By Ravini Perera
Covid-19 has had a tremendous impact on all industries, including trade. Packaging, highly incorporated in trade and business, faced direct complications due to the pandemic. Issues in the supply of raw materials by international importers, restrictions on the local manufacturing process, the difficulty of maintaining supply with growing e-commerce activities, and fluctuations in pricing were among the most significant problems. This situation has thus prompted local manufacturers to operate at low capacity with the available raw materials, The Sunday Morning learnt.
Packaging has always played an important and significant role in the supply chain, protecting products from being damaged, while facilitating the efficient distribution and storage of goods. Packaging is used in almost every industry, including pharmaceuticals, food and beverages, apparel, and e-commerce, highlighting its importance for the producer and the end-consumer.
Most high-quality packaging methods incorporated by companies are considered dangerous to the ecosystem due to their inability to decompose. Therefore, many companies have adopted environmentally-friendly packaging methods for their products, with packaging styles such as corrugated packaging growing in demand.
In recent years, Sri Lanka has been promoting organic and sustainable products and supplies among consumers and various industries. The country has taken measures to ban hazardous products, such as single-use plastics, and many companies were seen supporting this endeavour.
Many Sri Lankan producers have also begun considering ways to manufacture the raw materials needed for packaging within our borders. Though experts view this to be a time-consuming and long-term project, its projected benefits are immeasurable if done correctly.
A bird’s-eye view
[caption id="attachment_111829" align="alignright" width="632"]
A carton packaging manufacturing plant Photo © Pixabay[/caption]
Speaking to The Sunday Morning, former Sri Lanka Institute of Packaging President Michael Perera shared his views on the current status of the industry in Sri Lanka.
The packaging industry of Sri Lanka has faced many obstacles in the past, especially during the war. Even at present, the global pandemic has had a negative impact on the industry. The main factor distinguishing the past and the present would be that the pandemic has affected the global community in its entirety. As a result, many shipments of raw materials and other imported goods needed to produce packaging have been either delayed or halted. However, the industry has managed to pull through, and is in the process of recovering the loss encountered.
According to Perera, although there has been no shortage of labour, its high costs have been an issue the industry faces. In other words, the high cost of labour has contributed to the high cost of production. With the cost of production rising, the addition is recovered mainly by passing on a portion of this cost to the consumer, as well as the producer.
With price controls in place, many manufacturers resort to alternative modes to recover the loss. Increasing one's capacity or output by utilising more automated machinery in the process is the most commonly sought remedy. This increases the output, causing the cost of production per piece to decrease.
Speaking further, Perera suggested that “manufacturers must look at reducing these costs mainly by recycling. The recycling of plastics and paper which can be reused in the industry is an innovative method to manage pricing, and to relieve the burden placed on the manufacturers and consumers”. Changing the packaging system is another solution put forth by Perera. “The industry will have to think about it openly,” he added.
He went on to stress the Government’s efforts to reduce the production costs and to support the industry and its stakeholders. “A lot of discussions are taking place among industry experts and the Government. However, it must be understood that the evolution will be a lengthy process and cannot be achieved overnight,” he noted.
The support and the input of suppliers is also necessary for the industry’s success. “Increasing production, increasing productivity, using alternatives for raw materials, and recycling paper and plastics will eventually lead to the country saving foreign exchange.” Furthermore, he opined, Sri Lanka needs to develop a mechanism to promote the collection of waste to be sent in for recycling.
Perera went on to emphasise the importance of packaging and its many aspects.
“Corrugated packaging alone is not sufficient. The goods being packed, given its nature, must have adequate protection.”
Taking food packaging into account, he stated: “There are two elements that can spoil food – water and oxygen. Therefore, a corrugated outer covering will not suffice to keep air and moisture from reaching the goods inside. The packaging must incorporate a plastic covering to seal the product first.”
Challenges faced by the packaging industry
The main raw material needed for the manufacture of kraft paper used in the corrugated industry is paper pulp. Thus, Sri Lanka imports this from countries such as Canada, USA, Sweden, Switzerland, and also from countries in Asia and the Middle East.
Speaking to The Sunday Morning, an industry source, who did not wish to be named, confirmed that during the past year, an increase in paper prices of approximately 15-20% was recorded worldwide. This was brought on primarily by the shortage in the pulp imported for manufacturing the paper. “As the prices rise, the impact is borne by almost all stakeholders, as packaging is used in most shipping and distribution channels. However, it is the end-consumer that is affected the most. This is due to the additional cost of production placed on the per-unit price being recovered through the consumer,” the source stated.
