Rubber JV may start functioning Nov. 15

Rubber JV may start functioning Nov. 15

Dow Jones, Bangkok

The joint venture rubber consortium set up by the world's top
three rubber producers - Thailand, Indonesia and Malaysia - is
expected to begin functioning Nov. 15, Thai Deputy Minister of
Agriculture and Cooperatives Newin Chidchob said Tuesday.

Speaking after the weekly Cabinet meeting, Newin said the
three founding countries of the consortium, the International
Rubber Corp., are currently considering to appoint its chief
executive officer.

The consortium was set up in August with the aim of purchasing
and stockpiling rubber to help shore up prices.

Thailand's Prime Minister Thaksin Shinawatra said Monday that
once the consortium is functional, it will start buying rubber
whenever prices fall below a yet to be determined level and sell
it directly to end-users. This will prevent international brokers
from being involved in the transaction.

Rubber farmers have urged the Thai government to accelerate
the operation of the consortium to help shore up rubber prices
instead of conducting domestic price intervention.

The government had been intervening in the domestic rubber
market by purchasing rubber from smallholders at intervention
prices which were higher than market levels.

However, the government has incurred losses from the long-
running intervention program while failing to sustain prices at
profitable levels for farmers.

"The prime minister and myself agree that the price
intervention (by purchasing rubber from farmers) would be the
last measure to impose to help shore up prices," Newin said,
adding that the government has been spending a huge amount of
money to intervene in the rubber market.

He added that the ministry will meet with representatives of
rubber farmers in Hat Yai, southern Thailand, Monday to discuss
ways to help shore up rubber prices.

Last week, Newin said he would ask the Cabinet Tuesday to
approve the intervention, under which around 4 billion baht from
the budget is expected to be used to finance the program.

However, Thaksin said Monday that the government wants the
intervention method to be improved to ensure its efficiency,
otherwise it won't approve the program.

Newin said last week the ministry would improve the
intervention method to ensure it brings full benefits to rubber
farmers. It would be improved in terms of accounting, registering
of farmers and the inspection process, he said.