25/07/2011 (The Nation) - The Palm Oil Industry Club under the Federation of Thai Industries (FTI) is to propose that the new government pass a new bill and set up an independent organisation to develop and supervise oil-palm agriculture and the palm-oil industry throughout the value chain.

Promoting the new bill is the current priority of the Palm Oil Industry Club, the FTI's latest industrial group set up in May this year.

Krisada Chavananand, the club's chairman, said the bill should cover the entire process of palm oil development. Oil-palm seeds, for example, should be developed scientifically and registered legally, as good seeds mean higher palm-oil content.

Krisada said that Thailand was the third-largest oil-palm producer behind Indonesia and Malaysia, but that development was behind the top two countries. Oil-palm production in Thailand is 8-10 million tonnes per year. Oil-palm yield is 2.7-3 tonnes per rai per year, while that of Malaysia is 3.5 tonnes. Moreover, palm-oil content in Thailand is just 17 per cent, while in Indonesia and Malaysia it is 22 per cent and 19 per cent, respectively.

Oil palms can be grown within 10 degrees of the equator with good distribution of rain, so Thailand has good conditions for their cultivation. The country now needs a research centre and to focus on increasing productivity and palm-oil content if it wants to be more competitive, said Krisada.

"Palm oil is an agricultural industry. Around 300,000 households in the South of Thailand are in oil-palm agriculture and related industries," he said. "Production from oil palms can be used in the renewable energy, food and cosmetics industries, for example. In the past, we developed the palm-oil industry without direction. But crude oil will become more expensive once the world's population reaches 9 billion by 2050. So it's time for Thailand to take the development of the palm-oil industry seriously."

Krisada said the Palm Oil Industry Club was outlining a framework for the club in order to do everything necessary for the industry's development. Presently, the National Oil Palm Policy Committee is the mechanism for developing and supervising oil-palm agriculture and the palm-oil industry. But the private sector believes that there should be a legal organisation and bill to oversee the industry as a whole.

For instance, the bill might state the budget allocation for research and development of seeds and productivity improvements so that the country can develop the palm-oil industry over the long term. It might also be beneficial if the government did not constantly subsidise oil-palm prices, said Krisada.

Another job for the new bill and the independent organisation will be to control crude palm-oil factories. Thailand has around 70 crude palm-oil factories, which means there is redundancy, considering oil-palm production is just 8-10 million tonnes per year. This results in high operating costs per factory and fierce competition.

A better way to control the number of factories would be to determine the productivity of each factory. Those that could not meet the criteria will be forced to close, said Krisada.