When inquired about the ability of the industry to increase the price of the packages supplied to customers, he emphasised: “Increasing the prices of their products simultaneously with the rise in prices of the raw materials cannot be done easily. This is mainly due to the annual contracts we have entered into with our clients. Hence, any amendments must be negotiated with the parties prior to any revisions.”
Referring to the impact of the global pandemic on the industry’s operations, the source expressed that many restrictions were imposed, challenging daily production and supply, and hence, operations were not carried out to full capacity. He further stated that, while adhering to the health guidelines, such as maintaining a one-metre distance between employees, production capacity was limited to approximately 60-70%.
“We anticipate that things will normalise by August in the coming year. We also believe that prices will return to the positions they held in 2019, given there will be no aggravation with regard to the pandemic,” he added, referring to the resilience of the industry.
Unpacking Sri Lanka’s potential
The Sunday Morning also reached out to Ananta Sustainables Founder Savera Weerasinghe for her views on the industry and its potential.
Commenting on Sri Lanka’s packaging and recycling industry’s potential for growth, she stated: “Unfortunately, a lot of our waste paper is exported to India and neighbouring regions, and we do not have sufficient local demand for recycled material.”
Speaking specifically about the food industry of Sri Lanka, she stated that the standards of the certifying bodies for food-grade manufacturing also do not permit recycled paper to be used as a raw material for food packaging. This is mainly due to quality, hygiene, and traceability concerns. Locally producing recycled, food-grade quality paper and paperboard would certainly cost less than transcontinental shipping of virgin paper from Europe and South America and Australia. She went on to explain that Sri Lankan manufacturers are also not currently focusing on this possibility, though they have the technical capacity to do so.
When asked about the contribution of the Government and public sector in resolving the issues faced by the packaging industry, she said: “The best models I have seen are where the public sector collaborates with social entrepreneurs to understand the situation on the ground, and co-create support systems to facilitate and achieve shared objectives.”
Weerasinghe expressed her thoughts on the solutions needed to be sought for the current issues in the packaging industry. “Straightforward banning is never the answer. Change comes from a cocktail of simultaneous actions meticulously executed, followed upon, and regulated. Waste management, packaging, and consumption are all a part of an intricately-woven, interdependent system.”
Sharing her thoughts on the effects of packaging, she stated that one needs regenerative ways of thinking to provide ways to replenish all we have depleted in everything we produce. “Packaging is such a ubiquitous yet insignificant constant in our everyday lives. We need to pay more attention to it. Thus, the question is if we really need it. In instances we deem it essential, we need to treat it as such, considering its social and environmental contribution at the end of its life cycle.”
The chain of supply would risk being collapsed without proper packaging to deliver goods locally or internationally. Hence, the attention of authorities must be drawn to improving the industry and reaching its potential. Thus, the downfall of an industry as large as the packaging industry cannot be easily recovered, as it affects many aspects of the economy.
Despite several attempts made by The Sunday Morning, Minister of Mass Media Keheliya Rambukwella was not reachable for a comment on the topic.
A carton packaging manufacturing plant Photo © Pixabay[/caption]
Speaking to The Sunday Morning, former Sri Lanka Institute of Packaging President Michael Perera shared his views on the current status of the industry in Sri Lanka.
The packaging industry of Sri Lanka has faced many obstacles in the past, especially during the war. Even at present, the global pandemic has had a negative impact on the industry. The main factor distinguishing the past and the present would be that the pandemic has affected the global community in its entirety. As a result, many shipments of raw materials and other imported goods needed to produce packaging have been either delayed or halted. However, the industry has managed to pull through, and is in the process of recovering the loss encountered.
According to Perera, although there has been no shortage of labour, its high costs have been an issue the industry faces. In other words, the high cost of labour has contributed to the high cost of production. With the cost of production rising, the addition is recovered mainly by passing on a portion of this cost to the consumer, as well as the producer.
With price controls in place, many manufacturers resort to alternative modes to recover the loss. Increasing one's capacity or output by utilising more automated machinery in the process is the most commonly sought remedy. This increases the output, causing the cost of production per piece to decrease.
Speaking further, Perera suggested that “manufacturers must look at reducing these costs mainly by recycling. The recycling of plastics and paper which can be reused in the industry is an innovative method to manage pricing, and to relieve the burden placed on the manufacturers and consumers”. Changing the packaging system is another solution put forth by Perera. “The industry will have to think about it openly,” he added.
He went on to stress the Government’s efforts to reduce the production costs and to support the industry and its stakeholders. “A lot of discussions are taking place among industry experts and the Government. However, it must be understood that the evolution will be a lengthy process and cannot be achieved overnight,” he noted.
