Cabinet to discuss subsidies for rubber farmers on Tuesday

On Tuesday the cabinet will meet to discuss a proposal to double the subsidy paid to rubber farmers to compensate or the low price of rubber. However the agriculture minister said that these measures many not be enough to placate some farmers who are planning further protests this weekend.

Agriculture Minister Yukol Limlaemthong said farmers can expect to receive 2,520 baht per rai up to a maximum of 25 rai in a scheme that will run until May 2014, at a cost of 21.29 billion baht. This amount is double what the farmers were offered last week, and will give farmers ten baht per kilo more than the market value of raw rubber which is currently 81 baht. Some groups of farmers however have reported that they want at least 95 baht per kilo.

Prime Minister Yingluck Shinawatra has come under pressure to resolve the dispute after violent clashes last week between police and protestors who hurled rocks and bottles filled with acidic liquid. Yukol said the government would avoid direct intervention because that would distort the market and would be cost prohibitive on top of the 600 billion baht already spent on rice subsides.

Thailand is the world’s biggest rubber producer and exporter but historically its intervention has done little to influence world prices that are more determined by demand from China.

The subsidy will have no impact on exports said Yukol and the money would be given directly to farmers to help offset production costs. He went on to say “we will try to help them cut costs and allow them to get a bigger profit margin and they could get around 90 baht per kg eventually, although they will still sell rubber at market prices”.

In February 2011 unsmoked rubber sheet had a market value of 180 baht per kg, a record in the rubber industry, however by 2012 the price had dropped to 75 baht.

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