The Thai military government has approved the sale of the country’s large rubber stocks and is in negotiations with potential buyers, a senior rubber-industry official said Monday.
Chanachai Plengsiriwat, director of the Rubber Estate Organization, which oversees the country’s rubber industry, said the junta approved the release of the natural-rubber stocks last week but didn’t specify the quantity that would be sold.
The first lot under negotiation, however, “should be at least half of the stock,” or 100,000 metric tons, he said. The Thai government’s rubber stockpile stands at around 208,000 tons. Mr. Chanachai said the rubber would be sold at a loss.
The previous civilian government spent 22 billion Thai baht ($689 million) as it built the stockpile under state-funded price-support programs that included buying rubber at above-market rates to support rural incomes—a move that mirrored the nation’s rice-subsidy program.
Natural-rubber prices have fallen more than 60% from their February 2011 peak. Thailand, the world’s largest producer and exporter of the commodity, had tried various ways to boost prices for farmers but to no avail, as global supply outstripped demand for several years.
The program’s expenses have also taken their toll.
“The stock of rubber has been a huge burden for us. Various costs have been involved, such as insurance, warehouse rent, maintenance and so on. We have tried every possible way to shore up prices but they never rose,” Mr. Chanachai said.
The planned sale of the stockpile was announced in early May, weeks before a coup d’état changed the country’s political landscape.
Earlier this month, the Thai government resumed selling rice from a large stockpile that the previous government had also accumulated under the subsidy programs.