Thai rubber growers are calling for an investigation into government claims it sold half the country’s stockpile of the commodity, as farmers grow increasingly disillusioned with what they see as a lack of state support. The military government said in early September it had struck a deal to sell half the 200,000-tonne national stockpile, built up when the previous government bought the rubber to support domestic prices and bolster farmer incomes.
The head of Thailand’s rubber industry group said the published terms of the sale were unclear. The government did not name the buyer and gave a sales price above the spot market. “We are afraid that the deal could be just a political ploy to tell the market that the stocks have been slashed,” Perk Lertwangpong, head of the Rubber Growers Cooperative Federation of Thailand, said on Tuesday. “But the rubber may not have gone anywhere and could still keep pressuring prices, with the government still paying burdensome storage costs.”
Senior officials in the Rubber Estate Organization), which oversees the country’s rubber stocks, declined to comment on the deal, as did officials from the agriculture ministry. The government of the world’s largest producer and exporter of rubber said it would look to sell remaining stocks by month-end, seeking to cut expensive storage costs and recover some of the billions of dollars spent on agricultural subsidies by the administration it replaced.
Cheap fertiliser?
Coup leader and Prime Minister Gen Prayuth Chan-ocha has promised fiscal discipline and an end to what he sees as the populist vote-buying policies of previous governments. He has offered soft loans and cheap fertilizer to farmers, who say that is not enough and are threatening to protest. Prayuth says farmers demands for a guaranteed price for their rubber of 90-100 baht per kilogramme, compared to existing market prices of around 45-49 baht per kilogramme are unrealistic.
“Who on earth can they sell this rubber to? I don’t understand,” Prayuth said in a speech on Monday. “We have a large rubber stockpile in this country and farmers keep on growing more rubber trees. How about selling the produce on Mars in the future? Demand on this planet is no longer enough.” Unprotected by a government scheme, rubber farmers in Thailand have seen local prices slump nearly 30% this year in tandem with Tokyo’s regional benchmark as economic growth slows in key rubber consumer China.
Perk said his group had asked the newly-appointed agriculture minister to launch an investigation into the stock sale, and demanded the publication of documentation for the deal.Sources at several major exporters told Reuters they had not bought the rubber. They did not want their companies to be identified due to the sensitivity of the matter.
Although the Thai stockpile only accounts for about 1.6% of annual global rubber production, it has become a burden for the oversupplied global market. Thai government officials said they are in talks with three potential buyers over selling the rest of the stockpile. Asia accounts for about 90% of the world’s natural rubber output. The tyre-making industry makes up about 60% of global rubber consumption, with the commodity also used to make gloves and condoms.