The cabinet on Tuesday approved a 7.66-billion-baht budget to finance the state-sponsored price guarantee scheme for oil palm in the 2021/2022 season.
Deputy government spokeswoman Rachada Dhnadirek said the scheme needs to be continued to ensure farmers' income.
The guaranteed price for fresh palm nuts is set at four baht per kilogramme, for a limit of 25 rai per family. The scheme runs from September 2021 to August 2022 and is expected to benefit 380,000 planters.
To be eligible, planters must register with the Agriculture Extension Department, with the money deposited directly into their Bank for Agriculture and Agricultural Cooperatives (BAAC) accounts. Under the programme, farmers are paid only the difference when the price falls below the benchmark.
"The scheme has yet to start as the price of fresh palm nuts soared to an average of 6.90 baht per kg, much higher than the guarantee. This is driven by higher consumption and increased demand for biodiesel production," she said.
In a separate development, the cabinet also approved a budget of 600 million baht to subsidise a 3% interest rate for loans secured by dry rubber entrepreneurs.
Ms Rachada said the subsidy scheme is meant to persuade dry rubber entrepreneurs to purchase natural rubber from planters and rubber cooperatives to prop up rubber prices.
The government wants to convince dry rubber entrepreneurs to purchase at least 350,000 tonnes of natural rubber during this year's harvest.
The cabinet also approved improving the interest rate subsidy scheme for entrepreneurs of rubberwood and rubberwood products to help them retain their companies and offer them loans to expand or upgrade machinery.
The government compensation will not exceed the 3% interest rate, she said.
Commerce Minister Jurin Laksanawisit said recently the farmers' income guarantee scheme is an important tool to ensure growers of rice, cassava, rubber, oil palm and maize can endure any price slump and economic difficulties caused by the pandemic.