Thailand’s cabinet has approved a Bt34.873bn (US$1.1bn) budget to set guaranteed prices for palm oil and rice.
The Nation Thailand reported on 27 August that Bt13.378bn (US$438M) of the budget was for the 300,000 palm oil planters registered with the Agriculture and Cooperatives Ministry.
The oil price guarantee was Bt4/kg (US$0.13) of product containing 18% of oil per kg. It was based on the market average of Bt3/kg (US$0.10) plus Bt0.25 (US$0.01) for transportation costs, allowing a Bt0.75 (US$0.03) price spread.
Registered farmers producing palm oil on 4ha or less were eligible.
A subcommittee would calculate the difference between the guaranteed price and the market value every 15 days, Thailand Business News wrote.
Additionally, the cabinet also sanctioned long-term price-management measures such as using palm oil to produce electricity and B20 biodiesel.
Commerce minister Jurin Lakasanawisit – who submitted the price guarantee policy for approval – explained that palm oil would need special attention since the market was currently difficult.
“Oil palm supply is too high while the demand does not quite catch up,” The Nation Thailand quoted him as a saying.
Meanwhile, the Electricity Generating Authority of Thailand (EGAT) continued to buy crude palm oil to generate electricity at Bang Pakong Power Plant under a 130,000 tonnes quota approved by the cabinet, Vietnam News Agency reported.
The committee instructed EGAT in May to purchase 160,000 tonnes of crude palm oil to use as fuel. It was later told to buy another 200,000 tonnes but, as of 24 June, it had bought only 70,000 tonnes, Bangkok Post wrote.