20/08/2008 (Bernama), Kuala Lumpur - There will be no short supply of palm oil-derived food with the use of palm oil to produce biofuel, the Dewan Rakyat was told Wednesday.

In giving the assurance, Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said the government's current policy was to give priority to palm oil for food production.

He said Malaysia and Indonesia, being world leaders in palm oil production, had agreed to fix a six million tonne palm oil ceiling to produce bio-diesel.

"To strengthen the demand for palm oil and to ensure oil palm plantation owners and palm oil millers received a fair price, the government encouraged palm oil be used as a source of raw material to produce palm oil-based biofuel," he said when replying to Jeff Ooi (DAP-Jelutong) during question time.

Jeff Ooi sought an explanation on the government's policy on biofuel production as palm oil was used as a source of fuel whilst the nation was facing food price hike crisis.

Chin said currently 10 biofuel projects were operating, with a combined annual production capacity of 942,000 tonnes, requiring 960,750 tonnes of palm oil as raw material a year.

Last year, the domestic biofuel industry used 128,235 tonnes of palm oil for biodiesel production, he said.

Chin also said researches are being done to produce second generation biofuel using oil palm biomass.

"Biodiesel produced from this source will not involve the use of palm oil, thus the cost will be much cheaper.

"However, biofuel production technology and cost worldwide are still high as compared to palm oil-based biofuel production," he added.