Agricultural exporters face hardship amid escalating costs

May 15, 2024 | 18:43
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Surging input costs show little sign of abatement, causing concern among agricultural producers.

Nguyen Ngoc Luan, director of Global Trading Connection Co., Ltd., based in Ho Chi Minh City’s Hoc Mon district, revealed that the price of coffee is increasing each day, leading to coffee producers like them unable to run production and business activities smoothly.

"Coffee prices have gone up continually from 2023 until the present, and this is a situation that could drag on for the rest of the year," said Luan.

The price of coffee started to rise in July last year, initially fetching $1.7per kg, then raising to $2.08 per kg. By late 2023, 1kg of coffee fetched $3.75, and is now around $5.40

Agricultural exporters face hardship amid escalating costs

Salt intrusion in southwestern localities and a lack of water for irrigation are contributing factors to the adverse impact on the quality of agricultural produce.

Nguyen Dinh Tung, chairman of Vina T&T Group, a major exporter of distinct local fruits based in Ho Chi Minh City’s Phu Nhuan district, cited the price of coconuts as an example of the runaway costs.

"Coconuts sold from the garden now fetch $5.40 for a batch of 10 while export-standard coconuts go for around $8.30. Previously, a batch of 10 coconuts could be bought for between $1.70 and $2.10," said Tung.

Amid such sharp price volatility, firms in the food industry are forecasting a sharp hike in the price of processed food for the rest of this year as well as for the 2025 Lunar New Year season.

Global Trading Connection's Luan believes that many businesses will be forced to make supply purchases at these inflated costs as their current stock has almost drained out.

"We bought in small amounts at first and bought on specific occasions. The company can accept losses to fulfill contracts for our long-term clients, but for new customers we must renegotiate the price so we must wait for the customer to accept the new price before buying materials," said Luan.

At this point, the company is unable to grow their new customer base as it has been forced to put up its prices by 30 per cent for export orders, which no new potential partners have agreed to.

"At present, the best option is to take more profit from items to cover other areas showing less, and accept a reduction in overall profit," said Nguyen Trung Dung, chairman of DH Foods JSC based in Ho Chi Minh City’s District 5.

Industry experts have suggested businesses bolster partnerships in material-growing areas to ensure a stable supply chain and ensure a strategic approach to taking orders.

"The price of agricultural products depends heavily on the global market. That's why for this year's crop season, when sales volumes were large and prices were fairly low, we signed contracts for the whole year to reduce our risk," said Dung.

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By Suong Thuy

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