BANGKOK (Reuters) - Thailand's government will buy rubber directly from farmers at prices of up to 60 baht (S$2.37) a kilogram, nearly double the market price, in a bid to placate increasingly disgruntled farmers as prices dip to a seven-year low, the cabinet said on Tuesday.
The cabinet did not guarantee a price for 60 baht per kilogram, as demanded by some rubber farmers groups, but said it would purchase up to 200,000 tonnes of rubber at up to 60 baht a kg.
The government has been anxious to head off protests from rubber farmers in parts of the south, who traditionally form part of the support base for the ruling royalist-military elite.
Some rubber farmers supported anti-government protests in 2014, leading to a military coup ousting the previous government.
Tuesday's (Jan 12) announcement follows protests and hunger strikes by some groups, who say not enough is being done to help farmers hit by a slowing demand for natural rubber as the economy cools in China, the world's top rubber importer.
Prime Minister Prayut Chan-o-cha has directed state agencies and ministries to use more Thai rubber, saying around 100,000 tonnes of rubber will be used for projects this year.
Thailand, the world's top rubber producer and exporter, currently uses around 1.4 million tonnes of the 4 million tonnes of rubber it produces each year.
The government also said on Tuesday it would help farmers by distributing 4 million bags rice to some 800,000 rubber farming households.
The commerce ministry said it would also negotiate with overseas buyers to purchase about 3.6 billion baht worth of rubber from Thailand this year.
But some want the government to intervene faster and guarantee all prices at 60 baht.
"We want to see the government drive rubber prices to our goal of 60 baht per kg within 30 days," said Mr Boonsong Nubthong, president of the Thai Federation of Rubber Farmers.
Thailand's benchmark unsmoked rubber sheet (USS3), which farmers sell to factories, was quoted at 33.80 baht per kg on Tuesday, the lowest since Dec 2008.
The industry ministry aims to open 25 rubber processing factories by April, which will use an estimated 870,000 tonnes of rubber, in another attempt to help the fledgling industry.