Crushing the Challenges: Krisada Chavananand on Tech, Efficiency &the Future of Thailand’s Palm Oil Sector

Krisada Chavananand

• Managing Director of Vichitbhan Palmoil Public Co., Ltd

• Vice President of Palm Oil Crushing Mill Association

• Vice chairman of Palm Oil Industry Club (The Federation of Thai Industry)

Mr.Krisada Chavananand is currently the managing director at Vichitbhan Palmoil Public Co., Ltd. With more than 30 years of experience toward Palm Oil industry, he has been granted the honor for the position of vice president of the Palm Oil Crushing Mill Association and vice chairman of Palm Oil Industry Club (the Federation of Thai Industry).He graduated Bachelor of Science in Computer Science, Sam Houston state University, USA and Master of Science, the Trustees of Columbia University, USA. Moreover, he has been invited to be a guest speaker, committee and subcommittee, both for government and private arrangements, in many occasions.

1. As VP of the Crushing Mill Association, you’re at the heart of the supply chain. What’s the biggest operational headache mills are facing right now — and why isn’t it being talked about more?

   
   

Industry Challenges and Overcapacity

I must say, we’re facing a lot of challenges in the industry. One clear sign of this is the oversupply of mills. While I agree that regulations are important, having no regulations at all is equally problematic. What do we do when there are too many mills? At the Palmex Jakarta Conference, we presented data showing that many mills were operating at at below 40% of their installed capacity. When mills are below capacity, operational costs increase, competition becomes more intense, and discussions around fruit quality become irrelevant. Grading is no longer feasible. It’s like walking through a forest while starving—if you find rice on the ground, you’ll eat it regardless of its condition.

Smallholders, Mills, and the Grading Dilemma

This is why smallholders are complaining. They wonder why mills don’t grade or reward those who deliver quality fruit. But it’s not that simple. Smallholders may manage about 8–10 hectares, while mill receives around 2,000 tonnes per day. How can we possibly grade 2 million kilograms manually? The manpower required would be unrealistic. This is one of our core challenges.

Lack of Centralised Data and Poor Investment Guidance

Another issue is the absence of centralised data. In Thailand, we lack a system to inform investors or policymakers about the actual number of mills and supply capacity in different regions. We're not against building new mills, but there should be transparency. The government should provide data showing where there is already an oversupply. This would guide not just mill owners, but also banks and investors. In Malaysia, for example, you must prove your supply before getting a mill license from MPOB. In Thailand, we say we’re a "land of the free," yet on the other side, there’s regulation without clarity. It’s contradictory.

Roadmaps That Were Never Implemented

I’ve been in this industry for more than 30 years and was involved in long-term planning, including Thailand’s 20-year palm oil development roadmap. We updated the roadmap five years ago, but unfortunately, none of it has been implemented. Governments change, and with them, policies change. One administration may promote B10, then a new one comes in and changes it to B5, causing confusion among investors who had already made long-term plans based on the previous policies. That’s how we ended up with overcapacity.

No Clear Alternatives for Farmers

Now, the government is telling farmers not to plant more palm. But then what’s the alternative? Rice? That’s not viable in the South. Durian? You can’t plant durian across 4,000 hectares for a single company. It’s not realistic.

Leadership That Understands the Industry

I must give credit to the new Deputy Prime Minister who now chairs the Palm Oil Board of Thailand. He seems to understand the industry well, having come from the private sector. Hopefully, he stays in the role long enough to make a real impact.

Mills and Farmers: Interdependent but Divided

The key point here is that mills cannot survive without farmers, and farmers cannot survive without mills—yet we’re constantly in conflict. For example, as a listed company, you can look at our financial records over the past 11 years. How many years did we actually turn a profit? The biggest problem is the oversupply of mills. Our industry is fragmented. Each sector works in silos, making collaboration very difficult. I used to tell the government long ago that politicians often need to play hero, which leads to finger-pointing. And since smallholders hold the voting power, governments naturally favour them over mill operators.

Government Support Comes Too Late

Unfortunately, government support only comes when there’s a crisis. Their priorities often lie elsewhere—such as industrialisation or developing EV hubs—while forgetting that Thailand has the potential to be the "kitchen of the world." They say it, but they don’t act on it. With each change in government comes a new agenda. At one point, the only focus was national security—meaning no protests, no disruptions. So, when farmers threatened to demonstrate, the government would quickly respond just to prevent unrest. They’d listen, label mills as the villains, and try to appease the farmers.

A Call for Policy Consistency and Collaboration

Ultimately, our biggest challenge is policy inconsistency and the lack of awareness. If the government doesn’t understand how the palm oil ecosystem works, they should at least facilitate better cooperation between mills and farmers—because one cannot thrive without the other.

