A worker unloads palm fruit at a plantation in Peat Jaya in Jambi province on the Indonesian island of Sumatra. Photo: Reuters/ Wahyu Putro

Thousands of farmers growing palm oil in Thailand are concerned about the European Union’s decision to look at ways to ban palm oil biofuel, despite the fact the country does not export such produce to the EU.

Thai authorities have said the EU move – to reform its power market and cut energy consumption – would have minimal impact on the Kingdom, which produces just 1.2% of global output.

Farmers in Indonesia and Malaysia, which are the world’s largest palm-oil producers, have staged protests. But the reaction in Thailand has been more muted. However, 80% of the country’s two-million-tonne output comes from small Thai farmers, mostly in the south.

The world’s biggest consumers of palm oil are India, the EU and China. News of the EU move has knocked the price of palm oil down further to US$634 a tonne, well down from the $809 per tonne in January last year.

Palm oil has been blamed for the destruction of rainforests in Indonesia and Malaysia, and Thailand has seen many rubber plantations converted to palm oil, spurred partly by government subsidies.

But major growers have said they believe the long-term outlook is positive, even if there are “price fluctuations” for a period of two or three years.