ALTHOUGH a top global producer of natural rubber (NR), Thailand does not have the capacity to determine prices of NR; it only relies on the set prices in the global market, says Deputy Prime Minister and Minister of Agricultural and Cooperatives Yukol Limlaemthong in a recently concluded rubber industry seminar.
He attributes the weak pricing power to low domestic consumption – from the 3.7 million tonnes a year produced NR, the country only uses 500,000 tonnes. Yukol therefore suggests that increasing the nation’s domestic consumption will create more job opportunities; this will also enable Thailand to have a hold in determining prices.
Dr Art Pisarnwanit, Director of the Centre For International Trade Studies, University of Thai Chamber of Commerce, said the private sector involved in the rubber processing industry can afford the 90-100 baht per kg price for natural rubber.
He also agrees with the assertion that Thailand should increase the volume of rubber for domestic use to benefit its rubber sector. If this happens, the country will not only push local prices up but also lessen its dependence on the export market of NR, he says.
An increase of 20% of its domestic rubber consumption will generate 200,000 job opportunities, as well as increase rubber supply value chain to 2.3 trillion bahts from the current 900 billion bahts, he added.
In a related event, farmers in Thailand who were staging protests against falling prices of rubber have recently called off the demonstrations after the Government offered to double the subsidy for NR production. According to report, the subsidy offered is sufficient to raise the farmers’ income to 90 baht (US$2.80) per kg, which is above a market price of 80 baht.
Previously, thousands of rubber farmers had taken to the streets for two weeks, blocking roads and railways, in protest against declining prices of rubber.
While the subsidy being offered has quelled the tension, the farmers said that they will revive the protests once the prices drop anew and subsidy fails to provide them enough income.
Reportedly, prices remain below the 180 baht touched in February 2011, when benchmark smoked rubber sheet (RSS3) hit a record US$6.40 per kg.