Poor Packaging Erodes Competitive Edge, Profits

EghtesadOnline: Packaging introduces the product and protects it from the time it is produced until it’s sold.

News ID: ۷۷۴۲۲۶

27 February 2017

Unfortunately, the issue has been neglected in Iran such that domestic products’ packaging can neither compete with similar foreign products in the international market, nor can it appeal to domestic consumers.

According to figures released by the ministries of agriculture and industries, between 25% and 30% of Iran’s agro products perish every year due to improper packaging. This inflicts about $10 billion in losses on the economy annually, the Persian daily Kasb-o-Kar reported.

Most Iranian quality products, such as saffron, pistachio and honey, are wholesaled to neighboring countries where they are packaged and then exported under their own brand names to other countries, Financial Tribune reported.

Why do Iranian producers prefer to export their goods in wholesale when they are well aware of the value-added they could gain from selling packaged products?

Former member of Export Assembly of Iran, Alireza Yonchi, believes the first step is to categorize Iranian goods according to their comparative advantage over similar foreign products.

“We can focus on products in which we have a say and come up with solutions for problems in those areas. Some agricultural products as well as handicrafts are our main fields of expertise,” he said.

Yonchi said importing the raw material and setting up the infrastructure for packaging require the endurance of a lot of inconvenience and hassles brought about by the Customs Administration.

“Therefore, Iranian producers are encouraged to sell their products to other countries that handle the packaging process. This is why Iranian saffron, for example, is wholesaled to China and Pakistan for packaging. These countries then reexport the product as their own,” he said.

He added that obtaining printing permits from the Ministry of Culture is also a seemingly endless procedure.

“Another nuisance is that the Ministry of Culture does not allow the printing of non-Farsi letters on packages and no permits are issued in this respect for producers who want to export their goods or sell them to tourists. Moreover, 3-D printing is not permitted in Iran,” he said.

Yonchi lamented the shortage of machinery for producing cellulose-derived packages and complained of the tax levied on the imports of white adhesive paper and food grade paper as well as other raw materials used in the packaging industry.

“Scarcity of innovative designers and graphic designers with original ideas, edible ink, printing equipment and competent printing houses, as well as the knowhow to use these facilities are other factors that pose problems to Iranians.

“There are four types of packaging, namely cellulose, metal, polymer and glass packaging. Apart from non-alcoholic bottles, which are manufactured domestically, we have no say in producing the rest,” he said.

Yonchi noted that if increasing exports is a priority for the government, it must change its methods, and if not, the way Iranians are operating will not get them anywhere.