Addressing Food Loss In The Value Chain Through Appropriate Packaging

1. Addressing Food Loss In The Value ChainThrough Appropriate Packaging Dr. Nerlita M. Manalili NEXUS Agribusiness Solutions Based on an FAO Commissioned Study for the 2011Save Food Congress in Germany “Investing Into Appropriate Packaging Technologies in Developing Countries” Co-Authored With Prof Moises Dorado of University of the Philippines at Los Banos

2. The Packaging Industry Structure Drivers of Growth Share By End Use The Packaging Industry At A Glance NEXUS Agribusiness Solutions

3. The Packaging Industry FLEXIBLE RIGID NEXUS Agribusiness Solutions

4. The Packaging Industry’s Growth Drivers Economics Trade Policy Regime Affluence improving incomes, rise of middle class & increased demand for product leads to: growth of lucrative markets Variety in offering or highly differentiated products Crisis lead to demands for more affordable product options that call for product repackaging in smaller sizes. Bilateral Trade Multilateral Trade Free Trade Agreements National Trade Acts provide a boost to trade where products go beyond borders requiring varying forms of packaging. Changing consumer preferences and lifestyles together with technological innovations influences packagingtrends& consequently the packaging materials needed to meet their requirements and the machinery to produce them

5. The Global Consumer Packaging Industry by End Use, 2009 NEXUS Agribusiness Solutions

6. Packaging Industry At A Glance • packaging is the world’s third largest industry sector • annual growth rate of 3-5 percent • higher than growth rate of almost all countries’ GDPs. • Its growth is generally aided by • the increasing revenues of the other top two industries (food and pharmaceuticals) • the growth of emerging markets of India, China & Brazil • the continuing optimism that together with the other industry sectors, expenditures in the packaging sector will continually experience a boost NEXUS Agribusiness Solutions

7. Packaging Industry At A Glance …… The industry is beset with a number of limitations • limited packaging solutions to meet international market requirements • the smallness of domestic packaging industry that consequently leads to exportation of packaging materials, in turn delimits the developing countries ability to enhance product quality that meets standards of the fast becoming discriminating consumers both at the domestic and international markets. NEXUS Agribusiness Solutions

8. Packaging and The Food Sector: Packaging A Derived Industry The Food Industry Sector NEXUS Agribusiness Solutions

9. Packaging is a Derived Industry In the developing countries the packaging industry sector derives their strength from the large volume of production in their agricultural food sector NEXUS Agribusiness Solutions

10. Selected SWOT Analysis of the Food Sector

11. Major Concerns of the Food Sector & Role of Packaging In Addressing Them Global Hunger Increasing Prices of Food NEXUS Agribusiness Solutions

12. Major Concerns of the Global Food Sector Increasing Number of People Living in Hunger Increasing Prices of Food Packaging Plays an Important Role In Addressing Both NEXUS Agribusiness Solutions

13. Addressing Global Hunger • To address hunger situation, • the global food supplies need to be increased by 50 percent • by 2030 from its current level • this would require an infusion of US$44B annually, primarily • on agricultural production (World Summit on Food Security, 2009). A billion people are living in hunger across the globe in 2009 • To Increase food supply • further investment in production • food loss reduction strategy • 30 to 50 percent of food produced never reached consumers • due to postharvest losses and wastage along the food chain • Which can partly be addressed through appropriate packaging. NEXUS Agribusiness Solutions

14. Global Food Prices are Increasing Demand side Supply side Trends of more rapid expansion in demand & slower production growth strong global growth in average income & rising population – increase the demand for food. Per capita income increases led to higher consumption of staple foods & diversified diets to include more meat, dairy & vegetable oils, which in turn, amplified the demand for grains and oilseeds. Reduced global production largely due to rising energy prices, production costs & adverse weather Policies adopted by exporting countries to reduce food price inflation within in own countries resulted in lower supplies available to the rest of the world. Importers who want to buy food commodities now have fewer sources. Increasing Global Food Losses (postharvest, transport, consumption) NEXUS Agribusiness Solutions

