Commerce Min to propose end to subsidy for palm oil refineries

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BANGKOK, 30 May 2011 – The Ministry of Commerce is preparing to ask the National Palm Oil Policy Committee to cancel the subsidy for palm oil refineries as they are buying palm fruits at lower than the price ceiling. 

During the meeting of the National Palm Oil Policy Committee on 3 June chaired by Deputy Prime Minister Suthep Thaugsuban, Permanent Secretary for Commerce Yanyong Phuangrach stated that the Commerce Ministry would give its briefing on the current trade situation of palm fruits. He said the Ministry would request that the 1.79-THB-per-kilogram subsidy allocated to palm oil refineries be terminated and that the retail price of palm oil be allowed to move in line with the market mechanism.

The Permanent Secretary indicated that the entrepreneurs were initially required to buy palm fruits from farmers at 6 THB a kilo in order for their production of crude palm oil to cost around 36.50 THB a kilo and for the bottled palm oil to be sold at not more than 47 THB in the market. However, he claimed that their purchase price had been lowered to only 4-5 THB a kilo, reducing their production cost accordingly. Therefore, the cancellation of the state subsidy is deemed appropriate.

In the wake of the previous shortage, Mr Yanyong stressed that consumers should be able to buy palm oil at its actual price and the Government’s continuation of the subsidization policy would be considered a waste of people’s tax money.