New rubber pact likely to go ahead amid opposition
New rubber pact likely to go ahead amid opposition
MALACCA, Malaysia (Reuter): Southeast Asian rubber growers were opposed on Saturday to a new producer-consumer pact to stabilize prices, but said the accord was likely to go ahead.
They said the pact would proceed because of the political, social and diplomatic objectives of their governments.
"The governments are worried about the effect of rubber prices on smallholders. They have to fight elections...and hope to stabilize rubber prices," Wate Thainugul, head of the Thai delegation to the ASEAN Rubber Business Club, told Reuters.
He was speaking after a meeting of the club and ahead of a trade dinner in the southwestern Malaysian state of Malacca.
Other delegates from Indonesia and Malaysia, present at the meeting, said producers would prefer a free market in rubber but added they understood their governments had different social and political priorities.
"We don't want an artificial market. Market forces must dictate prices but we understand that governments have different social and diplomatic aims," said a senior delegate, who declined to be named.
Wate said in Thailand, 85 percent of the country's rubber output was from smallholders.
Daud Husni Bastari, chief of the Indonesia delegation, said the proportion of small-holding production was similar in Indonesia.
At a U.N.-sponsored meeting in Geneva last February, major rubber producing and consuming countries agreed to a modified roll-over of the International Natural Rubber Agreement (INRA), which expires on December 28 this year.
Fluctuation
The INRA sets a minimum reference price for rubber at which the International Natural Rubber Organization (INRO) buffer stock manager intervenes to buy or sell rubber in the open market to help minimize price fluctuations.
INRO buffer stock manager James Hegarty said although the current pact would soon expire, a new agreement did not have to be ratified until January 1, 1997.
Hegarty told Reuters he believed producers and consumers would agree to a new deal before the deadline, although there is some concern over the position of the new Republican-dominated Congress in the United States to commodity pacts.
Indonesia, Malaysia and Thailand -- members of ASEAN or the Association of Southeast Asian Nations -- are three of the world's largest producers of natural rubber. The United States is the world's largest consumer, followed by the European Union, Japan, China, India and Malaysia.