Government to brace for 7.9 billion baht loss in stockpiled rubber sales

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BANGKOK, 21 May 2014 – Mr. Chanachai Plengthanasiriwat, Director of the Rubber Estate Organization (REO), said that his agency is preparing necessary document to present to the Administrative Court to fight a petition filed by the private sector for the court’s protection against the government’s move to sell 208,000 tons of stockpiled rubber it has bought from planters to stabilize rubber price. 

The scheme was established way back when Mr. Nuttawut Saikuea was the Agriculture Minister. The REO-planned release has sparked a fear that the stockpiles would further pull the rubber price down when dumped into the market.

The Director said the price of rubber would be affected regardless of whether or not the Administrative Court would accept the petition and grant immunity to the private sector when it deliberates the issue on May 28th. He indicated the REO has yet to appoint a subcommittee on rubber stockpiles management to supervise the trading transactions.

The rubber price stabilization program had spent 22 billion baht to buy 208,000 tons of rubber from farmers at the optimum price tag of 106 baht per KG. If the rubber is dumped into the market now, the scheme would cost the administration a loss of 7.9 billion baht as the market price of rubber is currently at 68 baht a kilo.

According to the REO director, proceeds from the sales will be used to pay back the loan the project has taken from the Bank for Agriculture and Agricultural Cooperatives. The price difference will be compensated by the central budget once a new government is established.