The price of latex, which is used to make rubber sheets, has hit a 10-year low at Bt31 per kilogram on January 11. The National Farmers’ Council (NFC) estimates the production cost of rubber sheets at around Bt60 per kilo. The NFC had proposed that the government buy latex at Bt55-Bt56 per kilo and rubber sheets at Bt60 per kilo.

Meanwhile, West Texas Intermediate (the main United States benchmark) crude oil yesterday settled at US$30.48 per barrel after dipping below US$30 dollar per barrel for the first time since December 2003.

Crude oil and other commodity prices have been sluggish and so have prices of natural rubber due to a global economic slowdown and oversupply.

To implement the government’s buying programme for rubber sheets, Cabinet approval will be sought for an initial Bt4.5-billion budget.

However, the government has yet to decide on the issue of quota such as how much can one farmer sell to the state, and the prices for latex, smoked sheet, or cup lump will be determined later.

“This price of Bt45 per kilo for rubber sheets is agreed upon by all sides concerned,” said Prawit, who chaired the committee’s first meeting yesterday, adding, “The government has enough budget to fund the measure so do not worry about its funding”.

Asked about the impact of the government’s programme on market prices, Prawit said the price of rubber had already gone up by Bt2 yesterday.

The government’s price is around Bt9 higher than the market price which, according to the Rubber Authority of Thailand, stands at Bt36.05 as of 1.30pm yesterday and was Bt35.19 on Wednesday. The price of latex at factory was around Bt33.50.

Thailand produces around 4 million tonnes of rubber latex per year – 3 million tonnes are for export and 1 million tonnes for domestic consumption. The government currently has around 300,000-400,000 tonnes of rubber in dead stock.

Prawit said the rubber would be bought directly from all types of rubber planters nationwide. Interior Minister General Anupong Paochinda said the government would most likely begin to buy the rubber sheets in 14 southern provinces first as they were suffering the most.

Anupong said the fund of Bt4.5 billion would partly be from the Bank for Agriculture and Agricultural Cooperatives (BAAC) and the Budget Bureau’s Rubber Fund.

Agriculture Minister General Chatchai Sarikulya said the state agencies were expected to buy the rubber by the end of this month.

The 16 government agencies from eight ministries who will buy the rubber sheets will meet with the Public Warehouse Organisation (PWO) regarding the tangibility of their initial 100,000 kilograms demand and what the rubber sheets are going to be used for.

PWO chairman Kraiboon Suad-song said the budget could be increased if it is deemed to be |not enough and the reasons for |buying rubber sheets first instead |of other types was about ease |and requests from farmers.

Meanwhile, Krisda Chinavic-harana, director-general of the Fiscal Policy Office, said if the Bt4.5-billion fund was not enough, the BAAC and the Government Savings Bank would equally provide interest-free loans for the state to fund the measure. This could cost the state banks around Bt80-Bt90 million in terms of subsidy based on the market’s 2 per cent interest rate.

Also, the four state banks – Small and Medium Enterprise Development Bank, BAAC, GSB, and Krungthai Bank – also agreed to offer soft loans to private operators who were granted any projects initiated by the 16 state agencies that bought the rubber sheets from the farmers.