The world’s biggest rubber producer has been hit by a 40% decline in prices over the past two years, accentuated again recently as a trade war between the United States and China hurt Chinese demand for Thai rubber.
According to a report by Reuters, the government agreed to subsidies worth 18.6 billion baht (US$567 million), at a cabinet meeting, but rubber farmers are upset as the measures would only help about one in 10 farmers.
Rubber farmers, who have been threatening to stage a protest in recent weeks.
Manat Boonphat, the president of Small Rubber Tapper and Farmer Association of Thailand, said the government would be better off buying rubber from farmers at a price above the market rate.
Prime Minister Prayut Chan-ocha has appealed to farmers not to stage a protest by promising to help them.
The measures will take effect in January and include a direct subsidy of 1,100 baht (US$33) per rai of land (0.16 hectare), capped at 16,500 baht, for small rubber farmers who are registered with the Rubber Authority of Thailand.
Rubber tappers who work on registered farms but do not own the land will get a handout of 700 baht (US$21) per rai (1600sqm) of land, capped at 10,500 baht.
“We estimate that this measure will benefit about one million farmers and 300,000 rubber tappers,” said Luck Wajananawat, deputy minister of agriculture and cooperatives.
Last year Thailand produced 4.5 million tonnes of rubber from 20.32 million rai of land and exported 85% of the overall production. Thai benchmark RSS3 rubber grade was quoted at US$1.35 per kilogramme.
In 2013, hundreds of rubber farmers staged protests around the country, blocking roads and a regional airport in the south. They were part of much larger demonstrations in Thailand which eventually turned into a bigger political movement that paved the way for the 2014 military coup.
Prayut said on Tuesday that farmers need to adjust to the changing global economy, and said the government would press ahead with plans to reduce the country’s rubber-growing areas and increase domestic consumption of rubber to help reduce price fluctuations in the long term.