2. Production’s down, costs are up, and government price controls are squeezing margins. How close are Thailand’s mills to a breaking point?

I would say we are very close to a breaking point—if not already there. The real question is: are we operating above that breaking point, or have we already slipped below it? In my view, we’re slightly under. You can see this reflected in the statistics: the number of mills previously operating, how many have closed, and how many new ones have been built. Even in my own company, we operate two palm oil mills—one with a capacity of 120 tonnes, and the other 60 tonnes. We’ve had to shut down one of them for quite some time, not because of inadequate supply, but because the larger mill can now handle everything. That wasn’t the case 10 to 15 years ago. Back then, the 120-tonne mill couldn’t keep up. Farmers were forced to wait up to three days during peak season just to unload their fruit.

To honour my promise to the farmers, I expanded by building a second mill. I told them that as long as there was a queue, I would continue expanding. But when I expanded, others did the same. And now, we’re all competing. This is the kind of situation that defines a breaking point—but few recognise it. In the past, we made healthy margins, especially during peak seasons. That’s no longer the case.

Today, fruit distribution in Thailand follows a bell curve. In some years, output flattens due to weather conditions like El Niño, and during those times, every mill suffers. The reality is that mills used to rely on strong profits during peak seasons to offset losses during the off-peak. But competition has intensified, and margins have thinned. What’s more frustrating is that when prices spike during off-peak periods—often exceeding global market prices—there’s no intervention. Yet during peak times, the government attempts to regulate and control the market.

At this point, only a handful of mills are managing to turn a decent profit. The majority are either at or slightly below the breaking point. And if nothing changes, the situation will only get worse.

3. When the government imposed the export ban, were crushing mills consulted — or was the decision dropped on your lap?

From what I recall, there was only one instance when the Thai government directly intervened in the market, and that was around 15 years ago—during a time when global palm oil prices were particularly high. It's important to understand that Thailand operates as a semi-open market—we are allowed to export palm oil, but we cannot import it. That year, there was significant export activity, which in turn drove up domestic prices. Concerned that the rising prices would negatively impact local consumers, especially end users of palm oil products, the government decided to act.

The Ministry in charge convened a single consultation meeting, and then immediately imposed an export ban—despite industry concerns. The ban only lasted for one month, but its long-term impact was significant. At the time, Thailand was being considered as a potential hub for new industrial development, such as the Thailand Industrial Zone (TIZ). There was serious discussion around establishing sustainable aviation fuel (SAF) facilities, and international companies—such as Neste or Loxensen—were expressing strong interest in investing, particularly due to upcoming regulations around carbon credits for aviation emissions.

However, when the government unexpectedly halted exports, it raised a red flag. For investors, the core question became: If the government can impose a ban once without warning, what’s to stop them from doing it again? That one-month decision created lasting uncertainty, and for potential investors, regulatory unpredictability is one of the greatest deterrents.

It’s similar to today’s concerns with EU deforestation regulations. But in my view, the biggest challenge isn’t even the regulation—it’s the uncertainty. Uncertainty makes business planning nearly impossible. How do you account for it? How do you weigh the risks—positively or negatively—when the rules can change overnight? When the government introduces such unpredictability into the system, it significantly discourages long-term investment.

4. AI and automation are gaining ground across agriculture. Has Thailand’s palm oil sector — especially at the milling level — started embracing these technologies, or are we still playing catch-up?

When discussing the future of palm oil milling, we need to separate two things: automation and artificial intelligence (AI). In terms of automation, we used to be quite ahead of our time—not by inventing new systems ourselves, but by adopting innovations from Malaysia early and implementing them faster than both Malaysia and Indonesia. In my own mills, we’ve invested heavily in automation, particularly in monitoring and control systems. But as with all technology, it comes at a cost.

Now, AI is the new frontier. When I first encountered AI applications, it was hard to imagine how it could be incorporated into mill operations. But today, the potential is clearer. For example, instead of relying on traditional web-based sensors, AI could analyse patterns and make real-time decisions—such as identifying when the process is running too aggressively and recommending a slowdown. In that sense, we are now falling behind, not because of unwillingness, but because of economic pressure.

The real issue is this: when your mill is operating at a loss or barely breaking even, how can you justify further investment? People say that competition drives innovation—but only to a certain point. Beyond that, when competition becomes too intense, it discourages investment. If a mill’s margin only improves by 0.2–0.5% in oil extraction rate (OER) through a costly upgrade, it’s not automatically worth it. Whether that investment pays off depends entirely on the volume of fruit processed. And when there isn’t enough supply to begin with, there’s no confidence to invest—even if the technology is promising.

