Govt allocates up to Bt115mn subsidy to check cooking palm oil price rise

The ministry’s plan is an urgent measure to maintain the retail price at Bt42 for a litre bottle. In addition, it will help control inflation amid fears of a rising cost of living. Under the plan, the government will spend about Bt3-Bt5 to subsidise each bottle of cooking palm oil.
The subsidy would be spent on importing crude palm oil or purchasing local crude palm oil.
The move came after cooking palm oil manufacturers asked the Commerce Ministry to adjust the retail price from Bt42 to Bt50 per litre bottle. Manufacturers said they were facing higher production costs as the crude palm oil price had risen significantly from Bt29 per litre last month to Bt34-Bt35 now.
The rise in the crude palm oil price is in line with the increasing price of palm oil fruit from Bt4 to Bt6-Bt6.40 per kilogram due to low supply in the late harvest season.

Domino effect
After a meeting with eight cooking palm oil manufacturers yesterday, Commerce Minister Boonsong Teriyapirom said the government would not allow producers to increase the price in an effort to prevent the cost of living from going up.
“If we allowed the retail price of cooking palm oil to rise, it would create a domino effect on other goods and food prices. The government will shoulder the rising cost through subsidy measures directly through manufacturers,” said Boonsong.
Executives of leading cooking palm oil brands Morakot, Yok, Kasorn, Lela, Oleen, Phueng, Racha, and Waew attended the meeting with the ministry yesterday.
The ministry will seek Cabinet approval for the budget allocation next week. At least 30,000 tonnes of crude palm oil would be imported. In addition, the budget would be spent to purchase domestic crude palm oil production and sold at the same cost to control the retail price.
The market price of crude palm oil overseas is currently quoted at Bt35 per litre, equal to the local price.
“The subsidy programme will be for only a month as the new harvest season will begin in April,” said Boonsong.
A source at a refined palm-oil manufacturer said that producers would shoulder higher cost of production for only one month according to their stockpiles.
“Without approval for price adjustment or assistance measures from the government, manufacturers will soon suspend production as they can’t shoulder the rising costs any longer,” said the source.
Wiwan Boonyaprateeprat, secretary-general of the Thai Oil Palm and Palm Oil Association, said the government should allow a price increase to reflect the real cost of production and prevent a repeat of the shortage problem in the near future.
She said the government could not easily import crude palm oil at a lower price as the price in Thailand and the imported variety is not different; both trade at Bt35 per litre. Even in Malaysia, the world’s leading palm oil supplier, the retail price of cooking palm oil has been quoted at Bt50 per litre bottle.
The current total stock of crude palm oil with producers would reach 240,000 tonnes, which can ensure supply for one or two months, said Wiwan.