Published on January 14, 2008
To ensure food and energy security, the Agriculture, Commerce, Industry and Energy ministries must emphasise crop allocation, experts say.
The shift of arable land to oil crops and the use of crops for energy rather than food will need scrutiny, lest it threaten food prices and the cost of living, they stress.
Collaboration is urgent, they add, given the average 53-per-cent price increase in three main crops - corn, soybeans and wheat - in the past eight quarters.
The situation will intensify as the Energy Ministry encourages ethanol and biodiesel demand through the introduction of new alternative fuels like E20, E85, B2 and B5.
Compulsory increases in the ethanol and biodiesel mixture ratio in fuel will push demand for oil crops, particularly palm and tapioca.
Intensifying the situation are fears of a palm-oil shortage. This prompted the Commerce Ministry to allow imports. It was worried any shortage would spark a further hike in retail prices.
"It was last year that nearly all raw feed materials appreciated by more than 50 per cent. That is the steepest increase in history. This will lead to higher feed prices, and then food prices will be raised.
"This tends to go on and on and consumers will need to bear the rising costs," said Pornsilp Patcharintrakul, the chief executive officer of CP Intertrade.
The Agricultural Economics Office forecast all oil crops, including sugar cane, palm, tapioca and soybean, would see continual price hikes.
"It is high time for the four ministries to work more closely. They must come together to set a national agenda of how to handle food and energy insecurity," said the office's secretary-general, Apichart Jongskul.
"People from all sectors must brainstorm what we should produce and how to use the output - as food or energy. The Agriculture Ministry alone can't sort things out."
Demand for oil crops will definitely rise thanks to the Energy Ministry's promotion of alternative energy. Starting on February 1, it demands fuel retailers mix diesel with 2 per cent biodiesel to create a fuel called B2.
In 2007, Thailand produced 1.24 million tonnes of crude palm oil. While 859,363 tonnes were for domestic consumption, 150,000 were exported and 251,130 were for other purposes.
The office estimates that in 2008, crude palm-oil output will reach 1.47 million tonnes. Domestic consumption will rise to 920,000 tonnes. Combined with 250,000 tonnes left over from the previous year, the remaining 800,000 tonnes is available for biodiesel production.
Based on the conversion ratio of one tonne to 1176.7 litres, the stock could produce 941.36 million litres. Based on diesel consumption of 50 million litres a day, B2 would demand 1 million litres of biodiesel a day.
"Supply is not tight now, but with the current output and planting area, it's impossible for the Energy Ministry to make it compulsory for the sale of B5, B50 or B100 now," Apichart said.
Rising demand for ethanol will spark more demand for molasses and tapioca. At present, 10 factories are licensed to produce ethanol from molasses and 11 from tapioca.
The Energy Ministry policy to introduce gasohol E20 - petrol with 20 per cent ethanol content - will increase demand for raw material. The office anticipates factories will be short of molasses in 2009 and this will encourage farmers to grow more sugar cane. This will lead to fewer areas available for the growing of tapioca and corn, and this could lead to further price hikes in other crops. And, the situation could intensify if E85 is introduced.
Apichart suggested the establishment of a "war room", where representatives from the four ministries would calculate domestic and overseas food and energy demand.
"We need to make sure the food sector is not affected now that we are supplying food to the entire world. If we leave things uncontrolled, we cannot survive. We need to find an optimum," Apichart said.
He said as soon as the new government is in office, proposals for managing the situation must be tabled.
Apichart said agricultural zoning, where farmers in a particular zone are encouraged to grow a certain kind of crop, could not ensure food security. "Whenever a crop price rises, farmers shift to that crop. We can't stop them."
To Pornsilp, it is the main issue for the government. It must regulate alternative fuels. There should be annual domestic-demand figures, a ratio of exports, output forecasts for each crop and, if these measures are not sufficient, import limits. The government must find a solution to food shortages if it prohibits genetically modified crops.
Also, the government must develop non-crop alternative energy sources like wind, nuclear and hydroelectric.