Upgrades plans halt for canned food producer
Upgrades plans halt for canned food producer
Laos' sole fruit and vegetable canning operation, Lao Agro Industry Company (LAICO), has delayed plans to expand its production line due to lack of funds.
The multi-million dollar project, originally slated for next year, will see the company improve production efficiency, add more production lines and install a larger boiler system.
“So far we have not started the upgrading because we lack a source of funds or money support,” said Mr Chanin Awakulpanich, a senior company official.
The company, based in Vientiane province, plans to invest millions of dollars in the project which will cost around 24 billion to 32 billion kip (US$3 million to US$4 million). Just one boiler will cost about 1.6 billion kip (US$200,000).
The project already has government approval, although the agreed proposal was to ensure LAICO would receive financial support from the government, especially seeking loans from the state bank.
“The government supports us, however the bank has not released a loan to the company,” Mr Chanin said.
“So the completion of the development project may be delayed until 2015 or 2016.”
LAICO wants to improve the current production line because it hopes to lower ongoing production costs as it prepares to face more competition from the European market in coming years. Currently the company has a large number of foreign buyers in both EU and Asean countries, including the UK, France, Germany, Poland, Vietnam and Thailand, while it is focusing on finding more buyers in Asia. It is now selling their canned products for US$14.50 per case to EU markets.
One of the measures to slash production costs includes installing new boilers to replace costly bunker oil with charcoal in the manufacturing of its canned foods. The cost of bunker oil continues to increase with current prices at about 6,000 to 7,000 kip per litre. The price was only about 3,000 kip per litre four years ago.
Alternatively, each kilogramme of charcoal can be bought for 2,000 or 3,000 kip cheaper than each litre of bunker oil.
At present the use of bunker oil as fuel covers about 15 percent of LAICO's total production costs; but this will only be about 7 percent with the use of charcoal.
Through this the company will able to save about 50 percent of its 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 it has intensive production, it has to use up to 36,000 litres per month.
The factory was established in 1994 and chose to use bunker oil as it was cheap energy. The price is the opposite now.
In Thailand, most of the food producers have stopped using the oil and they are now using charcoal instead.
LAICO cans sweet corn as well as producing pickled garlic and cabbage, rambutan in syrup, baby corn in brine, bamboo shoots, sweet corn milk and palm seeds on its 5 hectare site in Thoulakhom district. It sources most of its raw materials from forests and local farms, although some vegetables are imported.
LAICO's factory employs 300 people when there is a large supply of corn, its workforce comprising both permanent and temporary staff.
The company 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.
It has three international accreditations which certify production and product quality, namely Good Manufacturing Practice (GMP), Hazard Analysis and Critical Control Point (HACCP) and British Retail Consortium (BRC).
vientiane times
