Palm Oil

[moby]

Hello all

I have just got back from Chumphon looking at palm oil plantations

I would just like some clarification on what I was told by the wife.

(1) Palm oil starts producing at around 4/5 year first few years around 15 kilos per palm then 30 kilos per palm after 6 years.

(2) Palm is cut around every 20 days

(3)You have 22 palm trees per 1 rai

(4)40% of what you make goes back into the trees fertilizer cutting pruning ect,

(5) Tor bor 5 land is ok to buy for farming as we will not be building on the land

(6)Does any body know what tax you pay on your profit?

Thanks any advice will be greatly appreciated

Moby

[gregb]

(1) Palm oil starts producing at around 4/5 year first few years around 15 kilos per palm then 30 kilos per palm after 6 years.

That's about correct if you start from seed. You can shave 2 years off the timeframes by paying for seedlings. The yields are quite variable. If you are in an area with 2 meters of rainfall and a well drained alluvial soil, you can get 80 kg/tree or more when the trees are about 8 years. Yields drop considerably with less rain. Some of this can be recovered through irrigation. Water and soil quality have a tremendous effect on this. Do your homework here.

(2) Palm is cut around every 20 days

A reasonable estimate. You should plan on visting every tree at least once a month. More during periods of higher rain. Your actual harvesting will be determined by looking at the fruit bunches, and harvesting the ripe ones.

(3)You have 22 palm trees per 1 rai

This one is questionable. There are lots of theories on this, but this density seems to be the extreme low end. I wouldn't do this. Generally, in Thailand with low rainfall, people usually recommend an 8.5 meter grid (or less) because the trees don't grow as large. In the best case scenario (Malaysia/Indonesia) where you get 2 meters of rain per year, correct planting density is on a 9 meter triangular/hexagonal grid, yielding 148 trees per hecatre, or 24 trees per rai.

In Thailand, with less rain, the trees don't grow as large, so maximizing your revenue usually means planting at higher densities, usually upwards of 160 trees per hectare or more. I've heard of people going up to 185 trees per hectare. Rainfall plays a big role here. Also, you need to decide if you are going to irrigate. Generally, if you can afford the investment and have access to water, a drip irrigation system more than pays for itself.

This will be something you need to study and answer for yourself, based on the specific layout of your land. I would error on the higher side though. My opinion only. Listen to the local knowledge, study the literature, and then make an informed choice.

(4)40% of what you make goes back into the trees fertilizer cutting pruning ect,

Not sure what you are saying here, so can't really help you. If you are talking about total costs, it depends alot on what you are paying your help and how efficient they are. At current Thai prices of 5 baht/kg for fruit, and 29 baht/kg for CPO, 40% is a hefty chunk unless you are including interest on capital for purchase of the land. Also, higher yields (such as you can get with irrigation) decrease your overall costs as a percentage of income.

Fertilizer is generally most effective during the early years, after the trees are mature they need significantly less, so this is highly variable. Estimates for labor for maintainence are all over the map, and really depend alot on you and how much you will do yourself. The more involved you are, the less your costs will be. If you want to buy it, fund it, and walk away, expect to pay through the nose.

Rats are a big problem though. You can expect about a 5% attrition rate during the early years if you don't have an effective rodent control plan. This can increase your costs slightly. Also, irrigation can add substantial costs if you plan on this, but again, you generally get that back in yields.

I'll let someone else respond to your financial and legal concerns, as I've learned long ago that these areas are not my strong point.

Are you planning on seeds or seedlings? Who are you buying the trees from? Would you mind sharing with the group what you are paying?

I stated this in another thread. I highly recommend the following book if you are serious:

The Oil Palm

R.H.V Corely and P.B. Tinker

ISBN 0632052120

It is the best $300 USD you will ever spend, and guaranteed to pay for itself several times over. Many graphs and charts to help you understand exactly what you can expect in terms of yields for various conditions. Since I'm not in the Chumphon area I can't be more specific than this, but maybe someone else can give you a more local account of expectations.

[moby]

Thanks for the info Greg So just to clarify after about four years should be looking at 10-15 kilos per month per palm?

[Issangeorge]

If you look at http://www.oae.go.th/statistic/yearbook/20...sec2table40.pdf they say you get 2,725 kilograms per year/rai, but I have no idea what the amount of trees planted per rai are. Issangeorge

[Doni]

Hi,

If one had 5 rai of Palm trees and it's 4 Baht a kilo, then 100 trees would only give 600 Bath - is that right?

Doni

[gregb]

Thanks for the info Greg So just to clarify after about four years should be looking at 10-15 kilos per month per palm?

