A customer browses the fresh food section at a supermarket in Hanoi. (Photo: VNA)Even with the Lunar New Year just around the corner, producers have beenstruggling to maintain sales. Rising prices, to better reflect their increasedcosts, will likely deal a huge blow to sales, said Thai Binh Duong, salesmanager of a vegetarian food company in the southern province of Dong Thap.
"About 70% of our ingredients must be imported, mostly Canadian soyabeans, yet in the first eight months of the year prices on the internationalmarket increased by 16.6% compared to the same period last year," hesaid.
Duong said his company has been trying to find alternative sellers in thedomestic market but the task has proven to be difficult as they either failedto meet the company's demand for quantity or quality.
"We will likely keep prices stable for the time being but may be forced toraise our prices after Tet," headded.
Nguyen Quoc Hoang, CEO of Bibica Corporation, a large confectionery maker inVietnam, said his company raised prices by 5-10% as input costs soared 20-25%,on average, since the beginning of the year.
Hoang said Tet is the mostimportant time for his company. All ingredients, therefore, must be purchasedat least six to nine months in advance. A price hike was unfortunate butinevitable.
Nguyen Hoang Dat, CEO of Vinahe, a cashew-based food producer, said his companyhas been trying to connect with numerous retail networks in a bid to push salesbefore and during Tet. While Vinahehas not decided to raise prices, he urged the government to take additionalmeasures to support food producers at a time when input cost is rising withoutan end in sight.
As the US dollar continued to strengthen, producers were badly affected by aweakened Vietnamese dong and borrowing costs, especially loans in thedollar, according to economists.
Retailers have also reported an increased number of requests from producers toraise prices. Compromises have been made to keep prices stable for the timebeing to boost sales but the situation was likely unsustainable in the mediumterm.
"The idea is to find a balance that benefits consumers, producers andretailers. We don't want to raise our prices but if we must, we want to raiseit by as little as possible," said a representative from a largesupermarket chain in HCM City.
"Steep price hikes will likely result in consumers being forced to cutspending on foodstuff for the holidays. It will hurt both producers andretailers alike."
According to a report by the HCM City Department of Industry and Trade, demandfor foodstuff for Tet willlikely increase by 20-30% but only if prices are to stay stable from now untilthe end of the Lunar year.
A sliver of hope, according to producers, is for the government to continuewith the VAT 2% reduction policy.
In last month's meeting with ministries and local authorities across thecountry, Deputy Prime Minister Le Minh Khai, head of the National PriceManagement Committee, said measures must be taken to support businesses andkeep prices stable before and during Tet.
Economists have long advocated an increase in domestic production of keyingredients for foodstuff as a long-term solution to manage food prices andreduce reliance on the international market./.
VNA
