Shortage of local raw materials causes production cutbacks
Shortage of local raw materials causes production cutbacks
Lack of raw materials and an increased cost of production over the past few years has left a local canned food processing company with little choice but to stop the production of some of their goods for export.
Laos' only fruit and vegetable canning company, Lao Agro Industry Company (LAICO), said the company had produced many types of canned produce over the last 10 years: pickled garlic, baby corn in brine, canned sweet corn, sugar palm seeds in syrup, rambutan in syrup, pickled mango, bamboo shoots in water, pickled cabbage, pickled ginger and mulberry used for making paper.
“Now we have only three products, pickled garlic, canned sweet corn and sugar palm seeds in syrup,” an official of the company said on Friday.
The official explained the company stopped the production of bamboo shoots because it could not compete with a Chinese product on overseas markets.
The buyers asked LAICO if they were able to sell their product at a similar price to the Chinese one.
The Chinese one cost only US$7-8 per can, “so we couldn't compete as that is lower than our production cost,” the company official said and added that the Chinese one is cheaper because wages are lower there.
The company's Factory Manager Mr Chanin Awakulpanich said yesterday that to compete with the Chinese product, the factory would need to pay the farmers about 1,000-1,200 kip per kilo for the bamboo. However the farmers required at least 1,500 kip per kilo.
“Bamboo in China is also cheaper as there is a large bamboo forest to harvest from,” Chanin said.
The company's official also said it had stopped making mango sliced in syrup or canned mango because it had to import the mango from Thailand which added to the production cost especially after adding on the transportation fee.
“The cost of this product would be lower if we could buy local mangoes. However we have a very small supply locally,” the official said. “We used to promote the establishment of mango plantations to the local farmers, but none of them took it up.”
Chanin said that the rambutan in syrup production ended because there is no raw material in Laos and the company cannot afford the transportation cost as it pushed the price up too high.
The pickled cabbage production discontinued because the price in Thailand, where it was mainly being sold was too low. Baby corn in brine production stopped because the farmers were not good at harvesting, only at planting.
“We stopped producing these items when we saw that pickled garlic, canned sweet corn and sugar palm seeds in syrup had a larger market,” the official said.
LAICO was established in 1994, operating on a 5-hectare site in Thoulakkhom district of Vientiane province.
It now produces pickled garlic, canned sweet corn and sugar palm seeds in syrup for both export and local supply. About five percent is sold on the domestic market while the remaining 95 percent is exported.
The official said most of the canned sweet corn is exported to European markets, about 4,000 to 5,000 tonnes a year. It produces about 2,000 tonnes of canned palm seeds annually, exporting almost 80 percent to the Thai market and almost 20 percent to the Cambodian, Malaysian and Vietnamese markets. The pickled garlic is mainly for local markets.
Now the company's new products are sweetcorn milk, pineapple juice and orange juice that are being supplied to local markets, mainly in Vientiane.
