Canned food producer to cut production costs

Canned fruit and vegetable producer Lao Agro Industry Company (LAICO) based in Vientiane province plans to stop using bunker oil in the manufacturing of its canned foods to cut production costs.


“We will use charcoal once the factory's improvements are complete because the bunker oil is costly and the price increases each year,” a senior company official, Mr Chanin Awakulpanich said yesterday.

Currently, the cost of bunker oil is about 6,000 to 7,000 kip per litre. “The price was only about 3,000 kip per litre four years ago,” Mr Chanin said.

“With the charcoal, each kilogramme of it will be bought for 2,000 or 3,000 kip cheaper than each litre of the bunker oil.”

At present the use of bunker oil as fuel covers about 15 percent of the total production costs but “the costs will only be about 7 percent with the use of charcoal,” he said.

“We will able to save about 50 percent on our energy expenditure for production.”

The company reported that it uses about 1,000 to 9,000 litres of bunker oil each week and goes through an average of about 18,000 litres per month. “Some months, when we have intensive production, we have to use up to 36,000 litres per month,” he added.

The factory was established in 1994 and chose to use bunker oil as it was cheap energy. “The price is the opposite now,” Mr Chanin said.

“In Thailand, most of the food producers have stopped using the oil and they are now using charcoal instead.”

To get ready to use the new energy source, LAICO is preparing to upgrade its production line and improve efficiency. The project will cost about 24 billion to 32 billion kip (US$3 million to US$4 million).

The improvements need to be completed next year as the company wants to develop the production line. It hopes to lower ongoing production costs as it expects to face more competition in the years to come.

LAICO has a large number of foreign clients in both the EU and Asean countries, including the UK, France, Germany, Poland, Vietnam and Thailand, while it is focusing on finding more buyers in Asia.

Asian customers want to buy at a cheaper price than is being offered by the company at present. It is now selling canned products for US$14.50 per case to the EU market.

LAICO's factory cans sweetcorn as well as pickled garlic and cabbage, rambutan in syrup, baby corn in brine, bamboo shoots, sweetcorn milk and palm seeds on its five hectare site in Thoulakhom district, Vientiane province.

It sources most of its raw materials from forests and local farms, although some vegetables are imported.

It can produce an average of 3,600 tonnes of canned or bottled fruit and vegetables each year, with about 5 percent sold on the domestic market, while the remaining 95 percent is exported.

When there is a large supply of corn it employs around 300 people, the workforce comprising both permanent and temporary staff.

It is the first fruit and vegetable processing factory in Laos. It has three international accreditations which certify production and product quality, namely Good Manufacturing Practice, Hazard Analysis and Critical Control Point and British Retail Consortium.

vientiane times

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