RISING exports and increasing local consumption of packaged food have pushed up demand for packaging products that is attracting foreign investment. But local packaging industry meets only a part of the domestic demand and millions of dollars are spent every year on imports. So, there is much room for expanding this industry.
The key issue, however, is that there’s scarcity of data on production volumes as this sector is not so well organised. Information coming out of just four companies involved in manufacturing of packaging products and listed on Karachi Stock Exchange provides some clues about the working of the industry. But much remains opaque as dozens of other sizable, registered private companies operate with little or no media spotlight while dozens or may be hundreds of small, unregistered companies work in the informal sector.
However, regular holding of annual international plastic and packaging industry trade fairs for last 12 years helped expand the local packaging industry.
Industry sources say dozens of small factories operating in the informal sector across the country continue to produce tens of thousands of plastic crates and plastic sheets that are used for packaging agricultural products
As a first step, manufacturers of flexible plastic packaging products have established their representative body called Flexible Packaging Sector, or Flexpac for short, to help this sector become more organised.
Flexible packaging products are now increasingly used in agricultural and food sector. From large cans and barrels used for storing and transporting pesticides to small butter boxes used in retail packaging, there is a long list of such products. Flexpac officials say once they start maintaining a data bank on this industry the specific issues of agricultural packaging can be identified and addressed.
Moves to organise agriculture and food packaging industry coincide with the entry of foreign partners in overall packaging industry. Earlier this month the UK-based Ashmore announced to set up an aluminum beverage can plant near Islamabad with an initial capacity of producing 700 million cans every year.
An Australian company, in collaboration with a local partner since 2010, has been involved in manufacturing of WPP bags and sheets, some varieties of which are used in packaging of rice, sugar, maize and pulses etc.
Similarly, Packages Ltd has set up a joint venture project Bulleh Shah Packaging with Finland’s Stora Enso OYJ Group for enhancing production of paper, paperboard and corrugated boxes and cartons etc. Although these products would be used in a wide variety of industries, officials of Packages say they would also cater to additional demand of these packaging materials and products in the agriculture sector.
Exporters of seafood, meat and meat products say international competition has forced them to adopt better packaging. “Many of us are now using finest quality of thin plastic sheets and even aluminum foils for packaging lamb or goat carcasses,” says a Karachi-based meat exporter recalling that ten years ago low-grade paper packaging was common.
Seafood companies are increasingly using food grade plastic films for internal packaging of fish and fish products before placing them in thermoplastic crates and cartons for shipments.
Use of thermoplastic boxes and containers is also common in export-packaging of vegetables and fruits along with parchment paper-cum-corrugated boxes and cartons.
From small cardboard-and-paper packets for mangoes to big polypropylene and jute sacks for rice and from traditional wooden boxes for vegetables to exclusively designed plastic crates for seafood, numerous packaging products are used in the agriculture sector.
Most of these products are manufactured locally and some are mostly imported from the US, Japan and China. The bulk of raw material including plastics used in agricultural packaging products also come from Saudi Arabia, UAE, China and Qatar.
Wood, jute and cotton sacking, paper and plastic of various grades are most widely used in manufacturing of agricultural packaging products. In some cases, products are made up of each of these items and in other cases a combination of the two or three works well. Production of paper and board rose by 11pc in FY14 to about 682,000 tonnes from 614,000 tonnes in FY13. But output of jute and cotton sacking has been on a modest decline and the shortage is increasingly being met through imports. Production of plywood is also falling and its imports growing, stats on output of large-scale manufacturing show.
Industry sources say dozens of small factories operating in informal sector across the country continue to produce tens of thousands of plastic crates and plastic sheets that are used for packaging agricultural products. But lately, China has emerged as a major supplier of these products at competitive prices.
Pakistan is the second largest market of plastic materials in South Asia after India but local production of polymer resins is limited to less than 150,000 tonnes, about 60pc of which is consumed locally.
Lately the use of polymer resins in manufacturing of PET bottles, cans and crates has increased as farmers are shifting from wooden and straw baskets to plastic crates for vegetables and fruits picking and transportation to markets. PET bottles are also being increasingly used in packaging of fruit juices along with juice boxes, made up of multiple layers of paper.
Published in Dawn, Economic & Business, September 22nd, 2014