On May 18, 2012, the Ministry of Commerce imposed an export surcharge of 10 baht/kilogram (approximately $317/mt) on crude palm oil (CPO).
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: TH2056
Export Surcharge on Crude Palm Oil- A Move to Control
Oilseeds and Products
Trade Policy Monitoring
Trade Policy Incident Report
Orestes Vasquez, Agricultural Attaché
Sakchai Preechajarn, Agricultural Specialist
TH2056. On May 18, 2012, the Ministry of Commerce imposed an export surcharge of 10
baht/kilogram (approximately $317/mt) on crude palm oil (CPO), Harmonized Code 1511.10.00,
effective immediately until June 30, 2012. It is the first time in recent history that the government
imposes an export surcharge/tax on agricultural products. The move came after the Cabinet agreed on
April 17 to import 40,000 metric tons of semi-refined palm oil to alleviate palm oil shortages and
increasing prices. However, these two measures have been opposed by a group of crude palm oil
crushers and oil palm farmers and it is likely that the Cabinet will decide to suspend the measures in the
next few weeks. The government apparently imposed these measures to cope with rising
food/consumer product inflation which has become a hot political issue in Thailand.
On May 18, 2012, the Ministry of Commerce imposed an export surcharge of 10 baht/kilogram (approx.
$317/mt) on crude palm oil (CPO), effective immediately until June 30, 2012. It is the first time in
recent history that the government imposes an export surcharge/tax on agricultural products.
According to an interview, Thailand’s Minister of Commerce said that the Ministry of Commerce was
worried that surging export prices have induced increased exports of CPO over the past few months. If
this trend continues, the level of supplies would fall short of meeting domestic demand, for human
consumption and biodiesel production, and fears that the government fears it would not be able to
control runaway domestic retail prices for refined palm oil, which are currently selling at 42 baht/liter
($1.33/liter). According to the Thai Customs, Thailand’s CPO exports significantly increased to 95,205
metric tons in the first quarter of 2012 (Jan-Mar), as compared to 293 metric tons in the same period of
The April 17 Cabinet decision to import 40,000 metric tons of semi-refined palm oil to alleviate palm
oil shortages and increasing prices, seems not to be assuaging shortage fears. Under this decision, the
Public Warehouse Organization (PWO), a government enterprise, would limit the imported amount to
10,000 metric tons per import in order to prevent a possible decline in domestic prices that could hurt
However, these two measures have been opposed by a group of crude palm oil crushers and oil palm
farmers and it is likely that the Cabinet will suspend the measures in the next few weeks. Thai Oil Palm
and Palm Oil Association (TOPOA) as well as other relevant palm grower and crusher associations
submitted a petition to the National Palm Oil Committee (NPOC), chaired by Deputy Prime Minister
Kittirat Na Ranong on May 23 to voice their opposition. They claim that the imposition of the export
surcharge is illegal because the Ministry of Commerce did not submit the initiative to the NPOC for its
review and approval. The crushers and farmers claim that the fears are unfounded as domestic prices
for fresh fruit bunch (FFB) of oil palm have dropped sharply by 23 percent, from 6.20 baht/kg
($197/mt) in April to currently 4.80 baht/kg ($152/mt); and the export surcharge measure would
aggravate the situation. In addition, they argue that the government should discontinue allocation of
palm oil imports since increased supplies of domestic palm production currently meet demand.
According to the Secretary General of TOPOA, the NPOC agreed that both measures of palm oil
imports and export surcharges be removed and Deputy Prime Minister Kittirat promised to propose the
NPOC’s agreement and recommendations for the Cabinet’s consideration.
Rising food/consumer product prices has become a hot political issue as the current government is being
blamed for runaway inflation. In order to relieve the public’s dismay, efforts have been made that
include extending the number of products under price control, cooperating with consumer product
manufacturers to freeze retail prices for a period of time, and an establishment of thousands of
government-sponsored grocery shops across the country. The decision to import semi-refined cooking
palm oil and to control CPO exports is just another effort to cope with rising retail prices as cooking oil
is considered an essential product for Thai households.