The support and the input of suppliers is also necessary for the industry’s success. “Increasing production, increasing productivity, using alternatives for raw materials, and recycling paper and plastics will eventually lead to the country saving foreign exchange.” Furthermore, he opined, Sri Lanka needs to develop a mechanism to promote the collection of waste to be sent in for recycling.
Perera went on to emphasise the importance of packaging and its many aspects.
“Corrugated packaging alone is not sufficient. The goods being packed, given its nature, must have adequate protection.”
Taking food packaging into account, he stated: “There are two elements that can spoil food – water and oxygen. Therefore, a corrugated outer covering will not suffice to keep air and moisture from reaching the goods inside. The packaging must incorporate a plastic covering to seal the product first.”
Challenges faced by the packaging industry
The main raw material needed for the manufacture of kraft paper used in the corrugated industry is paper pulp. Thus, Sri Lanka imports this from countries such as Canada, USA, Sweden, Switzerland, and also from countries in Asia and the Middle East.
Speaking to The Sunday Morning, an industry source, who did not wish to be named, confirmed that during the past year, an increase in paper prices of approximately 15-20% was recorded worldwide. This was brought on primarily by the shortage in the pulp imported for manufacturing the paper. “As the prices rise, the impact is borne by almost all stakeholders, as packaging is used in most shipping and distribution channels. However, it is the end-consumer that is affected the most. This is due to the additional cost of production placed on the per-unit price being recovered through the consumer,” the source stated.
When inquired about the ability of the industry to increase the price of the packages supplied to customers, he emphasised: “Increasing the prices of their products simultaneously with the rise in prices of the raw materials cannot be done easily. This is mainly due to the annual contracts we have entered into with our clients. Hence, any amendments must be negotiated with the parties prior to any revisions.”
Referring to the impact of the global pandemic on the industry’s operations, the source expressed that many restrictions were imposed, challenging daily production and supply, and hence, operations were not carried out to full capacity. He further stated that, while adhering to the health guidelines, such as maintaining a one-metre distance between employees, production capacity was limited to approximately 60-70%.
“We anticipate that things will normalise by August in the coming year. We also believe that prices will return to the positions they held in 2019, given there will be no aggravation with regard to the pandemic,” he added, referring to the resilience of the industry.
Unpacking Sri Lanka’s potential
The Sunday Morning also reached out to Ananta Sustainables Founder Savera Weerasinghe for her views on the industry and its potential.
Commenting on Sri Lanka’s packaging and recycling industry’s potential for growth, she stated: “Unfortunately, a lot of our waste paper is exported to India and neighbouring regions, and we do not have sufficient local demand for recycled material.”
Speaking specifically about the food industry of Sri Lanka, she stated that the standards of the certifying bodies for food-grade manufacturing also do not permit recycled paper to be used as a raw material for food packaging. This is mainly due to quality, hygiene, and traceability concerns. Locally producing recycled, food-grade quality paper and paperboard would certainly cost less than transcontinental shipping of virgin paper from Europe and South America and Australia. She went on to explain that Sri Lankan manufacturers are also not currently focusing on this possibility, though they have the technical capacity to do so.
When asked about the contribution of the Government and public sector in resolving the issues faced by the packaging industry, she said: “The best models I have seen are where the public sector collaborates with social entrepreneurs to understand the situation on the ground, and co-create support systems to facilitate and achieve shared objectives.”
Weerasinghe expressed her thoughts on the solutions needed to be sought for the current issues in the packaging industry. “Straightforward banning is never the answer. Change comes from a cocktail of simultaneous actions meticulously executed, followed upon, and regulated. Waste management, packaging, and consumption are all a part of an intricately-woven, interdependent system.”
Sharing her thoughts on the effects of packaging, she stated that one needs regenerative ways of thinking to provide ways to replenish all we have depleted in everything we produce. “Packaging is such a ubiquitous yet insignificant constant in our everyday lives. We need to pay more attention to it. Thus, the question is if we really need it. In instances we deem it essential, we need to treat it as such, considering its social and environmental contribution at the end of its life cycle.”
The chain of supply would risk being collapsed without proper packaging to deliver goods locally or internationally. Hence, the attention of authorities must be drawn to improving the industry and reaching its potential. Thus, the downfall of an industry as large as the packaging industry cannot be easily recovered, as it affects many aspects of the economy.
Despite several attempts made by The Sunday Morning, Minister of Mass Media Keheliya Rambukwella was not reachable for a comment on the topic.