The no-interest loan fund approved by the cabinet last month is aimed at propping up the prices of the commodity to at least 120 baht a kilogramme for raw rubber sheet grade 3 sold at the Songkhla market.
Domestic prices are edging up in response to the smaller supplies expected to enter the market over the next few months. The Thai government's intervention scheme also pushed up the price to 107 baht/kg on 14 Feb. 2012, compared with 92 baht in early January.
Agricultural officials expect to wrap up talks with rubber farmers this month on the details of the loans that groups can use to buy rubber for buffer stocks or higher-value processing, said Wit Pratuckchai, director-general of the Office of the Rubber Replanting Aid Fund (ORRAF).
He said 5 billion would be allocated to farm groups, which must be repaid by the end of 2013. The other 10 billion is for the Rubber Estate Organisation for intervention if market prices fall.
Mr Wit said the organisation may start buying rubber soon, considering slow moving prices last week.
It is expected with the loan the organisation could buy 200,000 tonnes of rubber to keep as a buffer stock.
Under the intervention plan, the Bank for Agriculture and Agricultural Cooperatives will manage the lending process for the government.
Mr Wit said the intervention scheme will stabilise domestic prices as global demand is still strong. Mr Wit added that his office has been assigned to move forward with the project to add 800,000 rai (one rai=1,600 sq m) of rubber plantation.
The three-year project to run through next year is likely to be behind schedule. Last year, only 60,000 rai of plantation were added, far from the 200,000-rai target. The shortages of rubber saplings were to blame for the shortfall.
This year, the ORRAF plans to add 300,000 rai of new rubber fields across the nation and the agency will double the payment for saplings to 36 baht each to attract more suppliers.
Source: Daily "Bangkok Post", Bangkok; 15 Feb 2012