BUSINESS
Goffer May Boost Georgian Agricultural Export
07 June, 2012

Local paper packaging industry is estimated as a potential to supplant import at local market and boost agricultural export. Georgian paper and packaging industry has full potential to develop and take the local market by supplanting the 80% of import infesting the market at the moment.  The import figure bespeaks of the market demand that promises to be increasing along with industrial development for the industrial development level is very low in Georgia. Agriculture, acknowledged as the top consumer of

goffer packaging in both developed and developing countries globe over makes just 3% of Georgian goffer consumption and rears up the list of about 17 sectors consuming goffer in the country at the moment. The reason is Georgian agriculture producers and exporters are not aware of goffer amenities.

Georgian agriculture producers and exporters still largely use wooden crates on transportation/logistics purpose thus bringing impact on the environment, product quality and their own profit all alike. A very simple recipe to solve all these problems plus boost all the industrial sectors of Georgian economy including the flabby agriculture export is developing local paper production and packaging, the USAID supported Economic Prosperity Initiative (EPI) believes.
The goffered packaging is cheaper and more profitable from both direct and indirect points of view. According to Giorgi Gorgishvili, Financial Director of Legi - Georgian paper packaging company covering about 90% in Georgian fruit and vegetable packing market made of eight local market players, price of goffer  package is by 20-30% cheaper than of crates but that is not even half of goffer priority. The most attractive side of the paper packaging is its weight that eases logistic and increases profits.
“Direct packaging has an insignificant share in the self –price in fact, the better privilege is weight,” he said. “Paper boxes are much lighter from logistics point of view, for exporters as you know limits are fixed for crossing borders and products are transported through 22-ton trucks, and thanks to lighter weight of paper boxes exporters can export 1.5 tons more product than by crates.”
The rap sheet of crates is as long as goffer privileges. According to Davit Charkviani, Packaging Sector Manager at EPI, the perishing coefficient of fruit and vegetable packed in crates is much higher than in goffer for wood includes bacteria causing perishing that affect profit at both export and local markets. Perish coefficient of mandarins in crates average to even 50% for example while bacteria-free goffer packages insure bigger volumes of product to get the place of destination unaffected.
Moreover, products easily loose shape in crates that makes them less attractive to consumers and they are sold at lower price in spite of excellent taste and organic consistence, while goffer packages in line with international standards provide a wide range of boxes tailored on different sorts of product to save their shape and image thus pushing the price and profit up ultimately.
According to EPI experts, paper and packaging development in the country in line with the EU standards may give a wide range of priorities to Georgian agriculture producers and exporters: it lays ground to branding that increases exported product quality and value as well as entire competitive image of Georgia, jacks the product up in the premium price segment and brings bigger profits. 
Products exported in crates do not provide any information of the product they contain except that they are Georgian that also undermines competitive power of Georgian export for Georgian product is not familiar beyond the Commonwealth of Independent States (CIS) been traditional market to Georgia due to common soviet past. Moreover, almost in all countries including CIS space the law forbids product transportation in crates that automatically pushes crated Georgian product down to low price segment of agriculture markets for high price segment made of supermarkets chain [that are more developed than markets in many countries] cannot handle with non-standard crates.
“Let’s take Ukraine where Georgian mandarin is sold at markets and no other information that salesman’s stamen that it is Georgian is available. Consumers are quite satisfied by taste but because the product is not offered in due package the price is lower than Turkish mandarins for example packaged in standards. Turkish mandarin cost last year was USD 1.20 per kilo while Georgian was sold for 80 cents. On the other hand our export cannot be sold at supermarkets even if they want to for they cannot handle with logistics of even non-standard size paper boxes let alone crates. So due packages gives an opportunity to increase profit margin,” Charkviani elaborated.
Packaging may boost competition among Georgian exporters. A logo explaining that the product is Georgian and of certain company is put on the paper box that gives an impetus to exporting companies increase quality to be competitive against their Georgian competitors for consumer has a chance to differentiate the product that will bring to a positive image of Georgian product at export markets all in all, Charkviani believes. 
To give an impetus to export, EPI helped local goffer producers to adopt a special technology that process packages by solution that makes boxes resistant to humidity and allows transporting of products vulnerable to damp been hard to export  as of yet. Legi plans to start producing such packages starting this summer and enhance productive capacity by fall.
And the last but not the least discomfort of the wooden crates is they cannot be reprocessed for secondary use; they remain at export market useless, while goffer packages can be reprocessed 8 times and only small quantities [around 20%] of cellulose [material made of fresh timber that is the constituent part of paper] is added during reprocessing that makes goffer in line with green industry. The bigger profit agriculture producers and exporters will enjoy from goffer packaging will be reflected in enhanced producing capacity and better quality, Charkviani presumes.
Once the big export companies adopt goffer packaging petty farmers providing local market and reluctant to changes are also supposed to be convinced in privileges of paper packaging and give up crating practice thus sparing forests and own expenses.
“The reason they still stick to crates is timber was cheaper thanks to free cut out practice, government officially prohibited free cut out past year, it cannot be that wooden box could be cheaper than the paper one,” Gorgishvili said. By today price of crates is higher than the paper ones fixing GEL 3 and GEL 2 per box respectively.

 

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