Bank for Agriculture and Agricultural Cooperatives (BACC): Guarantee Palm Oil Crop Prices To Switch in Thailand

The Thai government should ensure the prices of palm oil to encourage farmers to grow more palm trees or switch from rubber, says Lak Wachananwat, president of the Bank for Agriculture and Agricultural Cooperatives (BAAC).
Given the current severe shortage of palm oil that has caused prices to skyrocket, the government is encouraging palm tree growers to increase their productivity.
Heavy rain and floods in plantation areas in Indonesia and Malaysia have exacerbated the shortage. The two countries are key suppliers of palm oil.
However, Mr Lak said it's difficult to ask the growers to increase output as most of the plantation areas are occupied with other economic crops. And most of the areas suitable for growing palm trees already grow rubber.
Rubber prices are also rising rapidly, making it unlikely that growers will switch crops anytime soon. Apart from producing rubber sheets, growers can earn extra money from selling parawood, which also has rising prices, when the trees no longer produce latex.
It normally takes three-and-a-half years to grow palm trees.
According to BAAC's account year ending in March this year, the amount of loans granted to palm growers is likely to stand at over 2 billion baht, closed to last year's figures.
Land for palm tree plantation increased only 4.8% in 2010 from the year before, but productivity per rai declined by 9.6%.
In a related development, the Commerce Ministry through the Public Warehouse Organisation will speed up the import of the second lot of 60,000 tonnes of palm oil this month as the shortage remains unresolved. The government approved the import of 120,000 tonnes in addition to the first approval of 30,000 tonnes.
However, the ministry does not know the import price yet and still cannot confirm whether the local sales price will remain at 47 baht per litre.
Commerce Minister Porntiva Nakasai said it expects the new harvest of palm nuts in April would drop by 50% from last year so the imports are necessary.
(Bangkok Post, Thailand, February 8, 2011)