Thailand to repland rubber to help market

Thailand to repland rubber to help market

Dow Jones, Bali

Thailand, the world's largest rubber producer, is considering replanting rubber plantations in an attempt to reduce natural rubber output and help shore up physical prices.

Since it takes seven years for rubber tapping to begin after replanting, the program is considered a valuable tool in controlling the output of the country's 1.99 million hectares of rubber plantations, said Jirakorn Kosaisawee, director of the economics division at the Rubber Research Institute of Thailand.

"We need to replant...and we should not add new planting area (for rubber trees)," said Jirakorn Sunday evening, ahead of meetings in Bali Monday and Tuesday involving senior rubber officials from Thailand, Indonesia and Malaysia.

The meetings are expected to finalize plans by the world's top natural rubber producers to form an International Tripartite Rubber Council to manage an output cut of 4 percent and export cut of 10 percent starting next year. A ministerial meeting Wednesday is expected to approve these plans to help boost rubber prices.

Benchmark Thai ribbed smoked sheet rubber 3 grade was quoted Friday at 46-47 U.S. cents a kilogram, free-on-board for prompt shipment, sharply down from around 65 U.S. cents per kg at same time last year and 74 U.S. cents per kg two years ago.

The Thai Farmers Research Center Co. said in August the country is expected to produce around 2.25 million metric tons of rubber in 2001, up 0.4 percent from last year.

Indonesia, the second largest rubber producer, announced earlier its intention to replant rubber plantations to help achieve the 4 percent output cut under the tripartite agreement. Agus Pakpahan, director-general of estate crops at the Agriculture Ministry had said Indonesia will replant 100,000 hectares of rubber planting area in 2002. Indonesia is expected to produce 1.41 million tons of rubber this year.

Malaysia hasn't announce any plans to replant. The country's 2001 output is expected to reach 580,000 tons.

Besides replanting, Thailand's rubber farmers should be encouraged to diversify into other crops or grow trees for wood, said Jirakorn. Growing more fruits, like durian, rambutan and mangosteen, can help boost the agricultural export market, he said. Making a switch to oil palm also would be lucrative for farmers as Thailand still needs to import the crop to satisfy domestic consumption, he said.