26/02/2009 (Bernama) - The government does not intend to set a ceiling price for natural rubber and oil palm following the sharp fall of the two commodities' prices in the world market, Deputy Minister of Plantation Industries and Commodities A. Kohilan Pillay told the Dewan Rakyat today.

Nevertheless, the ministry would take immediate measures to ensure commodity prices, particularly rubber, remained at a profitable level to smallholders and rubber products producers, he said.

The Government would expedite replanting of old, unproductive and uneconomic rubber trees to slow down natural rubber production, he said when replying to several members of parliament who queried on efforts made by the government to address the price slide of the two commodities.

They proposed to the government to set a ceiling price for rubber and oil palm to safeguard the interests and well-being of rubber and oil palm smallholders.

This year alone, the government aimed to replant 32,000 hectares of unproductive rubber trees, Kohilan said.

Under this approach, an estimated 32,000 to 38,000 tonnes of natural rubber output could be reduced in the world market, he said.

He said similar action would be taken by world leading rubber producing countries -- Indonesia and Thailand -- to delay rubber production.

The move is to avoid a glut in the market, thus influencing rubber and oil palm prices in the global market, he said.

Kohilan also said a decision has been made with the consensus of Indonesia and Thailand to coordinate to reduce their rubber exports respectively.

"The reduction has been made through a jointly agreed mechanism to ease the pressure on rubber prices and to restore market confidence," he said.

For palm oil, the crude palm oil price has been stabilised between RM1,800 and RM1,900 under the joint strategy to manage the commodity supply and demand, he added.