Thailand worries over food shortages amid palm oil debate

Thailand has started requiring that all its diesel fuel include a component made from palm oil, a move that could reduce costly energy imports but is driving up prices for the commodity, experts say.

The switch has sent prices for palm oil soaring, leading to shortages of the commodity that is widely used for domestic cooking and in the food industry.
Palm oil is among the products for which prices are controlled by the government, but as prices have risen globally, traders stopped selling to stores or began ignoring the fixed price.

That sounded alarm bells for producers and consumers, who urged the government to ban exports of palm oil and to adjust its price controls.

Instead, the Commerce Ministry allowed a one-time import of 30,000 tonnes of palm oil to boost supplies until March, when production enters its peak season.

It also allowed a 4-baht increase in cooking oil prices to 47.60 baht (1.44 dollars) per litre.

Wannaporn Martkasem, chairman of the Palm Oil Refinery Association, said floating palm oil prices would help prevent a shortage in stores, but warned the government would have to find a better way to balance the competing demands for food and fuel.

Forbes