15. Packaging and Food Loss Along the Value Chain Comparative Food Loss : Developed & Developing Countries Packaging And Food Loss Packaging Solutions Across the Food Value Chain Further Challenges NEXUS Agribusiness Solutions

16. Comparative Food Loss Along the Value Chain Developed and Developing Countries Developing Economies 26-40% 10 – 50 % 0-10% Pre harvest Harvesting &Processing Secondary Retail Processing 12-21% 1-10% 2-26% 3-40% Developed Economies NEXUS Agribusiness Solutions

17. Packaging and Food Loss • Huge food loss from farm to plate are attributed to poor handling, distribution, storage, and even purchase/consumption behavior. • Huge amount of resources otherwise spent into more productive activity goes into producing and transporting goods that only go to waste due to lack of adequate packaging. • Losses at almost every stage of the food chain may be addressed by appropriate packaging. • While packaging alone cannot fully correct today’s food shortages, it is an essential part (combined with technologies & processes) NEXUS Agribusiness Solutions

18. Packaging Solutions Across The Food Chain Loss situation and causes Selected packaging solutions production unnecessary variety of packaging types; high amount of GHG emission per ton of production; non-recyclable wax-coated boxes for delicate perishables universal packaging design; modified atmosphere packaging; integrated materials handling and warehouse management system post harvest insufficient product insulation; manual Case forming and stretch wrapping; product Spoilage and toxicity fibre reduction; microflute technology; automated process reducing labor and material costs; anti-microbial packaging distribution Damage due to palletizing and strapping; Damage due to mixed products and strapping slip sheets and stretch wrapping in lieu of pallets and strapping; cube utilization via ‘pin- wheeled’ position processing Damage during transport; product Spoilage; loss of production leak resistant packaging; tough, tear resistant packaging; hermetic seals, efficient equipment system wholesale Inappropriate shipping containers; damage due to high humidity, storage time and stacking height optimizing secondary packaging for shipping and shelf impact/appeal; use of new materials with high stacking strength retail In-store preparation losses; product Spoilage; passed sale date in the bag merchandizing; leak resistant packaging; shelf-life extension; freshness preservation consumption Too much preparation; spoilage; not consumed prior to expiration date portion control packs; ready-to-eat entrees; re-sealable packaging; shelf-life extension; freshness preservation

19. Challenges Confronting The Packaging Sector • Important as they are, packaging and packaging materials are usually seen as too expensive by potential users from the farm, the processing and the distribution sectors. • Even consumers view them as unnecessary costs, most are not willing to pay. • There is the need to/for: • disseminate the true value of packaging and the options available (usually a factor of the demand for commodities requiring packaging, resource availability and innovation capacities, among others), can change. • Promote the emerging view that in the long run more but better rather than less packaging (added cost- reducing stance) could help address the problem. • An increased understanding on the protective and marketing functions of packaging and a better appreciation of the economics of its use to help promote the use of food packaging & to reduce postharvest losses that can help improve world food security (Marsh, 2001). • Promote understanding that advances in packaging will not only lead to improved food quality and safety (IFT, 2008), they will also address an equally important concern in developing countries: that of livelihood enhancement of small producers through enhanced market access and integration into sustainable value chains. NEXUS Agribusiness Solutions

20. Optimum Packaging: The Innventia AB Model The environmental consequences of product losses caused by excessive packaging reduction are far greater than guaranteeing adequate protection through an incremental excess of packaging. Source: Consumer Goods Forum, 2010 NEXUS Agribusiness Solutions

21. Selected Issues & Responses to Packaging Challenges In Developing countries R&D Institution Generated Packaging Technology Use of Indigenous Material for Packaging Cost Effective SME Packaging Innovations For Enhanced Competitiveness Packing and Packaging Facility at Ports Packaging As a Positioning Strategy Packaging Innovations

