl]

I am not a politician, so can somebody tell me??

I see no sceme at all, not then and not now. Just a government subsidy system (which is rather normal) that got mistreated by the lower level people in charge of handling this system. At leats that is what i understood from the farmers. Not a sceme, just a plan unable to execute because of corruption.

Subsidy is everywhere in the world right. Or is this a simplistic view on matters. ( i know the former government failed to tell about some big budget problems in this matter, but that is stupid politics , it does not change the idea of subsidising)

better than letting all farmers rot until civil uprise is there.

maybe the government now realizes it has to make someof the same choices they condemned before, because the alternative is worse.

Since the topic is on a NEW subsidy I think you're posting in the wrong thread. The Ms. Yingluck protection squad is gathering at the topic on her appearence in court I think

[rubl]

One thing is clear that the days of small rubber holders who form the majority of suppliers are numbered. The cost of producing rubber in Thailand has been on the rise over the last few years. Labour, chemical, transportation, land and borrowing costs are quite daunting for small farmers. Some big rubber producing and processing companies like Thai Hua Rubber has already strategized well and moved over to Laos and Cambodia. Their business model is to have the plantations outside Thailand and concentrate on trading and manufacturing plus a healthy dose of R&D. The government should realize this and formulate strategies along this model and stop encouraging the farmers by subsidies which only harden their mentality to refuse change.

I agree. An intermediate step could be to let small farmers to form cooperations to share/shoulder costs and be able to put a more united front towards the rubber processing industry they sell their raw rubber to.