02/08/05 Chanthaburi (Bangkok Post) - The cabinet yesterday ordered theAgriculture Ministry to review its plan to expand oil palm plantations byfour million rai countrywide to produce biodiesel, and the offer of a1.6-billion-baht compensation to fruit farmers if they switch to growingpalm.

If approved, the scheme would be financed by the 38-billion-baht SpecialPurpose Vehicle (SPV).

Chalermchai Mahakitsiri, deputy government spokesman, said the ministrywas asked to resubmit the plan after making changes to it. The cabinet,while agreeing in principle with the scheme, wanted the planned areareduced.

The cabinet wanted the initial implementation stage to cover onlyChanthaburi and Trat for a total area of 87,000 rai, down from theoriginal 1.23 million rai proposed for four eastern provinces, includingRayong and Chonburi, which were facing a severe water shortage.

In addition, the growing of palm in other parts of the country, includingthe Northeast, would only be done on an experimental basis in small fieldsin order to test the suitability of the areas before the project's fullimplementation.

The 1.6-billion-baht compensation budget will remain the same and ownersof 6,000 rai of degraded fruit orchards would receive 2,705 baht per rai.