Policy needed on biofuels

Once seen as a rising economic crop, oil palm saw its price swing sharply in line with spiralling oil prices. Only a few months ago, palm oil was a hot commodity as there was a sudden surge of demand when the oil price reached US$100 (Bt3,500) per barrel. However, the recent drop in the oil price has prompted importing countries such as India and China to cancel palm-oil orders of almost 5 million tonnes worldwide. As a result, Thailand has 170,000 tonnes left in stock, while a total of 150,000 tonnes is expected to enter the market by the end of the year.

Oil-palm planters are suffering from the sharp drop in demand for domestic palm oil. At present only 30 million litres of diesel and biodiesel are sold per year as drivers shift to natural gas. Not long ago, 53 million litres of diesel and biodiesel was consumed per year. Demand has fallen as consumers shift to cooking gas or natural gas for vehicles. The sudden shift has left many oil-palm planters dealing with unexpected fluctuating prices.

Thus the government yesterday introduced the immediate measure to assist the planters in the short term. The guarantee measure might ease their suffering temporarily, but it is likely to serve as only an interim measure thanks to the unsettled situation of global oil prices.

The government should lay down a long-term plan for planters by helping them boost capacity. Besides this, the government should also set a definite policy on biodiesel by making it clear that it will continue supporting the consumption of the fuel, in spite of the recent drop in oil prices. Biodiesel not only helps reduce the country's reliance on foreign oil but also lessens the impact on the environment.