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Published on January 7, 2008

The government's policy of promoting the use of alternative fuels has encouraged not only farmers to plant more oil palms but also businesses to produce palm seed and seedlings.

Farmers in Krabi, Chumphon and Surat Thani, the country's major palm-growing provinces, are expanding production to serve rising demand and to cash in on the good prices for palm fruit.

Farmers in other southern provinces have switched from ordinary fruit, rice and other crops to growing palm trees, which bring in more revenue.

In a recent meeting with farmers arranged by Univanich Palm Oil in cooperation with Germany's technological cooperation agency, hundreds of farmers were introduced to more efficient ways and techniques to grow high-yielding oil palms and to maximise benefits from the commercial fruit.

Palm-growers and others gathered there to learn more technology to increase their incomes.

A farmer from Nakhon Si Thammarat's Pak Phanang district, who cultivates rice and pomelos, turned part of his land over to oil palms a year ago.

"I want to grow oil palms because the price is higher than rice," he said.

Palms can be harvested twice a month at an average price of Bt5,000 per tonne, equal to rice, but palm-ruit income is higher thanks to greater output.

Palm bunches fetch Bt5.50-Bt5.60 per kilogram, separated fruit commands Bt6.80m and crude palm oil trades at Bt30.

Another farmer from Chumphon said the high price of both palm kernels and palm oil had prompted farmers in the province to expand their plantations and concentrate more on farm management to improve yields.

"Not only are farmers converting to grow more palm trees, but also people in other careers are entering the palm-oil business. Despite low production, growers enjoy high prices," she said.

Prices are expected to remain high because palm oil is used not only for personal consumption but also as feedstock for making biodiesel, she said, though cautioning farmers to pay attention to management to achieve high-quality fruits that produced high volumes of oil.

Univanich Palm Oil is not only a leading producer of crude palm oil from the fleshy part of the fruit and crude palm-kernel oil from the fruit's kernel; it is also involved in related businesses including seed, crushing mills, research and development and exporting.

Managing director John Clendon said the company had developed high-quality palm seed to ensure higher yields. Oil-palm growers in Thailand should reach a maximum yield of 3.1 tonnes per rai, as much as in Malaysia, the most successful player, followed by Indonesia with 3 tonnes per rai, he said. So far, oil palms in Thailand yield only 2.6 tonnes per rai.

The country's geography is suited to oil palms, particularly provinces south of 15 degrees north. So far 3.02 million rai is planted with oil palms, mainly in the three southern provinces of Chumphon, Krabi, and Surat Thani.

Clendon pointed out that the government's promotion of alternative energy, particularly biodiesel, had boosted demand for palm oil.

Demand from the biodiesel industry has blossomed to 300,000 tonnes per year, a level which is expected to double in five years.

"Demand for palm oil in the country mainly depends on the government's policy of restricting the percentage of palm oil mixed with diesel. If it requires a high ratio, that means high demand for palm oil," he said.

Supplies of crude palm oil run to 1.4 million tonnes per year, of which 600,000-700,000 tonnes is processed into vegetable oil for personal consumption and the food industry, and 300,000 tonnes is delivered to biodiesel plants. This ensures that the country does not face a palm-oil shortage.

Clendon believes that prices for both palm fruit and palm oil will stay high thanks to rising demand in the world market. The price of palm oil rises or drops in tandem with global petroleum prices.

The company said the area planted to oil palms has been expanding 15 per cent a year. Average production cost is Bt1.5-Bt2 per kilogram.

Univanich is a key player in the palm-oil industry, which produced about 150,000 tonnes in 2006. The company's seed-production unit churns out six million to seven million seeds, partially for shipment to growers around the world.

Achara Pongvutitham

The Nation

Krabi