4 years from seed and you could probably get it on select trees. 5 years from seed is generally where they become reliable. 15 kg is reasonable for about 1.2 meter rainfall without irrigation on a 5 year old tree from seed.

4 years from seedlings on the other hand, and 15 kg is conservative. You will probably get more than this unless you are on very poor soil with little rain.

Irrigation will help tremendously. Consider that if you are planning on irrigating, you need to be looking at 200 liters per tree per day during the dry season for a fully mature tree. (Drip irrigation. Open trench would require more.) Again, there is a whole science behind yields, and it is heavily dependent on water. Really spend some time analyzing your water situation. Anything you can do to improve it will improve your yields.

[gregb]

Hi,

If one had 5 rai of Palm trees and it's 4 Baht a kilo, then 100 trees would only give 600 Bath - is that right?

Doni

Not sure where you got that from. At current prices, a stand of 8 - 10 year old trees should deliver about 5000 - 13000 baht per rai depending on alot of factors, mostly rainfall and irrigation. The long term expected price of palm oil is solidly upward.

[gregb]

If you look at http://www.oae.go.th/statistic/yearbook/20...sec2table40.pdf they say you get 2,725 kilograms per year/rai, but I have no idea what the amount of trees planted per rai are. Issangeorge

I'd love to know how they got this figure. This works out to 17 tons per hectare. That's only slightly below the long term average yield that they get in Pennisular Malaysia. My suspicion is this might be a selective sampling of data, given that the rainfall in Thailand is substantially less.

I would think the real average of southern Thailand needs to be down in the 12 tons per hectare range. Even with irrigation I don't think you could push the yield up that high. Wouldn't mind being proven wrong though.

[Doni]

Hi Gregb, and all,

Thanks for the information on prices and all the rest of useful tips on palm trees. Now, the next question is: where can one buy seedlings up near Nogkhai area? Any idea? prices?

It sounds like a LOT OF WORK but sounds good if it takes off.

Thanks again,

New deciple -Doni

[Doni]

Hi,

Did you buy that book on growing palm trees on Amazon?

Doni

[gregb]

Doni,

Doubt you're going to find much in Nong Khai. That's not really the prime growing area. I would contact these guys. They can certainly ship germinated seeds by Thai Airways that you can pick up at the airport. Seedlings would probably have to be delivered by truck. Not sure what the cost on that would be. Make sure it doesn't get too cold during the winter nights there. Probably not an issue, but it pays to look at some historical weather patterns to be sure.

Palm trees take a long time to generate income, and an unfortunate, unusual cold spell in 5 years could result in the loss of your entire investment. Make sure you understand the risk, and price it in to your calculations. The prime growing areas are more costal regions and further south.

In any case, information on growing in Nong Khai would be extremely interesting. There isn't alot of data for this area. I know the government talked about planting all throughout the Issan region, but it never really got started, whether that was due to technical or political issues I guess we'll never know.

http://www.univanich.com

[Doni]

Hi,

Once again, thanks for the information and advice. There is a lot to think about but I will probably give it a go on a small scale.

Doni

[Mosha]

A thai friend reckons he makes a living off 2 rai. Also I asked this one before, but aren't Palm trees sexed, and if so how do you ensure you get the correct female to male trees?

[gregb]

Also I asked this one before, but aren't Palm trees sexed, and if so how do you ensure you get the correct female to male trees?

African Oil Palms (Elaeis guineensis, the kind we are talking about here) are monoecious. Both sexes are available on every tree. Further, the only kind you actually want to grow, are Tenera. They are hybrids, specifically a cross between a Dura and Pissifera parent.

An average farmer can not supply oil palms you actually want to waste your time growing. They take years to mature, and it isn't viable to grow anything other than the high yielding varieties with a large mesocarp and small nuts. You need to go to a recognized company that has an established breeding program with certified parent trees. As long as you do this, there is no danger of getting the wrong type.

I have heard that there are specific varieties of oil palms that are temporarily dioecious, meaning they alternate cycles of male and female flowers, rather than having both appear at the same time. I don't have any experience with this. No one except for very large plantations will actually try and breed their own trees, so I can't offer any more information.

If you can provide more information, it would be interesting to know what the real story is behind this rumor. There is always the possibility he is growing some kind of non standard local tree that just happens to produce fruit with oil, but as a 20+ year investment, I would stick with what everyone else does.

[Mosha]

The sex of trees thing, came about because my wife's cousin bought some. He says half of them are not producing fruit. However from what you say, it goes along with a suspicion I had that he bought from a cowboy supplier.