22. Packaging Challenges for Exporters ( SMEs) • catering to the domestic market in developing countries is a different scenario than when catering to the export market, in terms of packaging as quality requirements rise to new, high, levels. (ITC UNCTAD/WTO) • Even if exports are directed only to neighboring developing countries, their packaging has to withstand extra transport stresses, often under severe conditions. • If, on the other hand, they are directed to sophisticated industrialized markets, the products and their packages will have to compete at quality levels which are difficult for them to meet. • The product itself may be excellent, but it will never achieve customer acceptance unless it is at least adequately packaged • With increasing globalization, however, where competitions with foreign competitors are occurring even on home grounds, or local traditional markets, the packaging challenges for SMEs are likewise enhanced. • This problem can be viewed instead as an opportunity in terms of an untapped potential for the packaging sector to cater to. • The key is to know what your market requirements are and what packaging solutions will meet them best. NEXUS Agribusiness Solutions

23. R&D Institution Generated Storage Packaging Technology : Challenges & Issues • Training Component is Critical • - Simple technology but wrong usage renders it non • functional ( improper sealing, over filling, etc) • - Quality aspect is important and facilitating • understanding of quality needs to be part of the training • - Include teaching the principle(Example: teach to use • the Super bag (the product) and the principle of • hermetic storage in existing containers • Needs an enabled environment • - While technology is available, issues such as IPR, • tax and tax exemptions delimit use of technology • - Conflicting perspective at the national and field level; • government claims farmers not storing seeds but they do • Takes time for benefits to sink in • (the adoption that takes time more than the R & D) • - takes time for the benefits to become visible to users • (longer time to store compare to traditional system); • - business models needed for usage and for distribution • of technology • What it is The International Rice Research Institute (IRRI) bag is a farmer friendly 50kg storage bag that allows cereal grains to be safely stored for extended period. The super bag fits as a liner inside existing woven jute or polypropylene storage bags presently used by farmers. The bags are made from a tough transparent multi layer polyethylene material which incorporates a gas barrier that restricts oxygen and water vapor movement. • How does it work? Sealing the grain inside the super bag stops the uptake of moisture and oxygen from the surrounding air and protects the grain from pests and disease. Respiration by the grain and the insects trapped inside the storage system quickly reduce the inter- granular oxygen levels from 21% to less than 5%. Studies have shown • life of seed extended from 6 to 12 months • Head rice yields improved by 10 percent • Insect numbers are reduced to less than 1insect/kg of grain with out using insecticides and often within 10 days of sealing Contributor: Martin Gummert, Senior Scientist Post Harvest Development, IRRI Photos part of the image collection of the International Rice Research Institute (www.irri.org)

24. Packaging Solutions: Use of Indigenous Material Indigenous Packaging Made Waves & Facilitated Sustained Presence in Egypt Market The Situation: Industry Level Competition in the global olive oil consumer market is very fierce and is monopolized by traditional producing countries like Italy and Spain, and there is very little room for newcomers, unless in bulk, where the oil would be bottled under unknown brands of traditional producers. Country Level Egypt emerged as an olive exporting country only in the mid-nineties and the tiny export quantities were mostly in bulk. As such, the country lacked image and branding which negatively affected producers who wanted to export added value olive oil in consumer packages. The Packaging Strategy: Objective To add uniqueness to the product through packaging which would attract consumers, an Egyptian olive oil producer innovated a premium package with well executed details for export markets. The package: consisted of a wooden box made out of recycled light wooden boards covered with papyrus which is thick paper-like material produced from the pith of the papyrus plant, Cyperus papyrus. The papyrus is hand-painted with scenes of Egyptian old civilization. The outcome: Thanks to this innovative packaging style, consumers in export markets were attracted to buy from a new non-traditional producer with little track record in the market. Note that the painting on the packaging bears no relation to olive oil what so ever. The package, which is entirely hand-made, also helped sustain the livelihood of craftsmen and women and young artists. (Information source: Mohamed el-Kholy, Farmer and Olive Oil Producer, Egypt)

25. Enhancing Competitiveness of SMEs Paste the Mango caselet

26. Government-Private Sector Initiative on Packaging Services

27. R&D Institution Led Product Branding International Potato Center Led Initiative

28. Bags from Fruit Waste (Malaysia) Edible Food Packaging (Turkey) Packaging Innovations in Developing Countries A product of the Turkish Scientists research using more flexible film compared to competing products on the market. The flexible film is made using egg white and Corn rotein and natural substances and can kill microbes in food. The new packaging is 500% more flexible than Those currently on the market, as claimed And will soon be produced three to four years hence. Featured in Packaging Gateway, May 2010 issue.

