Prime Minister Thaksin Shinawatra told a rubber seminar Thailand wanted new discussions with Indonesia and Malaysia about the supply-cutting agreement.

"Thailand might not need to cut trees to reduce supply as earlier agreed in Bali because by doing so, the country would unnecessarily lose some forest areas.

"Other governments might consider cutting rubber supply, but I think we should grow more.

"Growing rubber trees will also help increase forest areas. The tree also provides moisture for the land."

Thaksin also said rubber prices would not be depressed by additional rubber tree cultivation.

"I believe that I could find markets for the additional supply," Thaksin said, adding that Thailand's parawood furniture production from rubber trees should also be increased.

Thai RSS3 rubber sheet was offered last week at around 95-96 U.S.cents/kg FOB for March shipment, a six-year high. Thai unsmoked rubber sheet - the raw material used for making export-grade rubber sheet - was quoted at almost 37 baht/kg this week, its highest in eight years.

The government was also considering scrapping a scheme to compensate farmers in return for cutting down rubber trees - one of Thailand's main ways of reducing market supply.

Thailand, Indonesia, and Malaysia - which account for around 62 percent of world rubber production - agreed in Bali in December 2001 to cut exports and output yearly by 10 percent and four percent, respectively, in 2002 and 2003 to support rubber prices.

According to a Thai government report last week, Thailand reduced supply by only 36,000 tonnes in 2002, far below its 72,636 tonnes target. Malaysia overshot its 32,400 tonne target, cutting by 39,806 tonnes.

The report said Indonesia, the world's second-largest exporter of rubber, had not released information on whether it met its target of lowering supply by 60,000 tonnes in 2002.

Thailand produces around two million tonnes of natural rubber annually, 90 percent of which is for export.