Prime Minister Prayut Chan-o-cha has assigned rubber-related state agencies to find ways to increase the use of natural rubber domestically to prop up falling prices.
Government spokesman Lt Gen Sansern Kaewkamnerd said the government wants to raise the use of natural rubber in Thailand by 50% from 600,000-800,000 tonnes per year.
The move will also diversify farmers' risks from falling exports if it leads to a lower domestic price.
"The prime minister has ordered government agencies to find ways this year to use an additional of 100,000 tonnes of natural rubber," said Lt Gen Sansern.
The government is also encouraging farmers to reduce rubber plantation areas to help decrease supply and eventually increase the price as it was reported there are up to 8.5 million rai of rubber farms that might be unlawful.
The administration also plans to encourage farmers to switch to other lucrative commodities such as palm oil, demand for which remains strong in both the food and biofuel industries.
The price of benchmark export grade smoked rubber sheet (RSS3) has fallen more than 75% from the record high of US$6.3 per kilogramme in 2011 to $1.56 currently. That has pushed the price of unsmoked grade rubber sheet (USS3), which farmers sell to earn a living, to 42 baht per kg, down from the record of 180 baht in 2011 and forced farmers to stage sporadic protests, demanding a government subsidy.
The drop in price was due largely to an increase in plantation areas and production at a time when export demand, which normally accounts for more than 80% of total annual output, remained weak.
Thailand, the world's biggest producer of natural rubber, is forecast to produce 4.5-4.8 million tonnes of natural rubber a year. Of the total around 3.8 million tonnes are for export as a commodity grade to serve the tyre industry in China, the world's biggest tyremaker.
Some 600,000 tonnes are used as raw material for local business, leaving the remainder overhanging on the market and keeping pressure on prices.
Pasu Loharnjun, the permanent industry secretary, said the ministry is developing a "Rubber City" in Songkhla province, a rubber industrial estate that will accommodate six investors there and encourage more local production.
