11/4/05- The Agriculture and Cooperatives Ministry has plans to plantanother five million rai of oil palm, specifically for use in bio-dieselproduction in the South, the Northeast, the East and even someneighbouring countries.

It is estimated this could save about 35 billion baht in oil importsannually.

Oil palm is now grown on about two million rai in the South.

Agriculture Minister Sudarat Keyuraphan said yesterday cultivation wouldbe promoted on at least five million rai more, or seven million raialtogether, in areas where there are natural water sources.

Thailand has 130 million rai of arable land but only 22 million rai isirrigated. The ministry plans to bring irrigation systems to another 11million rai.

Mrs Sudarat said the ministry expected to produce about 8.5 million litresof fuel a day in the next seven years in the wake of the expansion of oilpalm production.

The government has already spent 80.9 billion baht subsidising domesticpetrol prices. Diesel is now about three baht below actual market price.

``If we can meet that goal, we can cut oil import costs by about 35billion baht a day,'' Mrs Sudarat said.

She said the ministry wanted to use land in the South, the East, theNortheast, and in neighbouring countries, in increasing oil palm output.

About 2.5 million rai would be in the South _ one million rai of abandonedrice fields and 1.5 million rai of existing rubber plantations. In theEast, about 1 million rai of fruit orchards would be turned into oil palmplanting areas. In the Northeast, oil palm would be grown on 500,000 raiwhich is now rubber plantations.

Oil palm cultivation would also be promoted on another one million rai inCambodia and Burma under the contract farming system.

Mrs Sudarat said the oil palm price would be guaranteed at 2.50 baht akilogramme. That meant fruit growers who switched to oil palm would earnat least 3,000 baht more per rai, and that should encourage more farmersto take part in the expansion.

The minister said the new organisation set up by the government to dealwith production and marketing of specific farm products _ a specialpurpose vehicle (SPV) _ would buy back oil palm produce from farmers asanother means to encourage farmers to plant it.

Mrs Sudarat said the action plan to boost oil palm planting, which shouldbe completed at the end of this month, would focus on land zoning forcultivation, economic benefits and imports of seeds to accommodate theexpansion.

The promotion is part of the ministry's new agicultural reform plan, whichdivides crops into four main groups where their production anddistribution would be restructured.

The first group comprises agricultural produce with potential forvalue-adding. Crops having economic significance in domestic market,including oil palm, are in the second group.

The third group comprises crops that are major income earners for farmers,such as rice. The final group consists of produce with low marketingpotential due to heavy competition.

Warawut Chootummatouch, director of the Surat Thani Oil Plam ResearchCentre, said oil palm needs a large amount of water and specific soilconditions _ preferably clay as it holds water. Oil palm could not just begrown anywhere.

Mr Warawut said the ministry should carefully survey the land before goingahead with its oil palm promotion.

``In the South, not all rubber plantations can be turned into oil palmfields,'' he said.

Decharut Sukkumnoed, a Kasetsart University economist, said oil palmproduction would be worth promoting during this time now oil prices havekept on soaring.

However, Mr Decharut warned the price of bio-diesel from palm oil mightnot be cheaper than fossil fuel due to its production process, and couldin turn put pressure on the price of palm oil.