Noon International: Food Trading Import Export

Why are China frozen vegetables going to be more expensive this year? 

We would like to share with you some of the reasons why we can expect increased pricing from our China suppliers of frozen vegetables.  Below is a list of 5 reasons why pricing will increase this coming year:

1. Raw material costs have risen sharply.  The China CPI has been increasing with the food leading the way.  In particular food oil, rice, pork, poultry and eggs have all increased by double digits in 2007.  We are currently witnessing high prices in the raw materials of broccoli, cauliflower and carrots in China, with prices over 50% higher then normal for this time of year.
2. Packing material cost have increased from the printers by 10 - 30% because of oil cost, labor cost, etc.
3. Labor cost will increase more this year.  One of our suppliers says that labor cost have increased by 100% over the past three years.  Also of importance is during the last CCP (Communist Party Of China) meeting in October one of the key issues was “Peoples Living Standard”.  They will focus on improving living standards, workers working conditions, and work time.  In some areas of China the minimum pay for the factory workers was increased in October of 2007 by 100RMB per month per worker.
4. The RMB continues to appreciate against the dollar.  Some China banks are estimating that the RMB will increase to 6.3 to 6.8 RMB to the dollar in 2008. 
5. Interest rate cost have been increasing as the China government trys to cool the economy.  The current rate is 7.85% with more increases being predicted in the near term.

Also of major concern are the rumors that the China government will cancel the tax refund for vegetable exports.  If this happens it would have a dramatic impact on frozen vegetable pricing.

Is it any wonder that prices are rising? 

Technorati Tags: Noon International, frozen vegetable, RMB, China, CCP


 

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