31/03/2011 (Bangkok Post) - The price of cooking palm oil will remain at 47 baht a litre for another three months to ensure price stability in the market and no impact on planters as producers will be required to purchase fresh palm nut at six baht a kilogramme.

Suthep Thaugsuban, the deputy prime minister and chairman of National Palm Oil Committee, said palm nut crushers have to buy nuts with 17% oil content at the ex-factory price of six baht a kilogramme. The crushers should then sell crude palm oil to refineries at 36.28 baht a kilogramme, resulting in the final product price of 47 baht a litre.

Under this model, the industry is required to purchase 40,000 tonnes of crude palm oil and the government will compensate 1.79 baht a litre to cooking-oil producers. The total estimated budget for the scheme is 138 million baht.

A factor for consideration is the price of fresh palm nuts which has dropped to around four baht a kilogramme so the committee wanted to ensure that all parties would not be in trouble, Mr Suthep said.

The Commerce Ministry, which oversees goods prices, had earlier suggested the cooking oil price be cut by five baht a litre but later had no objection to the committee's decision.

''The committee already carefully considered the information,'' said Commerce Minister Porntiva Nakasai.

Wiwan Boonyaprateeprat, secretary-general of the Thai Oil Palm and Palm Oil Association, said Mr Suthep wanted parties to have time to adjust.

''If the existing measures were suddenly lifted, the price would fluctuate and could lead to a shortage like in the past,'' she said.

Despite the current heavy floods in the South, the major palm nut plantation area, the Office of Agricultural Economics (OAE) and manufacturers are confident annual fresh palm nut production will stay at 9 million tonnes. There are two harvests: from April to May and October to November.

Palm trees aged over two years can sustain the floods but all activities are suspended at the moment. If the floods are prolonged, small plam trees would be damaged but the actual impact will be seen in the next two years.

OAE secretary-general Apichart Jongsakul anticipated the floods would have no impact on projected palm harvests.

Ms Wiwan believes the palm oil shortage is over as production in Malaysia gains while the global price of crude plam olein dropped to 33-34 baht a kg.