Rubber slump prompts call for stronger international cartel

KUALA LUMPUR -- As the price of rubber tumbles, Malaysia has called on producing countries not to sell natural rubber at less than the production cost of $1.50 per kg, and to convene a ministerial level meeting next year to address the problem.

The price of natural rubber has fallen by more than half since 2011 as a result of excess stocks and reduced demand from China. In Malaysia, the October average price for tire-grade SMR 20 has fallen 63% to 460 sen ($1.42) per kilogram from 1.26 ringgit three years ago.

Speaking on Monday at an annual meeting of the Association of Natural Rubber Producing Countries, Douglas Uggah Embas, the Malaysian minister in charge of plantations, proposed to host a ministerial level meeting of ANRPC in 2015 to discuss measures for collective regulation of the industry.

"The time has come for producer countries to explore ways and means towards the transformation of ANRPC into a binding forum with commitments by all member countries," he said.

ANRPC is an inter-governmental organization of 11 rubber-producing countries including Malaysia, Indonesia, Thailand, China and India. With a secretariat based in Kuala Lumpur, ANPRC accounts for over 90% of global natural rubber production.

Recently, industry associations in Thailand and Malaysia agreed with their counterpart in Indonesia to induce producers and exporters of natural rubber to observe a minimum selling price of $1.50 per kilogram. The three countries, which collectively account for about two thirds of global production, jointly cut exports two years ago to tackle falling prices but with little success.

Countries have introduced different measures individually to help tappers mitigate the income plunge. Malaysia is currently assisting the industry to replant some 500 sq. km of rubber trees older than 20 years. Last week, Prime Minister Najib Razak allocated 100 million ringgit in next year's budget to subsidize rubber plantation smallholders. Malaysia is considering using rubber for paving roads, an experiment also under way in Thailand.

Thailand's military government faces calls by some rubber tappers to guarantee the latex selling price at 80 baht ($2.46) per kilogram. Along with rice farmers, who formed an important constituency for the previous government of Prime Minister Yingluck Shinawatra, tappers have received government assistance in the past.
http://asia.nikkei.com/

The plunged of rubber price is inevitable as it went up so much since 2001. I wouldn't wonder even it o come $1/ kg. The only way government can help by providing money to farmers once they set target price, if rubber price becum below traget then goverment bear the loss- that is the SL government plan which is the right way. Any of the government cant control the rubber price since no1 will be genuine to the rule and it will come down day by day. No1 exactly know the other side cost of production. The one who produce at low cost will win and persumably get good profit all country agree for the set target price. So mkt will definitely comedown if it wants. Artificial rules cannot rule out the nature. This is widley failure model and can always help to compensate farmers mind for short time.