High rice prices cause difficulties for noodle and cake production facilities in Nghe An

According to a survey, in early November, at many retail stores in the province, the price of regular rice/common white rice was at 17,000 - 19,000 VND/kg; long-grain Thai fragrant rice was 21,000 - 23,000 VND/kg; Jasmine fragrant rice was 19,000 - 22,500 VND/kg; Huong Lai rice remained at 22,000 - 23,500 VND/kg...

Mr. Tran Cong Hoa - owner of a food agent in Vinh City said: "Our agent mainly serves the consumption of people and vermicelli and cake processing facilities in the province... Nghe An rice prices are mainly affected by export activities, in addition to factors such as transportation costs and supply. When import prices increase, we also have to adjust the selling price accordingly. In 2024 alone, the prices of rice at the store have increased by about 1,000 - 4,000 VND/kg."

The increase in rice prices has not only caused difficulties for consumers, but also for noodle and pho factories and businesses, which have had to limit production to keep customers.

Having produced clean vermicelli for 7 years now, Mr. Nguyen Xuan Hung, the owner of a clean vermicelli facility in Nghi Phu (Vinh City), has never seen rice prices increase so rapidly or stay high for so long as they do now. Rice is the input material for vermicelli production, and the increase in rice prices and electricity prices has caused him many difficulties.

“On average, our facility supplies 200kg of fresh vermicelli to the market every day, and consumes 4 tons of raw rice every month. Previously, the price of rice was only 12,000 VND - 13,000 VND/kg, but now it has increased to 15,000 - 16,000 VND/kg. The price of input materials has increased, but we have not dared to increase the price of finished vermicelli because our customer base is limited, and the main distribution channels are supermarkets and schools. Therefore, it is very difficult to increase the price,” said Mr. Hung.

To cope with rising input costs, he had no choice but to cut staff to save costs.

As the largest rice paper production facility in Nghe An, Luong Son Company Limited consumes up to 40 tons of raw rice each year. The rice is mainly purchased from purchasing agents of the producers. The price of Khang Dan rice, which was previously only 11,000-12,000 VND/kg, has now increased to 16,000 VND/kg. The high, rapid and prolonged increase in rice prices over the past year has caused the company to face many difficulties.

Mr. Ton Cong Thang, representative of the company said: “Common products such as vermicelli, noodles, rice paper... currently use 90-95% of raw materials as rice. To cope with the increase in rice prices, we have to find ways to save as much as possible in order to reduce production costs, and negotiate with customers on selling prices to win orders.

In the case of retail customers, the establishment agrees to increase the selling price of the product by a few percent, but there must be a certain delay, it cannot increase suddenly according to the price of rice. In case of increasing the selling price, it is also a force majeure. Therefore, although the price of raw rice increases by 30%, the price of finished rice paper only increases by 100 VND/piece to retain customers.
According to Mr. Thang, if rice prices continue to stay high, the company will have to negotiate with partners to increase the price of finished cakes. Because currently, to maintain production, the company is facing many difficulties, having to minimize input costs but there is almost no profit due to increased raw material prices and increased electricity prices.

“Despite having reserves, the prolonged high price of rice has put pressure on production facilities, especially at a time when production must be increased to meet year-end orders,” said Mr. Thang.

Although it is the last months of the year, the peak season for rice vermicelli production, at this time, in Quy Chinh vermicelli village (Nam Dan town, Nam Dan), the atmosphere seems quieter than in previous years. According to the owners, the price of input materials has skyrocketed, while the finished products must be sold at competitive prices with the market to "keep customers", so they cannot increase, or if they increase, they will only increase slightly, with a roadmap and cannot increase massively according to the price of raw materials.

Therefore, manufacturing facilities and enterprises must cope, reduce input costs, accept reduced profits to maintain stable production. Many facilities do not dare to produce massively, only maintain a moderate level to cope with losses.