EU resolution on palm oil not affecting Thailand

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EU resolution on palm oil not affecting Thailand

 

BANGKOK, 3rd May 2017 (NNT) - Prime Minister Gen Prayut Chan-o-cha has instructed the Ministry of Commerce to study the pros and cons of joining the federation of palm oil producing nations set up by Malaysia and Indonesia. 

According to the Ministry of Commerce, Gen Prayut was invited by Malaysian and Indonesian leaders to join the federation during his participation in the recent ASEAN Summit. The premier has yet to accept the invitation but has directed the Ministry of Commerce to conduct a study on whether becoming a member would benefit Thailand. 

It is believed that the two countries are looking for support from Thailand to strengthen opposition to the European Union’s resolution, which was endorsed on April 4th, to phase out imports of palm oil from Malaysia and Indonesia within 20 years. 

The European Parliament made a decision to curb the use of palm oil from the two nations given that the production of palm oil has led to deforestation in their countries. Malaysia and Indonesia have also tried to persuade the rest of the ASEAN community to follow suit as the resolution could potentially damage the palm oil industry. 

The Department of Internal Trade will discuss the matter with the Department of International Trade Promotion, the Ministry of Agriculture and Cooperatives and the Ministry of Natural Resources and the Environment before making any decisions. 

The EU resolution however, has no impact on Thailand since most its Thai palm oil products are exported elsewhere. 

Thailand is the world’s 3rd largest palm oil exporter.

 

-- nnt 2017-05-03

[robblok]

Thailand always says nothing will affect them... something happens that can be bad for Thailand.. but it is always denied it will have any influence at all. 

[jonclark]

Good on the EU.

 

The damage palm oil plantations have done to the tropical rain forests is beyond words. If the EU is going to phase out palm oil in 20 years it makes no difference if Thailand joins or not. They still won't be able to export to the EU as all palm oil will be banned.

[williamgeorgeallen]

stop using palm oil? they use it in just about everything. what will they substituted with? there is a reason why palm oil is so widely used.

[IAMHERE]

what will they substituted with?

My understanding is that palm oil from Indonesia and Malaysia will be replaced by palm oil from somewhere else. Heck, maybe by Thai palm oil if Thailand doesn't join the two the EU doesn't like.

[Srikcir]

3 hours ago, IAMHERE said:

what will they substituted with?

My understanding is that palm oil from Indonesia and Malaysia will be replaced by palm oil from somewhere else. Heck, maybe by Thai palm oil if Thailand doesn't join the two the EU doesn't like.

Great insight:

 

In April 2014 "Proposed ban of palm oil from Malaysia and Indonesia to European Union on environmental reasons has boosted Thailand’s prospect to export the agricultural commodity to EU, according to the Commerce Ministry's Foreign Trade Department .... due to the kingdom’s ecologically-standardised agricultural system and the country’s participation in the Roundtable on Sustainable Palm Oil" http://englishnews.thaipbs.or.th/growing-prospect-thai-palm-oil-export/

 

Therefore, Thailand gains nothing by joining the federation of palm oil producing nations set up by Malaysia and Indonesia. Thailand may actually damage its volume of palm oil exports to the EU by bringing into question the credibility of its participation with the RSPO organization. If Indonesia and Malaysia became instead participants in RSPO, there would be no need for the proposed federation of palm oil producing nations.

 

[Eric Loh]

I concur with the comment that Thailand should not join the federation set up by Malaysia and Indonesia. In fact, I think they are selfish motives for these 2 countries to set up the federation. Malaysia and Indonesia are the largest producers and have 85% of the global market. Thailand just have 1.2%. The federation was set up as a cartel to control price and also for defending against  detractors. Thailand is still 3rd largest and getting them in the federation will obviously improve the federation image and bargaining power.

 

Thailand can take advantage of this development by more government initiatives to improve the industry. Most of palm plantations are in the south, fragmented and belongs to small holders. They lack the economy of scale and productivity. The oil extraction yield at 14-17% pales against 20-22% in Malaysia and Indonesia. Lots the government can do to improve the industry.