Wednesday July 2 2014

The matter of packaging produce for markets

By James Wire Lunghabo

In Uganda, there is a growing trend of supermarkets becoming the one-stop shopping places for the urban dweller. Each time you pass by a supermarket in the evening on week days or on afternoons of weekends, you will be faced with the spectacle of congested aisles and paying counters.
As a result of the growth of supermarkets, Ugandans have taken to adding value to some of the local produce in order to avail it in a much more appreciable manner to the customers that patronise the supermarkets.

Meet requirements
You will find dried pineapples, dried bananas, roasted and fresh groundnuts, silver fish (mukene), mushrooms, ggobe, among others, gracing the shelves.
One of the basics that anyone intending to sell their product in a supermarket needs is proper packaging.
Packaging helps meet a number of needs and these could be;
• Protection from damage or contamination
• Preservation
• Product identification
• Ease of product storage
• Marketing, and
• Information availability, for example, barcodes, ingredients, sell by date.
On many occasions, government officials have castigated small and medium enterprises (SMEs) for not doing much in terms of packaging their products.
They correctly point out that for better branding and exploitation of the export market, it is important for the products produced to be in packaging that not only conforms to the international standards but is attractive to the consumers.

Costs and standards
This observation is very good and ideal for an MBA class presentation. However, when you choose to get your hands dirty and try to implement this advice, only then is when you start realising how the hurdles are of Goliath proportions.
First and foremost, the packaging that is readily available in Uganda for food packaging is quite sub-standard that one can at best use it to produce for the local and regional market.
It would be a serious case of day dreaming to believe that you can get decent packaging that suits international (European and American) standards at an affordable price in Uganda.
A number of the package dealers when approached for food grade high-end packaging resort to becoming middlemen and importing it from countries like China and India.
When you choose to directly import the packaging, you have to contend with the taxes levied by Uganda Revenue Authority that are definitely over 100 per cent for any form of food grade plastic packaging.

Pass the test?
Food grade sealable paper packaging tends to be more expensive at source than its plastic counterpart and also attracts similar tax rates like the plastic packaging because of the sealable polyethylene inner lining that it has.
This leaves small scale producers at a loss and thus making them resort to the cheap locally available plastic packaging, which in most cases is not food grade material.
Food Grade Material basically means “any material which when it comes in contact with food is unlikely to contaminate it with harmful materials above the allowed limits.”
Ideally if the Uganda National Bureau of Standards were to enforce this requirement for all supermarket supplies, over 50 per cent of the products supplied by the local suppliers and a number of those from the region too would not pass the test.
One may understand that perhaps government rised taxes on packaging to discourage the importation and usage of plastic packaging while allowing a local packaging industry to develop, most of the local packaging is not targeting SMEs.
The paper packaging, for example, is aimed at high end manufacturers while the plastic packaging is of embarrassingly low standards. Since this experiment has not worked as thought over the years that it has been in force, then it is time for a rethink.
• Do we want local small scale producers to improve on their product branding?
• Are we keen on seeing Ugandan agricultural SMEs actively enter the export market?
• Do we want to see reduced wastage of local produce?

Search for ways
This then calls for some action in line with turning around the status-quo. The Minister for Trade, Amelia Kyambadde, and her team of technocrats should cease specialising in identifying the problems that SMEs have and actively participate in solving them.
While there have been some efforts in the past to train Ugandans on improved packaging, the lack of proper follow up did not yield the much desired results.
Are you a small agricultural products business with the zeal to conquer the market? Giving up is not an option.
You can try all possible ways to at least get some semi-decent packaging for starters and eventually reaching out for the high-end packaging as revenues are guaranteed.

choosing the package

The most important criteria for selecting the right package for your needs quickly boil down to the factors of cost and supply.
Assuming that you have made the decisions about which market you are going to supply and the cost of the produce and the cost of transport are known, there remains the choice of package materials.
The first criterion for any form of packaging is that it must add to the value of the produce handled, sufficient to cover the additional capital outlay and operation, plus a margin for profit.

The best way to cost packaging is as a unit cost per pound or kilogram of produce, and it does not matter what the cost is as long as it can be recovered from the market.
In practice this means that the packaging and the produce must be competitive with those marketed by other suppliers.
Good packaging of good produce has a clear financial advantage over poor quality produce which is poorly packed and presented.
The package could conceivably contain different types, sizes, grades, or stages of maturity of produce.

The important thing to remember is that the reason for bringing the produce together in the first place is to create a more manageable unit for conveying more than one item of produce in one handling step instead of several.
The question is not so much what is a package, but rather what should a package do, what different types of package are there, and how do we choose the right package?

Source: FAO

The author is an ICT and agro entrepreneur.