This is not a matter of disbelief. I believe in automation—I’ve been implementing it for over 20 years. In the past, I’ve seen companies from Malaysia and Indonesia visit my mill in Thailand to learn how we applied Malaysian technologies. It used to be that Thailand was a leader in adoption. But today, people say, “Oh, Thailand…” and see us lagging behind. I still believe Thailand can move forward, but we need budget support to do so. Even if not every part of the mill can be modernised, some sections—especially critical ones—should be prioritised.

For instance, sterilisation is key. It’s like cooking rice: if the rice isn’t properly steamed, it won’t cook well. The same goes for palm fruit. If the steriliser isn’t functioning correctly—if there isn’t enough pressure or steam—the fruit is undercooked, and oil extraction suffers. That’s where automation should begin. You can’t rely on workers alone, especially during night shifts when fatigue sets in. I’ve been there myself, working overnight when I was younger, and I saw how exhausted the workers were. Can you blame them? Of course not. But this highlights the need for automation in key processes—not to replace people, but to support consistency, efficiency, and quality.

5. With Indonesia and Malaysia ramping up automation, is Thailand’s crushing segment at risk of falling behind?

It’s honestly disappointing. Thailand was once the envy of Southeast Asia when it came to biodiesel policy. Believe it or not, we were the first country in the region to implement a national biodiesel programme—and I was directly involved in that early development. If you look back at the history, we were pioneers.

But today, look at Indonesia. They’ve already implemented B40, and are preparing to move to B50 next year. Meanwhile, in Thailand, we keep fluctuating—B10, B5, B3, back and forth with no consistency. It feels like we’ve lost our direction.

The frustrating part is that we actually have the capacity to do more. Our biodiesel production infrastructure is capable of supporting more than double the current demand. In fact, everything—from plant capacity to supply chain—has been built to support a higher blending mandate. The problem is that the raw material supply isn’t there, and the policies keep shifting.

So how can we survive in a system like this? Without consistent policy, without the raw materials to match capacity, and with no long-term planning in place, we’re left with overcapacity and underperformance. It’s a serious structural issue—and unless something changes, Thailand will keep falling behind.

6. What kind of support do mills really need from the government in 2026 — beyond policy statements?

We don’t need more policy statements—we need real implementation. Policies must move beyond declarations and be translated into coordinated action. But to be effective, we can’t focus on just one sector. We have to look at the entire palm oil ecosystem as a whole. I’ve said many times: don’t view the palm oil mill in isolation. Think of it like a country or a large corporation—it encompasses multiple interconnected sectors. So, how do you move a country forward? How do you transform a large company? You need all parts working in sync.

In Thailand, look at how many ministries are involved in the palm oil industry. You have the Ministry of Finance, Ministry of Agriculture, Ministry of Industry, and the Department of Internal Trade under the Ministry of Commerce. On top of that, the Ministry of Environment is now involved because of concerns like PM2.5 emissions. Today, every palm oil mill is required to install Electrostatic Precipitators (ESPs)—large devices that trap dust and particles using electrostatic charge. It’s a significant technological advancement and arguably gives Thailand the strictest emission standards among palm oil-producing countries. But that improvement comes at a cost—a very high one.

Yes, the government wants mills to comply, and we’re not against investing in technology. But there needs to be an understanding of economic reality. You can’t keep saying, “Mills make a lot of money—they should give more to farmers,” while continually imposing more regulations and costs on mills. These additional burdens aren’t factored into the overall equation. If mills can’t survive under these conditions, how can the Thai palm oil industry as a whole survive?

I’m not saying that mills are the most important piece of the puzzle. We’re just one part of a larger system, but all the parts—mills, farmers, regulators, ministries—need to move together. If one part fails or moves out of sync, the entire structure becomes unstable.

The real challenge isn’t just policy—it’s execution. We need a serious, comprehensive roadmap that looks at the entire supply chain, includes all stakeholders, and, most importantly, is followed through. Not just words. Not just statements. But concrete actions.

7. Digitization of mill operations, predictive maintenance, and traceability tech are trending. Are Thai crushing mills ready for this shift, or is there still resistance on the ground?

We’ve already implemented automation in our operations—particularly in motor control systems. For instance, when motor load increases, it often signals internal friction or mechanical issues. So, we’ve set thresholds to trigger preventive maintenance (PM) once a certain load level is reached. This is a form of digitalisation—monitoring equipment performance in real time to anticipate failure and take early action. But despite its effectiveness, very few mills are applying this. I would estimate only 2–3% of palm oil mills in Thailand have adopted such practices. Why is the adoption rate so low? Because of cost.

