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India's southern state of Kerala, the country's biggest producer of natural rubber, will buy the commodity at a premium of Rs 5 ($0.0811) per kg from farmers hit by a drop in prices, a state-government official told Reuters.
"The cabinet has decided to buy rubber through state-run agencies. They will offer Rs 5 more than prevailing market price," the official at Chief Minister Oommen Chandy's office told Reuters by telephone.
Kerala accounts for more than 90 per cent of the natural rubber produced in the country. The price of natural rubber, used for making tyres, hit a five-year low in India earlier this month, following a drop in global prices.
The spot price of the most traded RSS-4 rubber (ribbed smoked sheet) has fallen by more than a quarter so far in 2014 to Rs 12,250 per 100 kg at the Kottayam market in Kerala.
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