"Thai investors should not restrict themselves to thinking only about what they want to do in Laos, but should consider how much is possible there," Pises said.

Lao Agro is a Thai-Lao joint venture that began operating in 1995 and reached the break-even point in 2004, Pises said.

Lampang Food Products Co Ltd holds a 70-per-cent stake in Lao Agro, while a Laotian businessman owns the rest. Its registered capital is US$426,000 (Bt16 million).

Due to tougher competition for export markets, many Thai food manufacturers are looking to other countries for cheaper raw materials as well as production bases.

Lao Agro began by producing baby corn, but later turned to other crops due to problems in growing corn as well as low-quality production.

Pises said he had considered several fruits and vegetables for processing. Finally, he settled on bamboo shoot, mango and sugar-palm seed as Laos produces an abundance of the three. Production has been expanded to include fermented vegetables.

The company's main canned exports are bamboo shoot, sugar-palm seed in syrup and mango slices in syrup. Most of the exports go to Europe.

On Wednesday, the company received Good Manufacturing Practice and Hazard Analysis Critical Control Point certification from Thailand's National Food Institute, which has expanded its certification service to neighbouring countries.

Lao Agro's sales average $1.7 million a year, with exports accounting for 90 per cent of the total, Pises said.

He said production falls short of demand due to limited crop supplies.

"Our production relies mainly on seasonal crops, which are limited. As a result, we cannot manufacture as much as we want," he said.

The company's production capacity is only 4,000 tonnes per year, he said.

Pises expanded to Laos after Lampang Food Products' canned manufacturing - including tomato, bamboo shoot and lychee - lost its competitive advantage to firms in China, where production costs are cheaper and raw materials more plentiful.

The company focuses on canned sweet corn, lychee and fermented fruits and vegetables, as well as ready-to-eat curry dishes. Sweet corn products account for 70 per cent of production.

To expand his business in Laos, Pises plans to encourage farmers there to try growing baby corn again.

Lao Agro is looking for a suitable 1,000-rai area where it intends to manage a contract-farming system to ensure quality control and high yields. It will also bring crop experts to Laos to train farmers.

"We have to train targeted growers in the factory first to allow them learn more about the importance of high-quality raw materials. After that, they will have an incentive to take good care of their crops," Pises said.

He said the plan was formulated because the exports of canned sweet corn from Thailand to EU face an uncertain future. Recently, EU traders called for an anti-dumping investigating into Thai sweet-corn products.

"Although the case will take almost one year for its investigating process, we have to prepare ourselves," Pises said.

The export of canned sweet corn from Laos will benefit Thailand and Laos due to a zero-tariff privilege under the EU's generalised system of preferences.

In Thailand, Lampang Food Products may shift its focus to Japan and the Middle East to offset export losses in the EU, Pises said.

He advised Thai food manufacturers to invest in Laos to create economies of scale. Related manufacturing, such as canning and packaging, will subsequently expand to meet demand from food producers.

Achara Pongvutitham

The Nation

VIENTIANE