29. Packaging Management for Sustainable Environment Federation of Thai Industry PET Recycling in the Philippines San Miguel Corporation (SMC) PET FLAKE Sustainability Initiatives Of Private Industries in Developing Countries The aim is to significantly increase the usage of recycled PET in food packaging applications in order to significantly reduce dependence on virgin PET resin In Thailand processed and nicely packed food products are enticing tourists, The Thailand Institute of Packaging Management for Sustainable Environment (TIPMSE) in 2005 was established by four industry clubs under the Federation of Thai Industries namely; the Plastic Industry Club, the Pulp and Paper Industry Club, the Glass Industry Club, and the Aluminum Industry Club. The Thai Metal Packaging Association & other related consumer product manufacturers also participated. TIPMSE aims to reduce packaging wastes via safety and sustainable methodology by 12% in five years (Thailand Country Report, 2008).

30. Packaging and The Food Value Chain On the Importance of Packaging • On Packaging & Food Loss in Value Chains On Packaging Trends & Potentials for Development NEXUS Agribusiness Solutions

31. On the • Importance • Of • Packaging • Packaging and packaging solutions help address Food Loss , a major global concern • Packaging is one of the crucial keys to food loss reduction which is relevant to both: the poor smallholder food producer & the poor food insecure consumer • Thus, the global packaging industry contributes • in addressing food losses • in ensuring food security and safety • In enhancing global food trade which is key to • economic development of varying economies. • Packaging functions from mere protection to include: • promotion, information, convenience, innovation & handling • Packaging becomes an added P to the 4Ps of Marketing • (product, price, place & promotion) NEXUS Agribusiness Solutions

32. Packaging spans the entire value chain & is a shared responsibility for all (trading partners ) • Products generally represent greater resources and have higher inherent value than the packaging used to protect them: thus product losses due to underperforming packaging could cause greater adverse effects on the environment than the gains made through packaging reduction • Knowing what the losses are as well as where and how they occur could pinpoint solutions, packaging included, to minimize losses, the same way that knowing which packaging solutions are available, is a crucial first step in addressing food loss (Ex, developed economies food loss /waste are at retail & consumption level, for developing economies, its at postharvest and distribution level) • On Packaging • & • Food Loss in Value Chains NEXUS Agribusiness Solutions

33. On Packaging Trends & Potentials for Development • The increasing dynamism in the food system poses challenges as well as opening up opportunities and potentials for the packaging industry • Processing traditional export commodities at country source is on the rise, the need for new consumer-packed products from developing countries to world market poses challenges in terms of • marketing directly to consumers in target markets • using own brand names • maintaining competitive packaging designs of high quality levels, challenges spilling over to the packaging industry in DC • Given the tendency of packaging manufacturing firms to move nearer to their customers, investment potentials for developing countries abound in this sector • specifically if ethnic appeal of products (F&V) is capitalized on • and if extended to packaging as well -indigenous materials (generally lacking in strength) for packaging, may be used in combination with other materials aided by research and technological advancement • Container standardization is getting to be a cost reduction strategy, has given rise to a wider range of package sizes to accommodate the diverse needs of the industry and consumer sectors alike.

34. Packaging Potentials For Development High Potentials exist as packaging materials are in short supply in developing countries, relaxing packaging regulations a bit without sacrificing food safety will surely help • Potential for 2nd hand machinery market exist • (short/medium term.) • Local fabrication of appropriate packaging machineries may work best in the long term. Developing the packing service provision subsector, specifically the pre-packing & out sourcing will provide the much needed boost

35. Food Packaging Solutions For DC NEXUS Agribusiness Solutions

36. Appropriate packaging solutions along the value chain save food and consequently save lives! NEXUS Agribusiness Solutions