Palm Oil Crisis in Thailand
Palm oil has become the world’s leading vegetable oil in terms of consumption and production produced worldwide in 2009. The biggest producer, with a 47.6% share in production in 2009, was Indonesia, followed by Malaysia (38.8%) and Thailand (2.9%). Palm oil is versatile in its uses in the food and chemical industry and increasingly as a feedstock for biofuels.
What is the Crisis?
In 2011, Thailand was affected by the shortage of palm oil for cooking, despite being the world’s third-largest producer of the commodity. Thai people worried about not having oil to cook in their house. And the price of palm oil increased from 38 Baht to 47 Baht per bottle in ...view middle of the document...
Considering the country only consumes about 400,000 tons per year as food, with the rest used to make biodiesel, there has clearly been some mismanagement.
At that time Suthep Thaugsuban, Thailand’s deputy prime minister. Suthep, whose family is one of the other person who can control the palm oil industry in the South of Thailand, also be chairman of the National Palm Oil Policy Committee. We now need to consider is it conflict of interest.
* In August 2010, Thailand had stocks of 209,659 tons of palm oil. From September, stock levels had decreased to 98,015 tons in November. At that point, the National Palm Oil Policy Committee could have decided to import more palm oil, which is something that had happened in the past. But the committee did nothing. By December, stocks had run out completely.
* Then, instead of importing more oil the government chose to raise the controlled retail price to 47 baht per bottle.
* At the same time, palm oil refiners were buying palm fruit at 5 baht a kilo from farmers, not the 11 baht a kilo specified by the government.
* About 80 percent of palm oil is processed in the southern provinces of Surat Thani, Chumphon and Krabi by 65-67 factories. These factories are owned by just 10 individuals. And all 10 of them are either politicians or hua khanaen, powerful businessmen who secure votes for politicians in exchange for political favours.
* In November and December 2009, before any imports of palm oil entered the country, the monetary benefits to these 10 individuals from “pocketing the difference” amounted to between 4 and 5 billion baht.
* As well as paying no observe to rapidly falling stocks of cooking palm oil, the government also continued to allow exports, which at the end of 2009 were continuing at above-average levels. And it continued to support the production of biodiesel with palm oil, allowing 400,000 tons of the oil to be used for this purpose.
* When the committee did eventually decide to import palm oil, it insisted the...