22/02/2011 (Bangkok Post) - The Commerce Ministry will seek National Oil Palm Policy Committee approval to allow extensive palm oil imports while suspending exports of the local product for at least three months to ease a critical shortage.

Commerce Minister Porntiva Nakasai will ask the committee at its meeting today to agree to import 120,000 tonnes of refined palm oil instead of crude palm olein. This would bypass local extraction and curtail hoarding.

She said it would also ensure rapid distribution to retail outlets.

Importing palm oil usually could only be approved by the committee, and then only for food manufacturers. Import tariffs were removed last month.

Ms Porntiva said imported refined palm oil should be sold at the capped price of 47 baht a litre on condition the government subsidises manufacturers to compensate for the difference in the importing and sales prices. The subsidy budget would be around one billion baht.

She suggested a national administration committee chaired by the prime minister be appointed to manage the import quota.

Deputy Prime Minister Suthep Thaugsuban, the chairman of the committee, said he would ask it to promptly review its previous decision to bring in 120,000 tonnes of crude palm olein.

He said it should instead approve 20,000 to 30,000 tonnes this month.

Ms Porntiva said the private sector had been slow in importing crude palm olein despite earlier approval as high prices left them facing a loss. The ministry's Public Warehouse Organisation would act as the coordinator but could not import palm olein by itself.

Signs of a palm oil shortage emerged late last year but Thailand still exported 220,000 tonnes over the 12 months. In the last quarter of 2010, exports totalled 23,688 tonnes, according to Commerce Ministry figures.

Six kilogrammes of fresh palm nuts can produce one litre of crude palm olein, or 700ml of refined palm oil. If the price of palm nut is eight baht a kilo, a litre of refined palm oil would cost 68 baht, after taking into account income from the sale of by-products.

The National Oil Palm Policy committee approved the import of 120,000 tonnes of crude palm oil on Feb 1 after an initial 30,000 tonnes distributed to 10 palm oil refineries to produce cooking oil failed to ease the shortage.

Because of the 20-day delay in importing the second shipment, it was now unnecessary to import the full amount, as local crude oil output was about to hit the market by the end of this month, Mr Suthep said.

He would propose to the committee that it approve more gradual imports of crude palm oil of 20,000 to 30,000 tonnes a time.

Mr Suthep declined to comment on Ms Porntiva's proposed one-billion-baht subsidy to maintain the price of retail palm oil at 47 baht a kilo.

He said every party could propose measures to solve the problem.

He said the committee would listen to the views of all agencies and come up with an acceptable resolution at its meeting today, he said.

Mr Suthep said the retail price of cooking palm oil should be capped at 47 baht. People had been affected when the price increased from 38 baht to 47baht in December.

Luecha Ounyuang, chairman of the Palm Tree Planters Association in Surat Thani, backed Mr Suthep's idea to gradually import crude palm oil instead of bringing in the full 120,000 tonnes at once.

Local palm nuts would supply factories in March and April, he said. There would be an oversupply if huge amounts of crude palm oil were imported at this time.