The cabinet on Tuesday approved in principle an 8.8-billion-baht budget for the state-sponsored price guarantee scheme for oil palm in the 2021 season.
The guaranteed price for fresh palm nuts is set at four baht per kg, for a limit of 25 rai per family. The scheme will run until September 2021.
To be eligible, planters must register with the Agriculture Extension Department and the money will be deposited directly into their Bank for Agriculture and Agricultural Cooperatives (BAAC) accounts, said deputy government spokeswoman Rachada Dhanadirek.
Under the programme, farmers will get paid only the difference when the price falls below the benchmark.
The Commerce Ministry reported that BAAC has already paid 7.22 billion baht to 378,892 households between August 2019 and December 2020, accounting for 55.5% of the total 13 billion baht budget allocated.
Nevertheless, domestic prices of fresh palm nuts had sharply risen to seven baht per kg by late last year from 3-3.50 baht per kg in the middle of last year. The price now stands firm at 7.50 baht per kg.
Higher prices of fresh palm nuts have accordingly raised the prices of domestic cooking palm to 46-48 baht per litre now from 35 baht per 1-litre bottle in the middle of last year.
Wattanasak Sur-iam, director-general of the Internal Trade Department, admitted a sharp rise of fresh palm nut prices has affected the prices of bottled cooking oil palm.
However, he said such an impact is expected to be short-lived while the department pledges to cooperate with manufacturers, retailers and wholesalers to maintain the retail cooking palm oil prices at the current rates.
He said fresh palm nut production will resume its normal supply from next month.
In February 2020, the Internal Trade Department revoked ceiling prices imposed for bottled cooking palm oil at 42 baht and soybean cooking palm oil at 55 baht to reflect their real costs.