Oct 13, 2012

Vietnam - Businesses slack in kicking off Tet production season

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VietNamNet Bridge – Enterprises have just begun making products for Tet sale season since October, while they should have started in September like in previous years. The anticipated low demand has made producers shrink back.

Nguyen Chi Nguyen, Deputy Chair of the HCM City Food and Foodstuff Association FFA, describing food producers as the patients who make every effort to recover, said enterprises need time to prepare in capital, materials and labor force for the year-end production season after they experienced a very difficult period.

Nguyen said most of the association’s members do not intend to increase the output this year, because they can see the low market demand. Bidrico, a drink producer, only began hoarding up materials in the last week of September and has recruited 80 seasonal workers. Meanwhile, the company needed 200 workers last year for the year end production season.

Bidrico’s General Director Nguyen Dang Hien has noted that the purchasing power is on the decrease, predicting that the Tet sales would be equal to last year’s.

He is considering offering some preferences to wholesalers and discounts to consumers in order to boost sales. Especially, the company plans to market some new products, renew the package designs but maintain the sale prices unchanged.

The Dong Nai Food Processing Company (D&F) only summoned a meeting of the board of directors last week to discuss the production plan for the 2013 Tet.

D&F General Director Nguyen Tuan Phuong said by this time of the previous years, the material market got bustling already, while price quotations were sent by material suppliers to producers for their consideration. Meanwhile, no one can say for sure about the price tendency in the time to come.

“As for fresh food, we would be partially self-sufficient in materials, while we would rely on other supply sources. If the market price goes up on the days just before Tet, we would raise the retail price, and vice versa. The same strategy would also be applied for processed food,” Phuong said, stressing that the company does not hurry to make products in big quantities right now.

Viet Huong Food Company also said the company would only begin the production campaign in late November. Explaining this, Viet Huong’s General Director Nguyen Kim Ngan said the demand would not increase sharply, therefore, no need to begin the production season soon.

Saigon Food plans to churn out the output equal to that of the last year. Le Thi Thanh Lam, Deputy Director of the company, has noted that since consumers have to cut down their expenses, they would prioritize to buy essential goods for Tet, therefore, she does not intend of increasing the output of frozen products.

All producers have complained about the risks they are facing, because it is unpredictable about the purchasing power and the material prices.

“Pork and chicken are still cheap now, but no one can say for sure if the prices would increase in some more months, if the petrol and electricity prices increase,” Phuong said.

Sharing the same view, Van Duc Muoi, General Director of Vissan, said the food prices are now still at low levels, but they are very likely to escalate in some more months.

“The material prices have increased five times in the last some months. Meanwhile, the sale prices of finished products remain unchanged. Therefore, I think a price hike wave would occur soon,” he said.

Saigon Food has decided to raise the sale price by 10 percent commencing from October 2012. However, the distributors have not accepted the price increases. Lam complained that the pay for workers has increased by 15 percent, while the seafood material prices have increased by 5-15 percent, which all have led to the 10 percent increase in the production cost.

“If we do not raise the sale prices, we would not make profit,” Lam said.

Compiled by Thu Uyen

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