If I were to build a new mill today, my priority would be to minimise investment—to go with the lowest cost option possible. Why? Because we don’t know how government policies will change. There’s too much uncertainty. In the past, I built a mill with high-end, advanced specifications—what I would call the “Mercedes-Benz” of palm oil mills. But if I had to do it again now? No way. Today, I would simply go for “whatever works”—as long as it runs, it’s good enough.

And that’s the real danger. This mindset goes against innovation and against efficiency. When competition is left unregulated and profit margins are tight, there’s no incentive to improve. That’s one of the reasons MPOB (Malaysian Palm Oil Board) was created in Malaysia. If I remember correctly, Malaysia’s palm oil industry used to be in a similar state as Thailand’s today—highly competitive, fragmented, and inefficient. Then the government stepped in.

One of Malaysia’s advantages was political stability—they had a relatively stable government for about 20 years. That allowed them to think long term and make strategic decisions. They established what we now know as MPOB and MPOC, but originally these institutions had different names. One focused on R&D, while the other managed market development. Eventually, they merged and became instrumental in regulating mill operations and supporting sustainable growth.

Malaysia also took steps to limit the number of mills. But that brought a new challenge: ensuring mills didn’t take advantage of farmers. To counterbalance that, they implemented a pricing formula—a structured way to calculate and standardise prices paid to smallholders.

In Thailand, we’ve taken a different path. We don’t control the number of mills, yet we still want to enforce pricing formulas. But how can you do that effectively in an environment with such uneven competition? Each region has different levels of supply, infrastructure, and competitiveness. So how can a single formula work across all areas? How do you create a system of checks and balances that is fair and effective?

These are complex questions, and they highlight the need for a coordinated, long-term strategy. Without it, we risk stalling development, undermining innovation, and further weakening our industry’s ability to compete.

8. Looking ahead, what role do you see smart technologies playing in transforming Thailand’s crushing industry in the next five years?

To be honest—and I say this with a heavy heart—I don’t see anything improving over the next five years. The reason is simple: Thailand lacks a concrete, unified policy for the palm oil industry. Without that, there’s no shared vision. There’s no common goal. Each player in the industry is in survival mode, doing whatever they can to stay afloat. And when everyone is focused solely on survival, how can we talk about the future? How can we plan for progress, cooperation, or innovation?

Let me share one example. In my region, I used to operate one of the largest mills. Not only that—we also owned plantations, which are considered large by Thai standards, though still small compared to Malaysia or Indonesia. Years ago, I set up a leaf analysis laboratory, fully equipped to assess nutrient levels in oil palm leaves—such as nitrogen—so experts could recommend the most suitable fertilisers. Without that facility, we would have had to send samples to Bangkok, and wait over a month to get results. By then, it would be too late to purchase and apply fertiliser for the season.

So, I invested in my own lab and brought in experts. But I didn’t stop there. For the past nine consecutive years, I’ve been offering free leaf analysis to smallholders in my area, with no strings attached. Why? Because it’s win–win. If farmers use the right fertiliser, their yields improve—and that benefits my mill too, through better-quality and higher-quantity fruit.

I’ve never required them to sell to me. As long as they’re in the Chumphon Province area, they can access the service. And this isn’t a small gesture—it costs about RM 300 per sample, and we’ve covered it entirely. The first year, 73 farmers came for the seminar. We taught them how to record and track their farm history—because just like a doctor needs your health records to prescribe treatment, we need plantation data to make proper fertiliser recommendations. But by the next year, participation dropped. Out of 324 people who attended our training, only 48 submitted samples.

And that’s the root problem. Many smallholders don’t treat this as a profession. In most cases, the land was inherited, and farming is just a supplemental income. They often work in factories and don’t have the time or interest to manage their plantations properly. So, if they don’t plan to use fertiliser at all, why would they care to find out which one is right?

Still, I’ll leave you with a suggestion—something I’ve been asked before. People have said to me, "Why don’t Thailand, Indonesia, and Malaysia work together more closely?" From the private sector side, I believe there’s willingness. But from the government level, I’m not so sure.

We are always reacting to pressure from external forces like the EU, which imposes regulations that work against us. But we are ASEAN. We have 600 million people across the region. We share borders, markets, and flight routes. Why not create our own regional palm oil standard—something we define, that reflects our shared interests and realities?

If there's one thing I hope for, it’s this: that our leaders come together—Thailand, Indonesia, Malaysia—and talk. Because unless we unite, we will always be playing defence, always divided, and always falling behind.