InfoQuest (May 28, 2020) -- Thailand's Ministry of Energy is planning to ask all palm oil operators and farmers to use a blockchain-based system (or online trading book) for palm oil trade by 2020 to monitor the price of palm oil traded through the system, curb middlemen and prevent crude palm oil (CPO) smuggling, according to Energy Minister Sonthirat Sonthisajirawong.
The Ministry of Commerce will work with biodiesel (B100) plant operators, refineries, fuel traders and farmers in the next two weeks to test a palm oil trading project through the blockchain system. It will select B100 plant operators who are ready for the project, especially those with their own palm oil refinery. The blockchain system is expected to be in trial operation for one month before it is fully extended to the whole palm oil supply chain system. And discussions will be held with PTT Public Company Limited to prepare for the system testing.
The entire blockchain system was developed by the Federation of Thai Industries (FTI), and the transaction price in the system will be set based on the CPO price and in line with the B100 price, and farmers will get a more reasonable price for the palm fruit bunches they sell. The Department of Energy Business will set CPO prices, which must ensure that market mechanisms continue to function.
Requiring all palm oil traders to use the blockchain system is not legally enforceable. However, fuel traders under Section 7 of the Fuel Trade Act will be required to purchase B100 diesel only from operators in the blockchain system.
Mr. Sanin Triyanond, chairman of the Thai Biodiesel Producer Association, said regarding the use of the blockchain system to control the entire palm oil trading system, operators were waiting for the government's test results to see how prepared the system is and how authentic the information is. This is because other countries, such as Malaysia, the world's largest palm oil producer, have not adopted blockchain to trade palm oil yet, but only summarized the information of the whole trading system.
Source: InfoQuest, by Arda/ Wilawan / Rachada, translated by Xinhua Silk Road
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