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MARKET DEVELOPMENT
Imports ease pressure on palm prices
calendar28-01-2008 | linkThe Bangkok Post | Share This Post:

28/01/2007 (The Bangkok Post) - Palm-oil prices have fallen sharply since the Commerce Ministry allowed imports of fresh palm earlier this month to ease a local shortage, says a local palm-oil producer.

In the few days after the imports were approved, local prices paid by producers for fresh palm nuts declined to six baht a kilogramme from 6.80 baht, said Pongnares Vanasuwannakul, managing director of the Ta Chang Industrial Group.

Crude palm-oil prices have also declined from an average of 38-39 baht a kilogramme to 34-35 baht, slightly higher than the Malaysian market price of 32 baht, he said.

Mr Pongnares said a crucial task for the new government would be to develop an overall structure for the palm oil industry in terms of production technology and quality of crude palm oil.

The industry is facing major challenges because of fast-rising demand for palm oil to produce B100 (100% biofuel) to make B2 biodiesel, a blend of 2% biofuel and 98% diesel. Authorities are adamant that B2 will replace all conventional diesel starting next month.

Shortages of palm oil have also hit consumers at the checkout counter, with two price increases for cooking oil in the past two months. ''We really need to restructure the overall industry from crops to manufacturing to lift our competitiveness if we want to be a strong player in the world palm-oil industry,'' said Mr Pongnares.

Ta Chang is interested in investing in the production of B100 since the government is promoting biodiesel so vigorously. For now, the company's alternative energy focus is a biogas venture worth 80 million baht.

The company will recycle waste from its manufacturing complex to create biogas to generate 1.4 megawatts of electricity, with plans to expand capacity to 2MW, with an additional outlay of 25 million baht.

Also in the pipeline is a biomass energy project that would cost 250 million baht and should break even in three years. All of the projects are aimed at reducing production costs, as well as emissions from manufacturing.

Karun Nantileepong, managing director of Chumporn Palm Oil Industry Plc, said his company had invested 80 million baht in a project to use waste water to generate electricity, with funding supported by the state-backed energy service companies (Esco) programme.

Inter Rubber Latex Co is also interested in producing biogas from waste water released from its latex production process. It plans to install facilities and equipment worth 35 million baht, which will help cut its power bill by 20%, or 200,000 baht per month from an average of one million baht. The entire project will be completed in two years.

Outgoing Energy Minister Piyasvasti Amranand estimated that the value of electricity produced from waste could reach 5.4 billion baht within five years.