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Thailand to endure tougher times in rubber industry

Thailand introduces agricultural zoning for six of its staple crops, rice, tapiocam sugarcane, oil palm, maize and rubber. Farmers shall be given incentives for planting crops that are better matched to their locations and those that are against the move could lose subsidies. It is necessary to introduce the zoning policy as Thailand will now be able to manage the rubber difficulties that the government has been facing.

The zoning policy will enable an increased yield from 270kg per 0.16 hectare (per/rai) to 300 kg per rai instead of expanding the cultivation areas. Along with this solution,Thailand’s Prime Minister, General Prayuth Chan-ocha expresses the rubber issue had required a solution which was on the national agenda as a task that had been problematic for a long time. The rubber sector will face a rough time for the coming years as it depends on export, primarily to China.

Thailand exports 87 percent of its rubber and only 13 percent is utilized domestically. AatPisanwanich, the director of Thai Chamber of Commerce’s International Trade Studies Center in a statement explains China’s position on its policy to focus more on domestic investment and consumption as an alternative to export. He further adds Thailand’s rubber export should be reduced and domestic uses to be boosted by the government and relevant agencies. In August 2014, Thailand’s rubber exports dropped by 23 percent to 441 million Baht and also, during the eight month period dipped by 20 percent to 4.215 billion Baht.

China’s reduced rubber import from Thailand is owing to the lack of insight into global market recovery especially in the European Union. Aat further states the rubber prices currently stand at 40-45Bhat per kg and due to current factors could rise to 60 Bhat per kg. With relevant provision from the government and agencies, Aat proposes the acceleration in financial support for domestic co-operatives to erect factories that are able to process rubber and seek markets for their produce. It is estimated 100-200 million Bhat will be required to set up factories that can produce basic types of gloves that do not need high end technology such as medical gloves.

Source : RJA

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