April 16 (Bangkok Post)--Palm-oil crushers warn that any increase in theprice of palm nuts will lead to a flood of cheaper crude palm oil fromMalaysia.The manufacturers are worried that the move by Commerce Minister AdisaiBodharamik to raise the price of palm nuts to three baht a kilogrammewould affect the industries involved, as well as consumers.The market price has dropped to 2.10-2.20 baht a kilogramme from about2.50 baht last year.Mr Adisai promised to raise the price of palm nuts to three baht when hevisited planters in Surat Thani some months ago.The minister plans to call a meeting with crushers on April 22, when he islikely to ask them to co-operate by paying planters a higher price.Wiwan Boonyaprateeprat, the chief executive of Southern Palm Oil IndustryCo, a major palm crusher in Surat Thani, said the severe drought affectingthe South had reduced the oil content, leading to lower prices.Local palm now yielded an average oil content of 17 percent, compared with19 percent from Malaysian palm. Given its poorer quality, the Thai palmindustry cannot compete with Malaysia's, which is better managed.According to the Office of Agricultural Economics, Malaysia prohibitsmanufacturers from buying palm with less than 19 percent oil content.However, the requirement in Thailand is not as strict, allowing plantersto sell lower quality nuts at cheaper prices.Ms Wiwan said Thai crude palm oil was now fetching 14 to 15 baht akilogramme compared with 13 baht for Malaysian oil.When using palm with 17 percent oil content, 5.88 kilogrammes of crudepalm was required to produce a kilogramme of refined or cooking oil whichwould retail at 19.76 baht.Raising prices without due care would encourage planters to cut palm nutsquickly, regardless of the quality, she said."Palm from some areas yields only 12 percent oil. That means it takes upto 8.33 kilogrammes of crude oil to make cooking oil which could then cost24.67 baht a kilogramme," she said.The increase in the retail price of cooking oil would affect consumers andprices of other products.As well, Ms Wiwan warned that cooking palm oil might not be able tocompete with soybean oil, which would probably weaken in price after thegovernment allows unrestricted imports of soybean later this year.She urged the government to raise the competitiveness of the Thai palm-oilindustry to a level approaching Malaysia's.Palm plantations in Thailand lack economies of scale as 70 percent of the40,000 planters are small producers, each farming less than 50 rai. InMalaysia, small planters account for only 10 percent of the industry while60 percent is controlled by big companies and 30 percent is managed bystate agencies.

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