According to the latest development, the cabinet has approved four-billion-baht fund to shore up rubber prices. The government also earmarked 3.3 billion baht to shore up rubber prices last year, thus making a total of 7.3 billion baht for the two-year cost of the rubber price intervention. "It is still debatable whether the government's price-intervention scheme is the right way to shore up rubber prices, and it is time the government considered whether the scheme really benefited farmers as intended," a researcher at the Thai Farmers Research Centre said. According to the research centre, Thai rubber exports growth has slowed since 1996. The fall in exports in 1996 was attributed to weak demand from Japan and the United States.
The Rubber Research Institute predicted that rubber prices would continue to fall this year, regardless of government price intervention. Research Department of the Bangkok Bank said there was an urgent need to restructure the Thai rubber industry, with a view to augmenting the share of rubber blocks in overall rubber production. While consumption of rubber blocks is on the rise, which of smoked rubber sheets is sliding. Major importing countries have turned to ordering more rubber blocks at the expense of sheets because the quality of rubber blocks is standardised and prices are more stable as compared to rubber sheets. In addition, a number of low-cost emerging countries such as Vietnam and India have been able to produce smoked rubber sheets at lower prices and in rising quantity to supply to the world market.
At present, Thailand ships about 1.15 million tons of rubber sheets abroad, making it by far the largest supplier of rubber sheets in the world. Indonesia, the second largest exporter of rubber in the world, sells a mere 50,000 tons of sheets, and Malaysia, the third largest rubber exporter, only 40,000 tons. At the same time, Thai rubber block exports are only 600,000 tons, compared with 1.2 million from Indonesia and 900,000 from Malaysia. So the productions structure of the Thai rubber industry is the real problem.
The government has drawn up a plan to restructure the rubber industry but its implementation is very slow. Thai Farmers Research Centre recommended that if the government decided to continue with intervention, the price-intervention scheme should be limited to no longer than a few months. It said an open-ended or prolonged period would only encourage farmers to increase production and thus quickly draining the fund. It added that government agencies in charge of the scheme must be fair and transparent when making rubber purchases to ensure it benefited farmers.
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