The Natural Rubber Policy Committee has agreed to set the maximum and minimum prices of natural rubber and lay down measures to prevent extreme price fluctuations and stabilise the industry.
A task force chaired by the Agriculture and Cooperative Ministry was appointed to conduct the price guidelines within one month.
Deputy Agriculture Minister Supachai Phosu said in the short term the government has asked for cooperation from the Bank of Thailand to support commercial banks in lending to entrepreneurs who buy rubber and keep their stocks when the rubber price is below 120 baht a kilogramme.
Rubber prices increased to 150 baht a kilogramme last week from 80 baht and the trend will likely continue because of the dry season.
He said Thailand also sought cooperation from Indonesia and Malaysia to set the minimum prices at 120 baht a kilogramme, while the maximum price should not be too high to avoid driving users to synthetic rubber.
Apichart Jongsakul, director of the Office of Agricultural Economics, said the production cost of rubber was about 40 baht a kilogramme, so the appropriate price was 120 baht.
He said the price drop late last week was caused by unrest in Libya and the Middle East while entrepreneurs in China stopped buying rubber because of the high prices.
The committee estimated that the rubber prices this year should be higher than in the previous year because of high demand from the automotive industry.
Phongsak Vongbundit, honorary president of the Thai Rubber Association, said rubber traders were not concerned about the high prices but rather the volatilities, which made it difficult for them to plan ahead.
He agreed that the government should set the guidelines in order to prevent the price fluctuations.
Mr Apichart said the committee also maintained the rubber sapling price at 18 baht each.(Syed Rashid Ali, Karachi, Pakistan)