Thailand plans to increase palm oil production amid rising demand for biodiesel

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News from Beijing Derunlin on January 25: According to industry sources, Thailand plans to increase palm oil production by expanding the area dedicated to oil palm cultivation as well as boosting yields, due to the significant rise in demand for palm oil in the country’s biodiesel industry. Apichai Chuengrapha, Deputy Minister of Agriculture, said that the Ministry is working with the Southern Border Management Center to promote palm tree planting, with around 160,000 hectares to be planted by 2009. Apichai said that **Thais growers should be encouraged to focus on meeting the demands of the biodiesel industry. We should have an adequate supply of palm oil to implement the B10 biodiesel plan for the next five years. He meant that **a 10% biofuel blending plan was planned to be implemented by 2013. He added that new planting methods and technologies will help increase palm yield from 0.46 tons per hectare to 0.56 tons. The Agricultural Land Reform Office has allocated several plots of land specifically for growing oil palm trees, as part of the five-year plan. **The plan is to increase the area dedicated to oil palm cultivation by 400,000 hectares. The southern and eastern coastal areas, as well as the desert regions in the central part, will serve as the main areas for oil palm cultivation. Thailand has 320,000 hectares of oil palm trees, with an annual palm oil production of around 1.3 million tons, of which 850,000 tons are used for domestic consumption. The Ministry of Agriculture is planning to increase low-interest loans to encourage growers to replant their land with high-yield oil palm varieties, replacing the ordinary ones. According to the Thai Palm Oil and Oil Palm Association, the increased demand for palm oil in the production of B2 biodiesel has led to a drop in Thailand’s stock of crude palm oil in mid-January, from 98,000 tons in December to 86,000 tons, compared to 150,000 tons in June of last year. Thailand’s monthly demand for palm oil is around 150,000 tons; therefore, the current stock levels are only sufficient to meet half of the country’s demand. Of the 150,000 tons in demand, 70,000 tons are used for producing cooking oil, 50,000 tons are for export, and 30,000 tons are used for producing biodiesel. In recent months, the price of crude palm oil has risen sharply, from 31 Thai baht per kilogram in December to 37 Thai baht per kilogram. Due to strong demand in the biodiesel industry, palm oil prices will continue to rise. (