Home > Industry News > Rubber exports fell sharply and Thailand subsidized rubber farmers
Rubber exports fell sharply and Thailand subsidized rubber farmers
In 2019, the Thai rubber farmer Yot Kongyarit in the early 60s has 8,000 square meters in the Songkhla province of southern Thailand, a rubber field slightly smaller than a standard football field.
This month he has applied to register with the government department and asked the government to provide price protection measures for the output of his rubber field. Earlier, the Thai cabinet approved a total of 24 billion baht (US$792 million) in finance on October 15 to subsidize rubber farmers, which is the first part of the government’s income guarantee subsidy for rubber farmers. The plan aims to ensure that the country’s 1.4 million rubber farmers have stable income for half a year until March 2020.
Thailand is the world’s largest producer of natural rubber. In the context of the ongoing trade dispute between China and the United States, the country’s rubber farmers are very hurt and can only face the global downturn and the decline in rubber prices.
The country’s rubber farmers usually harvest latex at night or in the evening, which is what locals call “white gold.”
However, since the US Trump administration provoked a trade dispute with China, China’s demand for rubber imports has fallen sharply.
Data show that in the first nine months of 2019, Thailand’s rubber exports to China have fallen by 15% year-on-year. In 2018, Thailand exported 620 billion baht worth of rubber to China. From January to September this year, Thailand exported only 39 billion baht to China. Affected by trade disputes, China’s auto sales have continued to decline for 15 consecutive months as of September.
Nowadays, Thai rubber farmers are surprised to find that these old “white gold” can not guarantee their food and clothing now.
According to the Thai government’s subsidy program, the rubber manufacturer’s high-quality rubber guarantee price is 60 baht per kilogram, latex is 57 baht per kilogram, and block glue is 23 baht per kilogram. In addition, for every 1,600 square meters of rubber fields, the maximum subsidy is 240 baht / kg, and the maximum application amount per rubber farmer is 40,000 square meters.
Although many believe that this measure is an effort by the coalition government to achieve its campaign promises, providing income security for rubber farmers in the short term is one of the few things that Thai rubber growers can count on.
Suranil is the epitome of many people in northeastern Thailand who started planting rubber in the mid-2000s after the Thai government tried to solve the problem of poverty by expanding rubber farms during the boom in rubber prices, in part because China joined the world in 2001. Trade organization. Prior to this, rubber planting was concentrated in southern Thailand for nearly a century.
Thailand’s warm climate and coastline ensure Thailand’s competitiveness in the international market in terms of the quality and quantity of rubber products. However, in recent years China has begun to purchase rubber directly in Southeast Asia, mainly through partnerships with local producers in several countries.
Chaiya Kongmanee, an economist at Prince of Songkla University in Thailand, said that Thailand is the world’s largest producer of natural rubber, with an annual output of 5 million tons, Indonesia’s annual output of 3.5 million tons, Vietnam’s 1.1 million tons, and China’s 840,000 tons. India has 750,000 tons and Malaysia has 650,000 tons.
Chaiya Kongmanee said that the strategy of China’s output stability and rubber supply has changed over the years. In recent years, China has begun to supply rubber directly in Southeast Asia, mainly through partnerships with local producers in several countries. We have heard that China has rented large areas of land to grow rubber in Laos.
Sunan Nuanpromsakul, head of the Thai Rubber Authority, said the government is working hard to find emerging markets and expand existing export markets to India, Europe, Japan and South Korea.
But he said that the rubber consumption in these places is still not high, and the demand in Japan and South Korea is only 600,000-700,000 tons/year. India’s demand is 800,000 tons / year, and the country has produced about 700,000 tons of rubber every year.
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Sunan Nuanpromsakul said the Thai government’s other measures to deal with the collapse in rubber prices include loan plans, plans to increase processing of rubber manufacturing, and upcoming electronic auctions that will allow international traders to offer “in futures trading.” Not fixed “price. Once these measures are implemented, the situation should be more reliable by the end of the year.
At the same time, Yot Kongyarit said that he and other Songka rubberists in the local rubber cooperatives will stick to it as much as possible. Earlier, he transferred about 16,000 square meters of land to his two children so that they could continue the family’s business for at least a century.
When asked if he could sell the land if the situation worsened, Yot Kongyarit refused.
Source: Global Rubber Markets
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