The Thai government is mulling over whether to put 15 billion baht (£307 million) into its rubber sector, reports BBC News.

By investing such a large amount of cash into the industry, the state could effectively raise the price of the material, which has lost a great deal of its value on the global commodity markets in the past year.

While the falling cost of the substance is likely to have been warmly received by manufacturers of rubber products, farmers in Thailand have responded to the slide by demanding action.

Thai officials are considering answering them by buying up to 200,000 tons of locally produced rubber, which may alleviate the pressure being put on them. The country is the world's largest producer of the material.

Bloomberg reporter Supunnabul Suwannakij explained that the plans were unveiled by deputy prime minister and commerce minister Kittiratt Na-Ranong, with the proposals due to be submitted for cabinet approval next week.

The initial 15 billion baht fund will be used to buy rubber via the state-run Rubber Estate Organization until the material reaches 120 baht per kilogram. A further two billion baht will be set aside for farmer co-operatives to buy rubber at above-market rates.

Agriculture minister Theera Wongsamut remarked: "The appropriate and sustainable level for rubber is 120 baht per kilogram."

Author: Paul Smithson

18 January 2012