A facility produces rice-made products in Đồng Tháp Province. — VNA/VNS Photo Nhựt An
The sharp increase in rice prices recently has caused difficulties to many enterprises producing flour and rice-made products in the southern province of Đồng Tháp.
Enterprises said although the price of input materials has increased rapidly, production costs have increased, but they have not been able to increase the selling price of products or even sell many rice-made products equal to or below the cost of production.
Mật Bích Khuầy who owns a production facility in the province's Sa Đéc City, said that her facility has signed many deals with partners to supply rice-made products until the end of this year.
However, the price of raw rice has increased continuously. The price of IR504 rice has increased to the current VNĐ15,000 per kg from VNĐ13,600 per kg recorded at the beginning of August.
She said the rice price hike leads to an increase in input and production costs, but the selling price of products must be the same following contracts signed earlier with partners so that her facility has to maintain operations to keep customers.
Khuầy said rice is the main raw material for her facility's products. To cope with the increase in rice prices, in the immediate future, her facility had to implement many solutions to minimise input costs.
For retail customers, her facility will negotiate to increase the selling price of the product by a few per cent, but there must be a certain delay, the selling price cannot be increased suddenly according to the price of rice, she said, adding that investing in advanced equipment and machinery to increase labour productivity and reduce production costs may be included.
A large-scale firm Bích Chi Food JSC, which specialises in flour production and rice products in Sa Đéc City, was also heavily affected by the skyrocketing rice price increase. The company produces 10 tonnes of flour and 20 tonnes of rice products each day, earning an export turnover of US$15-20 million each year.
Phạm Thanh Bình, General Director of Bích Chi Food JSC, said the sudden rise in the price of raw rice has caused difficulties for the company in production and business.
Bình said from the beginning of August, the average price of raw rice has increased to VNĐ3,500 from VNĐ3,000 per kg (depending on the type of rice).
Not only rice, but prices of many other materials that the company imports from abroad such as potato flour and pea flour have also soared by nearly 100 per cent.
For orders that the company has signed with partners before with a fixed price, the company had to sell without profit. As for the upcoming orders, the company has announced that the product price will increase from 5 per cent to 11 per cent.
However, the price increase must be slow and cannot go with the price of rice, Bình said.
He also added that from the beginning of 2023, the company's goods consumption was 25-30 per cent slower than that in 2022.
Đồng Tháp is one of the provinces with a large production area and output of rice in the Cửu Long (Mekong) Delta region. The province's annual rice production area ranges from 480,000ha to 500,000ha, with an estimated output of over 3.3 million tonnes.
In the first half of this year, Đồng Tháp exported nearly 263,000 tonnes of rice for $152.15 millịon. The province aims to ship 338,000 tonnes of rice abroad, earning a turnover of $232 million.
With the strong fluctuations in the world market, the price of rice in the province has continuously increased. Faced with this situation, the provincial People's Committee has directed relevant units to coordinate in stabilising the rice market.
At the same time, the provincial Department of Industry and Trade should urge businesses that have participated in the stabilisation programme to draw up a plan to ensure supply for the market from now until the end of 2023 and the Tết period with stable prices. — VNS