The government has ordered the Internal Security Operations Command to closely inspect crude palm oil movement along the Thailand-Malaysia border to prevent smuggling from the neighbouring country.
According to Jariya Sutthichaiya, secretary-general of the Agricultural Economics Office, higher prices of crude palm oil (CPO) in Thailand could trigger smuggling from Malaysia.
Thailand's quoted CPO price averaged 19.20 baht a kilogramme in June, or 6-7 baht higher than CPO prices in Malaysia.
"The government is afraid that CPO smuggling from Malaysia, if left unchecked, may cause a plunge in domestic palm prices," Ms Jariya said after Friday's meeting of the National Oil Palm Policy Committee.
Average palm nut prices rose to 3.45-4.10 baht a kg in June, up from 2.70 baht in May, while CPO stocks fell to 270,000 tonnes from 400,000 in May.
"The committee yesterday agreed that the Electricity Generating Authority of Thailand (Egat) was allowed to suspend its purchasing of CPO for a while because fresh palm nut prices have already surpassed three baht a kg," Ms Jariya said. "The government needs to be careful in handling the overall domestic palm price, as too-high CPO prices may affect the price of bottled cooking palm oil for consumers."
Egat has agreed to purchase two batches of CPO. Egat completed the purchase of the first batch of 160,000 tonnes, while the second batch consists of 200,000 tonnes, 66,250 of which was bought as of June 24.
Egat will immediately resume its purchasing once fresh palm nut prices fall below three baht a kg, Ms Jariya said.
In related news, commerce permanent secretary Boonyarit Kalayanamit said the committee on Friday approved a revised palm oil strategy to fit the national 20-year strategy (2018-37).
The strategy covers six areas: production, innovation, standards, energy, marketing and management.
The committee agreed that Thailand should focus on innovation, increase the value of palm products and develop oleo, a raw material for cosmetics, soaps and chemicals.
The committee also resolved to maintain palm oil farmland at 5 million rai, producing 16.8 million tonnes of palm nuts.