Food firms moan over rising costs

On the first day of "Thaifex: World of Food Asia 2012", which was inaugurated yesterday by Prime Minister Yingluck Shinawatra, Thai food manufacturers shared similar views that they faced higher operating costs amid the slowing global economy.

They plan to invest more to offset higher production costs, mainly from higher labour costs to ensure stable incomes.

Agricultural conglomerate Betagro Group will this year invest Bt3 billion to expand its feed-meal, processed-pork and egg-production plants, and open new branches of its chain restaurants this year.

Athapol Uraipriwan, senior vice president for corporate marketing of Betagro Group, said it would this year continue its investments to increase production capacity and offset higher labour costs.

"The company will emphasise automation more. The firm will not reduce the existing workforce, which is about 20,000 people. However, the investment will focus on automation so that the new plants will rely less on labour," Athapol said.

He said the government’s minimum-wage policy had added to the group’s annual operational costs by several million baht.

Moreover, the firm has a strategy to focus more on selling processed food and high-value-added products such as sausage rather than raw pork as the retail prices of processed foods are more stable.

It also plans to penetrate more overseas markets to boost export income. It will promote its S-Pure hygienic pork product to Hong Kong’s and Macau’s supermarkets this year.

Betagro is projected to generate Bt68 billion in sales revenue this year, a 10-per-cent increase.

Meanwhile, Frozen Seafood Group PFP Trading is planning to invest Bt300 million on installing new machinery and expanding its warehouses to offset higher labour costs and rising fuel prices this year.

PFP managing director Thawee Piyapatana said the higher labour wage, high fuel prices, and uncertainty over economic growth in targeted export markets had encouraged the company to increase production capacity to ensure higher income.

The firm is expecting to generate Bt4 billion income this year, or growth of 5-8 per cent.

Metta Prabsutha, deputy managing director of PFP Trading, said that of the total investment budget of Bt300 million, Bt100 million would be for expanding its warehouses to cover all regions. A new warehouse will be set up in Khon Kaen province in the Northeastern region this year. The company has warehouses in Phitsanulok in the North, Samut Sakhon in the Central region, and Songkhla in the South.

Metta said setting up new warehouses in the Northeast would help reduce the cost of transportat and increase distribution capability nationwide.

The company will also invest more to expand its new outlet of sushi kiosks – Sushi Gold and Sushi Station. It is projected to have 155 new outlets this year and achieve Bt200 million in sales revenue from the restaurants.

She said the company would this year focus on promoting sales in the domestic market because of the slowdown in economic growth overseas.

It will expand its automated production line to rely less on labour. As the PFP plant is in Songkhla, the company must raise its minimum labour wage to Bt300 a day in early January next year.

The company also plans to import more raw materials because of lower supply and higher prices in the local market.

To offset the higher cost of labour and raw materials, the company has increased its retail price by 1-2 per cent this year in the domestic market, and 2-3 per cent for exports.