Published on January 11, 2008
The Commerce Ministry is threatening to ban palm-oil exports if producers and exporters are found to be hoarding palm-oil products.
The ban would be aimed at ensuring sufficient domestic supplies and cushioning Thai consumers from the impact of rising prices.
The ministry will meet with producers today to discuss the price of palm oil and will call another meeting for next Wednesday to talk about imposing a ban on exports.
Palm oil has recently become one of the hottest commodities in the world, because it is used to make not only cooking oil, but also the alternative fuel biodiesel.
The retail price of the oil has already risen from Bt38 to Bt43.50 for a 1-litre bottle and is due to rise another Bt5.50 to Bt49.
The skyrocketing price is the result of widespread demand for biofuel as countries around the world scramble to avoid the crippling cost of importing crude oil to make conventional fuel.
Commerce permanent secretary Siripol Yodmuangcharoen yesterday said palm-oil manufacturing plants and warehouses had been inspected, in order to ensure that manufacturers and traders were not maintaining stocks for future price speculation.
To avoid a domestic shortage of palm oil, the ministry says it is prepared to order exporters to stop exporting palm oil. Such a move would not only ensure sufficient domestic supplies, but also curb the rising price of the oil and avoid the effect it could have on the cost of food and consumer products.
The strategy would be aimed at preventing price speculation from diverting local palm-oil production to export markets and reducing domestic supplies.
The ministry's primary inspection found palm-oil stockpiles were reaching 120,000-140,000 tonnes a month. Previously, monthly stockpiles of only 70,000-80,000 tonnes were sufficient to avoid a domestic shortage.
The ministry will also meet manufacturers of vegetable oils, including palm and soybean oil, and canned fish manufacturers to consider an increase in retail prices.
The ministry's oil crop subcommittee will also be asked to consider the possibility of suspending exports, as well as importing palm oil to solve the high-price problem.
The price of palm bunches increased from Bt5.70 to Bt5.93 a kilogram last Friday, while separated fruit cost Bt7.80 a kilogram and crude palm oil was trading at Bt34.80 a litre.
Demand from the biodiesel industry has blossomed to 300,000 tonnes a year, a level that is expected to double within five years.
A Commerce Ministry source said the country was facing a palm-oil shortage because manufacturers had delayed production due to business losses arising from the rising cost of raw materials.
A source from the palm-oil industry told Krungthep Turakij some giant retailers were hoarding vegetable oil, so as to benefit from higher prices.
"This leads to shortages. The Internal Trade Department would find by checking the inventories of these stores that vegetable-oil producers had maintained their output," he said.
The Commerce Ministry has approved a price increase for bottled vegetable oil of no more than Bt3 a litre this month. After this month, it may be raised another Bt2.50 per bottle. That would make the maximum retail price of palm oil Bt49 a litre, while soybean oil would be Bt51.
Finance Minister Chalongphob Sussangkarn is opposed to cutting fuel taxes to cushion rising oil prices. He said yesterday that he did not agree with the idea of cutting taxes to reduce the high cost of living resulting from rising crude-oil prices.
Meanwhile, the Commerce Ministry has upgraded wheat flour to its priority watch list. It is closely monitoring price movements and stockpiles twice a week. The measure is aimed at protecting consumers from unfair pricing practices, because the product is a main ingredient in foods cakes, bread and instant noodles.
Wheat-flour prices have skyrocketed from between Bt370.35 and Bt484.36 per 25kg sack to between Bt515.20 and Bt527.57 over the past year. The price will likely increase further, because global warming is blamed for reducing crop yields.