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Chief operating officer Varapong Supachok said Kamolkij's rice-bran oil began suffering losses of up to Bt10 per litre bottle on the domestic market in 2006. The Commerce Ministry's policy of capping the product's retail price at Bt41 a bottle had imposed a heavy burden on manufacturers. The product's margin has gradually fallen from 8 per cent to 2 per cent, and these margins were calculated before paying interest, so manufacturers have lost out.

The requirements of modern trade retailers were also an important barrier that contributed to manufacturers' losses.

However, Varapong said the ministry had recently allowed manufacturers of soybean and rice-bran oil to raise the retail price to Bt50.50 a bottle.

Kamolkij began making rice-bran oil in 2002, and since 2003 it has spent Bt1.2 billion on expansion. At present, its processing plant in Nonthaburi's Pak Kret district is committed solely to producing rice-bran oil. A new oil refinery and mill will be set up this year and machinery updated. Next year, another new oil-refining factory will be established, and the company will have five crushing and oil-refining mills with a combined production of 500 tonnes of vegetable oil per day.

The company's vegetable oils have been traded locally under its Chim brand.

"It's one of our marketing strategies to reduce interest in medium-quality vegetable oil, in order to focus more on premium and super-premium products," Varapong said, adding that the super-premium oil had begun selling on the domestic market, and sales were growing gradually.

He said rice-bran oil had high export potential, because of its high nutritional value. The company's Alfa One brand of rice-bran oil is the market leader in New Zealand. However, consumers there still prefer olive oil, which accounts for 75 per cent of the vegetable-oil market.

Major export markets for rice-bran oil include South Korea, Australia, New Zealand, the UK, Canada, Belgium, the Netherlands, Singapore, Malaysia, Japan, Hong Kong, Poland, Germany, Portugal and South Africa. Kamolkij's export volume averages 800 tonnes a month.

The Kamolkij Group' s total sales reached Bt6 billion last year. Of this, revenue from vegetable oil accounted for Bt1 billion.

Achara Pongvutitham

The Nation