By Amy Sawitta Lefevre and Aubrey Belford
PHUNPIN, Thailand (Reuters) - Rubber farmers in southern Thailand clashed with police and threatened to shut down city halls in 14 southern provinces on Thursday after the government rejected their demands for price rises, deepening a crisis that is testing the populist government of Prime Minister Yingluck Shinawatra.
Angered by steep price declines, tens of thousands of rubber farmers have taken to the streets for two weeks, blocking roads and railways.
Protesters clashed with baton-wielding police in Prachuap Khiri Khanon province on the main road from Bangkok to the southern beach resort region of Phuket, authorities said.
"There was some fighting between protesters and the police and at least one policeman was injured after having acid thrown in his face. Some protesters were injured too but we don't know how many," said Narong Sapyen, a local police superintendent.
Ten protest leaders were arrested, he said.
Shipments by the world's biggest rubber producer and exporter are in disarray.
The standoff is among the most politically fraught crises Yingluck's government has faced since she swept into power in 2011 on the back of support from "red shirt" protesters, many from the rural north and northeast, who are loyal to her brother Thaksin Shinawatra, ousted in a 2006 military coup.
But now Yingluck faces a challenge on the opposite side of the country, a bastion of her rival Democrat party. Locals here say she has coddled supporters in rice-growing regions with an expensive subsidy program that has accumulated losses of $4.46 billion since it was introduced in 2011.
Protesters such as farmer Chatchai Piewpah give a simple reason for joining in: life is getting harder, and Yingluck's government seems not to care.
"Yingluck only wants to take care of her own and her own are the people in the north and northeast, the rice farmers and millers who are growing rich off the back of the rice subsidy scheme," said Chatchai, who owns a rubber farm.
He and others say they are being snubbed as punishment for not supporting Yingluck's Puea Thai party at the polls.
On Thursday, the government scrapped a tax on rubber exports until the end of the year in a bid to lift prices, but the move did not placate protesters. "We have no plans to buy rubber," Finance Minister Kittirat Na Ranong told reporters. "However, we will monitor the rubber market closely."
He added that the government would give 1,260 baht ($39.10)per acre of rubber plantations to subsidize farmers for up to 25 acres of land and help with production costs - an offer the protesters were likely to turn down.
"We won't accept their offer as it won't help support prices," Amnuay Yutitham, a protest leader, told Reuters.
Amnuay said several groups were discussing ways to fight on, including expanding their protests to 14 city halls.
SIGNS OF DISPUTE FEEDING INTO POLITICS
Although the dispute is taking place far from the corridors of power in Bangkok, the capital, it already shows signs of feeding into Thailand's volatile color-coded politics, where loyalties divide along class and regional lines.
"The opposition want to overthrow the government," Korkaew Pikulthong, a red shirt leader and Puea Thai Party lawmaker, told Reuters by telephone from Bangkok.
"They are behind the protest as their representatives have been present at all the main rally sites."
Chatpong Chatraphuti, the governor of the southern province of Surat Thani, told Reuters he suspected something similar.
"There are political elements interfering, but we don't know at what level. It could be local or national," he said in an interview at a protest-monitoring centre.
Senior figures in the Democrat Party, including former prime minister Abhisit Vejjajiva, have offered the protesters moral support.
"We feel the sense of injustice on behalf of rubber farmers nationwide," said Korn Chatikavanij, a former minister in Abhisit's government. "Puea Thai enjoy a maximum of about 20 percent of the vote in the south, so they think there's not much to do to sway voters there. It's basically, ‘Screw them'."
The protests have had little impact on the rubber market, but have disrupted distribution and delayed thousands of metric tons of Thai rubber shipments.
A $690-million rubber subsidy program that ended in May saw the government buy 210,000 metric tons (221,565 tons) of rubber at 10 percent more than the daily market price. But the scheme was axed after criticism that it was costly and distorted market prices.
Industry officials say extending the rubber scheme could cost Thailand more than $620 million, but would do little to soften the resolve of farmers demanding an intervention after prices for unsmoked rubber sheet (USS3) fell to 76 baht on Thursday, down 16 percent from 90 baht earlier this year.
The price of export-grade benchmark rubber sheet RSS3 was unchanged on Thursday at $2.75 per kg.
In Surat Thani farmer Chatchai said he would consider taking things further if the impasse was not broken.
"We will take our protest to Bangkok if we have to. If the Democrats join us, we welcome them," Chatchai said. ($1=32.2250 Thai baht)
(Additional reporting by Apornrath Phoonphongphiphat in BANGKOK; Editing by Clarence Fernandez and Nick Macfie)