Thailand, the world's biggest rubber exporter, would step in to buy rubber and build up stocks if the price of unsmoked sheet (USS3) fell below 80 baht ($2.42) per kg, a deputy prime minister said on Wednesday.
Suthep Thaugsuban, who oversees the rubber sector, also said he would encourage other producers in the 10-member Association of South East Asian Nations (ASEAN) to support their farmers, too, by not selling export-grade rubber below $2.60 a kg.
"We are happy with current prices. However, we would do something, such as buying to shore up prices, if they fell below 80 baht per kg," Suthep told Reuters in an interview.
USS3 traded at 94 baht ($2.85) per kg on Wednesday while the benchmark export-grade rubber sheet (RSS3) was at $3.10 per kg, supported by a fall in supply caused by dry weather.
Suthep is a member of parliament for an area in the south of the country, where 90 percent of Thailand's annual rubber output of about 3 million tonnes is produced.
He said a price of 80 baht for unsmoked rubber was a level that would give farmers an acceptable income while benefiting Thailand's economy in general.
The government set aside a rubber intervention budget of 8 billion baht ($242 million) in January 2009, when USS3 fell to 48 baht per kg because of the global economic recession.
But none of that budget had been used and Thailand had not built up any government rubber stocks, Suthep said.
Rubber prices rallied early last year after China brought in measures to support its car industry, which consumes around 70 percent of global rubber output.
A MATTER FOR ASEAN
Suthep said he would propose that rubber be put on the ASEAN agenda so there could be cooperation between members in the planning of production, research and growing techniques, as well as in monitoring prices.
On his proposed $2.60 per kg floor for rubber exports, he said: "I have raised this issue with the Indonesian president and he said he agreed with me, so I'll go and set up similar talks with the Malaysian and Vietnamese leaders as well."
"We should have bigger and more important cooperation, not just among a few rubber-producing countries. Rubber should interest all ASEAN members," he added.
Thailand is a member of the Association of Natural Rubber Producing Countries (ANRPC), which groups Indonesia, Malaysia, Vietnam, China and Sri Lanka.
Suthep said the government would set the "cess money levy", a tax on rubber exports collected from exporters, at progressive rates, rising in line with rubber prices.
"The increase in the money we would get from higher cess would be put into rubber aid funds to be used to develop the country's rubber industry or help support farmers if rubber prices fell," he said.
The current rate is 1.40 baht per kg.
Suthep said the tax could be progressively higher if the rubber price went above 80 baht per kg, then 90 baht and 100 baht.
"We will submit this issue for cabinet approval soon and I expect the legislative process to be done by June," he said. ($1=33.03 Baht)
(Source: irco.biz)
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