[WilliamCave]

So to ask a question, if the conditions were good and the trees 7 to 10 years old what would be the average income from these palm oil trees given they are on 40 rai of land,,My mother inlaw ownes the land so I am cerious to understand how much she makes every year..

My wife asked me if I was interested in a 100 rai of land with trees aged from 5 to 7 years they wanted 3.5 million baht for the land it is near chumphon close to ranong ..

with out getting technical or with lots of details about rain chemicals etc, what would be the guested income from land like this also, and would it be worth buying,,,

[gregb]

Without any more information than this I would say you can probably assume an income of around 10k baht per rai at current prices if there is nothing wrong with the plantation. This is a very rough guestimate. Lots of things could be wrong with it though, so take this for what its worth. (lack of water, sick trees, pest problems, forest encroachment, etc.) If it's very far away from the factory you may get a discounted price also due to transport costs.

Keep in mind these are current prices, not historical. Palm oil is on a very strong upward pricing trajectory. Prices have been much lower in the past.

Personally, as long as the title to the property checks out and you have the financial resources, I don't think it is possible to go wrong with oil palm right now. My predicition is the price is likely to go significantly higher. It's a very good substitute for diesel fuel.

[Mosha]

Make sure it's got access to a road, ie along side the land. I've seen a few disputes round here because a neighbour wouldn't let people cross their land to transport stuff in and out.

[WilliamCave]

Without any more information than this I would say you can probably assume an income of around 10k baht per rai at current prices if there is nothing wrong with the plantation. This is a very rough guestimate. Lots of things could be wrong with it though, so take this for what its worth. (lack of water, sick trees, pest problems, forest encroachment, etc.) If it's very far away from the factory you may get a discounted price also due to transport costs.

Keep in mind these are current prices, not historical. Palm oil is on a very strong upward pricing trajectory. Prices have been much lower in the past.

Personally, as long as the title to the property checks out and you have the financial resources, I don't think it is possible to go wrong with oil palm right now. My predicition is the price is likely to go significantly higher. It's a very good substitute for diesel fuel.

would that be 10k a month per rai or year...

[gregb]

10k per rai per year

[Doni]

Hi Gregb,

Then there would be no point in trying to plant Palm trees for oil if one had only 5 rai- is that right?

What size land would you need to make a decent profit, and not wreck the countryside??

Have you seen the oil palm debate on YouTube?

Do you think deforestation will also happen in Thailand if the prices keep going up?

Doni

[gregb]

Hi Gregb,

Then there would be no point in trying to plant Palm trees for oil if one had only 5 rai- is that right?

Depends entirely on your outlook for the future. That's something only you can answer. I personally believe palm oil prices will continue to rise, and it is a perfect hedge against diesel shortages. I think it is a safe bet however that the price will continue to increase. 5 rai properly managed in Thailand can probably give you 3.3 tons of crude palm oil per year. What do you think that will be worth in 6 years? Do your homework.

What size land would you need to make a decent profit, and not wreck the countryside??

Have you seen the oil palm debate on YouTube?

Do you think deforestation will also happen in Thailand if the prices keep going up?

Doni

What's a decent profit to you? Profit relative to what? What are your other options?

Deforestation has been happening, and will continue to happen in Thailand as well as everywhere else in the world. It is a primary cause of water shortages. Whatever you do, make sure you consider water management in your calculations. Deforestation will occur with or without palm oil. Prices are not the driving factor of deforestation. Increasing population and particularly economic growth are the root issues. As long as these are viewed as good, nature will suffer.

[stevehaigh]

can anyone tell me how oil is extracted from the palm trees and how is biodeisel made from palm oil? is there a market for raw palm oil? what is the price?

thanks, steve

[allcladrad]

Moby,

I live in Chumpon and have 17 rai in palm, I have averaged 80,000 baht over the last 4 years, gross. I fertilize 3 times a year, 16 bags, was 680 a bag now 900, trees are 9 years old. Paid 49,000 baht a rai. I harvest from mid May until mid December. In other words in the wet.

I am on the 9 meter planting plan. Trees here do get large. No taxes other than land tax is paid, these are cash crops.

Price flucuates depending on availability. Many of my neighbors have gone from rice to palm and palm to rubber trees.

When the biodiesel demand came on line prices went sky high, but so did fertilizer. Labor is following.

Rats are not a big problem here, but weeds are. There are non producing plants, they are called ladyboys here and are killed and another plant put in it's place, small problem. There are numerous places to purchase plants and most are using varieties from Malaysia, check the internet for the pedigre. You must order early meaning starting now because you will want to plant in May or June for best results.

To make a living you must work, and it is hard work. If you approach it any differently it will at best be a push. If you don't plan on moving to Chumpon then it will be extremely difficult to make money.

