Benchmark Tokyo Commodity Exchange (Tocom) rubber hit a 27-month low last Wednesday, following a plunge in Shanghai futures and steep losses in oil, and with many investors worried about global rubber oversupply. (Reuters Photo/Surapan Boonthanom)

Gov't to Buy Rubber From Farmers to Prop Up Prices

BY : BERNADETTE CHRISTINA

NOVEMBER 26, 2018

Jakarta. President Joko "Jokowi" Widodo ordered the public works ministry to buy rubber directly from farmers and cooperatives to help prop up local prices, a statement from the Cabinet Secretariat said on Monday.

Jokowi said the ministry will start buying rubber from farmers in December, and the commodity will be used as mixing material for asphalt, according to the statement.

The move aims to help the local price of rubber, which is currently around Rp 6,000 (41 US cents) per kilogram. The president has proposed that the ministry buy from farmers at between Rp 7,500 and Rp 8,000 per kilogram.

"Soon, especially in South Sumatra, rubber will be bought by the Ministry of Public Works and Housing. If there's an opportunity to raise prices [higher than what has been proposed], we will announce that," Jokowi said in the statement.

Benchmark Tokyo Commodity Exchange (Tocom) rubber hit a 27-month low last Wednesday, following a plunge in Shanghai futures and steep losses in oil, and with many investors worried about global rubber oversupply.

Meanwhile, an agriculture ministry official said last week the government will launch a rubber replanting program next month amid the low prices, targeting to replant 700,000 hectares of plantation area by 2025.

Reuters

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