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Canned fruit, vegetable producer hit by spiralling costs
Local canned fruit and vegetable producer Lao Agro Industry Company is facing spiralling production costs due to increases in global fuel prices and other overheads.
“The production cost often rises, but the export price remains the same,” the company's Managing Director, Mr Chanin Awakulpanich, said yesterday.
Lao Agro produces canned sweetcorn, pickled garlic and cabbage, rambutan in syrup, baby corn in brine, bamboo shoots, sweetcorn milk and palm seeds on its 5-hectare site in Thoulakkhom district, Vientiane province.
The company's costs include labour, fuel for machinery and transportation and cans.
The company uses a type of fuel oil as its energy source to process fruit and vegetables. “That kind of fuel rose from 4,500 kip per litre to over 5,000 kip per litre recently,” Mr Chanin said.
Individual wages have also gone up from 18,000 kip to 28,000 kip per day because “the fuel prices have impacted on their daily lives”.
The price of imported cans has increased on the world market, because can makers also use fuel for energy in manufacturing and transportation, which is growing more expensive the world over as global world fuel prices hit export costs.
The company's canned products are sold domestically and exported to the UK, France, Germany, Poland, Vietnam and Thailand.
“Currently we are losing profit on some of the products, but the exports must continue as they fall under contracts between producers and buyers,” he said.
Foreign currency values have also fallen which affects the company's production costs as the purchase agreements, which last for one year, were made in foreign currencies.
“To solve the issues we plan not to make long term purchase agreements with buyers. From now on the agreements will last only 2 to 4 months,” Mr Chanin said.
“This is to ensure the impacts from world fuel and currency fluctuations are reduced.”
In Vientiane, petrol stations are now selling premium petrol for 10,900 kip per litre, regular petrol for 9,810 kip per litre and diesel for 8,420 kip per litre.
The price of petrol recently rose by 200 to 330 kip per litre in Vientiane, and 200 to 340 kip per litre in five provinces, according to a report from the Price Planning and Marketing Division of the Ministry of Industry and Commerce.
Singapore (AP) reported that oil prices fell to below US$89 a barrel Monday in Asia as traders mulled mixed signals from the US jobs market about economic growth and crude demand.
Lao Agro Industry Company uses raw materials sourced from forests and farms in Luang Prabang, Xieng Khuang, Borikhamxay and Vientiane provinces, although some vegetables are imported.
Vientiane times
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