The SGGP newspaper has repeatedly reported on the increase in raw material prices, which threatens the stability of production activities of enterprises, especially those in the essential food industry.
From the beginning of the year to now, the prices of raw materials supplied for food and foodstuff manufacturing enterprises have jumped by 10-300 percent. In which, the prices of imported spices and food additives have edged up by 5-10 percent; imported raw materials for aqua and animal feeds, such as fishmeal, cereals, soybeans, additives, and neem cakes, have risen by 10-15 percent, sometimes even up to 30 percent; domestic raw materials, such as rice, seafood, and sugar, have increased from 5-20 percent.
According to the Food and Foodstuff Association of Ho Chi Minh City, enterprises have run out of raw materials for production and must increase imports to prepare for production activities at the end of 2021 and the first quarter of 2022. The prices of domestic and imported raw materials remain at a high level, causing enterprises to encounter difficulties.
Currently, many growing areas of domestic raw materials and agricultural products have entered the harvest season; however, due to a lack of workers and disruption in the logistics chain, it is difficult for food manufacturers in HCMC to access this source of raw materials. In addition, the temporary suspension of many preliminary processing enterprises in the Southwest region also makes the risk of a shortage of raw materials more and more serious.
Mr. Le Vuong Quoc, Deputy Director of Gimex Vietnam Joint Stock Company, said that his company invested in growing 30ha of longan and Taiwanese custard apples at Hau River Farm but could not harvest them because it could not find workers, and it was difficult to transport.
Raw material prices have been increasing input costs, but enterprises cannot increase the selling prices because the purchasing power in the market is decreasing sharply. Total retail sales of goods and revenue from consumer services since the beginning of the year have slightly gone up by 0.7 percent but decreased by 0.5 percent compared to the same period last year. Total retail sales of goods and revenue from consumer services in July alone dropped by 8.3 percent compared to the previous month and 19.8 percent year-on-year. July is also the month when the pandemic developed most complicatedly, and 19 southern provinces had to apply regulations on social distancing thoroughly.
Regarding this issue, Mr. Nguyen Anh Duc, CEO of Saigon Co.op, said the unit has had to suffer losses to keep and reduce the prices of essential goods to share difficulties with people. However, if this situation persists, manufacturers, distributors, and consumers will all face difficulties.
In that context, the issuance of Directive No.10/CT-BCT by the MoIT on strengthening the management on the export and import of some commodities to support domestic production and consumption is a prompt solution to remove difficulties for enterprises.
Accordingly, relevant agencies must coordinate with associations, enterprises, and corporations to review the production of raw materials, as well as the ability to supply to the market. It will be the basis for the ministry to implement export restrictions to prioritize the source of goods for the domestic market to meet the needs of domestic consumption and production. Currently, the ministry has requested relevant agencies to report their assigned tasks to the Minister of Industry and Trade before August 30.
According to the analysis from the MoIT, there are currently shortcomings in import and export activities for commodities, such as petroleum, coal, iron, steel, and fertilizer. These items are needed domestically but are not prioritized by enterprises for distribution in the domestic market, but mainly for export. Meanwhile, domestic enterprises that need these items have to import them at extremely high prices. This has affected the balance of supply-demand and the domestic price level.
The MoIT has also directed the Trade Remedies Authority to quickly review and propose safeguard measures in accordance with the law to ensure a healthy competitive environment and support domestic production activities. It is expected that the early promulgation of the above regulations will help cool down the prices of many "hot" commodity groups, which are considered essential raw materials of domestic manufacturers.
A representative of the Food and Foodstuff Association of HCMC said that the timely moves of the MoIT would certainly help cool down the essential raw materials of many domestic industries. Thereby, it will help enterprises maintain stable commodity prices, contributing to sharing difficulties with people in the context of the complicated development of the Covid-19 pandemic.