Trying it again.

The word cartel was conspicuously missing from the reports that Thailand, Indonesia and Malaysia have formed an association to try to increase the price of natural rubber. These three countries, which produce 70% of the world's NR, are faced with a monumental task. The price for NR is at a historical low point due to a combination of over-supply and flat demand. Their economies are just beginning to come out of that region's economic crisis and the growth prospects for North America, Europe and Japan are stagnant. Plus, haven't they tried this before?

Don't get me wrong, I'm a firm believer in the adage that few things are created and perfected at the same moment, but I can't see how trotting out another cartel is going to produce the results these NR producers are seeking.

One thing new is the three countries have established a company, Tripartite Rubber Corp., to help the three governments set production quotas and stockpile rubber. Whether the people making the decisions are called a corporation or association or organization, their goal is still the same, reduce the availability of natural rubber. The methods used will still be the only ones available - pay someone not to grow, pay them to switch crops or buy the product and store it in a warehouse. All three are costly programs that take away funds that should go to research and development. If you treat your product as a commodity, those buying will too.

It's the buyers that are actually the impetus behind this new association. Pronouncements after the signing indicated that the buying habits of the tire companies and purchasing groups were keeping prices low. Malaysian minister Dr. Lim Keng Yaik said the association is the "only way we can speak with some strength to the tire manufacturers. We have been bullied by buyers and tire makers for too long."

I'm sure the tire makers will take some pride in being called a bully by anyone, but I don't think taking advantage of market situations makes you a bully. Word is out that many have bought on the futures market through next year at today's prices. If prices go even lower, they made a calculated mistake. If they increase like the producers want, a good business move, not bullying.

The track record for these types of market schemes is not good. It would be nice to see the same money and effort go into research and development.