New Thai govt urged to set up separate palm oil body

This is written by Nalin Viboonchart and published in Thailand's newspaper The Nation.

The Palm Oil Industry Club under the Federation of Thai Industries (FTI) wants the new government to pass a new bill and set up an independent organisation to develop and supervise the entire value chain, from oil palm agriculture to palm oil processing.

The Palm Oil Industry Club, the FTI's latest industrial group, set up in May 2011, has made it its priority to lobby for this new law.

Krisada Chavananand, the club's chairman, said the bill could cover the development of the entire palm oil value chain. Oil palm seeds, for example, should be developed scientifically and legally registered because good seeds mean higher oil content.

Thailand is the world's third largest palm oil producer behind Indonesia and Malaysia, but its research and development initiatives is behind the top two.

Palm oil production in Thailand is 8-10 million tonnes per year. Oil yield is 2.7-3 tonnes per rai per year, while that of Malaysia is 3.5 tonnes.

Moreover, oil content in Thailand is just 17 per cent, while in Indonesia and Malaysia it is 22 per cent and 19 per cent, respectively.

Oil palms can be grown within 10 degrees of the equator with good rainfall distribution. Thailand now needs a research centre and to focus on increasing productivity and oil content if it wants to be more competitive, said Krisada. "Oil palm planting provides job security to rural folks. Around 300,000 households in southern Thailand are in oil palm agriculture and related industries," he added.

"Oil palm biomass can be used as renewable energy while the oil is an important ingredient in food and cosmetics industries. In the past, we developed the industry without direction. But crude oil will become more expensive once the world's population reaches nine billion by 2050. So it's time for Thailand to take the development of the palm oil industry seriously."

Presently, the National Oil Palm Policy Committee is the mechanism for developing and supervising oil-palm agriculture and the palm-oil industry. But the private sector believes that there should be a legal organisation and bill to oversee the whole industry. For instance, the bill could specify budget allocation for research and development of seeds and productivity improvement so that the country can develop the palm oil industry over the long term.

It might also be beneficial if the government did not constantly subsidise cooking oil prices, said Krisada.

He also said the new bill could authorise another independent organisation to control crude palm oil mills. Thailand has too many mills, around 70, considering palm oil production is just 8-10 million tonnes per year. This results in high operating costs per factory and fierce competition. A better way to control the number of mills is to grade their operational productivity. Those that could not meet the criteria will be forced to close, said Krisada.

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