[Thai-Aust]

can anyone tell me how oil is extracted from the palm trees and how is biodeisel made from palm oil? is there a market for raw palm oil? what is the price?

thanks, steve

follow these links

http://www.palmoilthai.com/miraculous_2_en.htm

http://www.cpi-th.com/home_e.html

http://www.palmbiz.co.th/htm/Eimage.htm

http://www.fedepalma.org/oil_palm.htm

[Maizefarmer]

If you look at <a href="http://www.oae.go.th/statistic/yearbook/20...sec2table40.pdf" target="_blank">http://www.oae.go.th/statistic/yearbook/20...sec2table40.pdf</a> they say you get 2,725 kilograms per year/rai, but I have no idea what the amount of trees planted per rai are. Issangeorge

I'd love to know how they got this figure. This works out to 17 tons per hectare. That's only slightly below the long term average yield that they get in Pennisular Malaysia. My suspicion is this might be a selective sampling of data, given that the rainfall in Thailand is substantially less.

I would think the real average of southern Thailand needs to be down in the 12 tons per hectare range. Even with irrigation I don't think you could push the yield up that high. Wouldn't mind being proven wrong though.

This emphasizes the "risk/problem" associated with using net articals as guidelines or indicators to growing any crop - they are indeed almost always figures given for a set of enviromental (soil/rainfall/temp/crop type) conditions that collectively are seldom repeatable in Thailand - and even when quoted for Thailand it is important to read the fine print, as they often have some or other condition attached to them - not only in respect of palm oil, but other crops as well.

Take something written about cassava or maize as just one example about many: collectively fuel and fertilser costs will add close on 30% to any given figures that are quoted in anything written before 2006, while yields are no higher today than they were then.

I too do not agree with the 17 ton p/hectare as anywhere near what is realisticaly achiveable in the majority of cases in Thailand. 12 ton p/hectare is more like it.

[fruity]

LADYBOYS........lol....appropriate!

I watched a trailer on Nat Geo....I think? of a fortcoming programme about Palm growing in Indonesia & how it is taking over from more traditional crops & big companies are buying vast tracts of land, basically, putting smaller tennanted farmers out of business. I look forward to catching the full show as & when I don't know? Lets hope the same doesn't happen here!

Moby,

I live in Chumpon and have 17 rai in palm, I have averaged 80,000 baht over the last 4 years, gross. I fertilize 3 times a year, 16 bags, was 680 a bag now 900, trees are 9 years old. Paid 49,000 baht a rai. I harvest from mid May until mid December. In other words in the wet.

I am on the 9 meter planting plan. Trees here do get large. No taxes other than land tax is paid, these are cash crops.

Price flucuates depending on availability. Many of my neighbors have gone from rice to palm and palm to rubber trees.

When the biodiesel demand came on line prices went sky high, but so did fertilizer. Labor is following.

Rats are not a big problem here, but weeds are. There are non producing plants, they are called ladyboys here and are killed and another plant put in it's place, small problem. There are numerous places to purchase plants and most are using varieties from Malaysia, check the internet for the pedigre. You must order early meaning starting now because you will want to plant in May or June for best results.

To make a living you must work, and it is hard work. If you approach it any differently it will at best be a push. If you don't plan on moving to Chumpon then it will be extremely difficult to make money.

[euca]

I notice in today's Bangkok Post that CP Gp is going into oil palm now for 2011. The article mentions several factors including sale price expectations. They are to process in three places including Saraburi which is well to the north of ten north which I read is the northern limit of best oil palm production(?) Also, it would be interesting to know what the maximum distance to the processor would be for a reasonable return. If more than a few miles then I would question the economics and wonder if it might be better, if possible, to convert one's own produce into fuel for one's own machinery. Be interested in any thoughts on the above points. If it's fairly easy to make DIY tractor fuel I could see a growth in that cottage industry throughout rural SouthEast Asia there. Hmmm.

[Issangeorge]

Maizefarmer, you said "I too do not agree with the 17 ton p/hectare as anywhere near what is realisticaly achiveable in the majority of cases in Thailand. 12 ton p/hectare is more like it." That figure comes from Office of Agricultural Economics Ministry of Agriculture and Co-operatives September 2004, I presume this is an approved Government figure. Most other figures I have seen on this site are quite conservative compared to other figures I have seen on the net elsewhere. Issangeorge. PS if you can't believe the government who can you believe? Ha,Ha.

[Gary A]

My wife came home the other day and asked if I was interested in oil palms. I was surprised that they are offering seedlings here in the Loei area. From everything I have read, the yield suffers too much if there is not sufficient rainfall, so I told her to forget it.