22/12/2012 (Business Recorder) - Thailand plans to intervene in the palm market by buying 50,000 tonnes of crude palm oil to be kept in stocks, in a bid to support farmers after they staged protests over falling prices, senior government officials said on Friday.

"The plan is due to be submitted for cabinet approval next week and we hope we can start buying immediately," said a senior official at the Ministry of Commerce, who asked not to be named.

Under the plan, the government would buy crude palm oil from palm crushers at 25 baht ($0.82) per kg, above current market prices around 19 baht, on condition that crushers must buy palm fruit from farmers at 4 baht per kg.

Prices of palm fruit have fallen to 2 baht per kg due to oversupply, caused by unusually wet weather that boosted output.

"We would keep the 50,000 tonnes of crude palm oil in stocks and would consider later whether to export or to offload it in the domestic market in the dry season, when production falls," said another official, at the Ministry of Agriculture.

Officials said the government would spend 1.2 billion baht for buying, well below the 45 billion baht budget for intervening in the rubber market and 260 billion baht for a rice-buying scheme.

Agricultural workers make up 40 percent of the workforce in Thailand.

Thailand is broadly self-sufficient in palm oil, which is widely used for cooking and as biodiesel fuel, but the government has allow limited imports from Malaysia in recent years to make up for a domestic supply shortfall.

It imported 30,000 tonnes of crude palm oil from Malaysia in July this year.

Thailand was forecast to produce 1.9 million tonnes of crude palm oil in 2012, of which 900,000 tonnes were for the food sector. Another 600,000 tonnes were for biofuel and the rest were for export.