Thailand takes hatchet to rubber trees in plan to cut output 30%

BANGKOK • Thailand, the world’s largest rubber exporter, plans to cut production by a third over the next five years in an attempt to lift prices that are hovering near their lowest level since 2016.

The country will fell old trees and replace them with other crops to tackle oversupply, said Agriculture Minister Grisada Boonrach.

The goal is to reduce output to three million metric tonnes from 4.5 million now and the area to 2.4 million hectares (ha) from 4.2 million ha, he said in an interview in Bangkok on Tuesday.

The world’s rubber growers are struggling with prices that have fallen more than 50% in the past eight years as supply surges after a bout of replanting. Weakening global growth and a collapse in the price of oil, from which a synthetic alternative is made, also threaten demand.

Thailand, Indonesia and Malaysia meet later this month to decide measures to support prices, but previous efforts to curb exports have failed to stem the decline.

The authorities plan to chop down annually more than 300,000ha of trees that are about 25 years old until the target is reached, said Grisada.

The plan, which is in line with proposals from the Rubber Authority of Thailand, will take output back to levels seen earlier this decade.

The country has also been promoting more local consumption as a short-term measure to boost prices.

Using rubber for glove- making isn’t taking out enough volume, so building roads with the material is now the main project. Almost 90% of production is currently destined for the export market.

The “One Village, One Kilometre” programme encourages over 75,000 small villages across the country to replace gravel roads with rubber ones.

Grisada said the rubber surface is more durable and better withstands severe weather.

There are 12 pilot projects, and the ministry will brief representatives from every province on the construction of rubber roads on Jan 11.

The project is expected to use more than a million tonnes of rubber, about a quarter of the country’s annual output. — Bloomberg