Cost still key hurdle for more sustainable packaging, panel says
MIAMI BEACH, Fla. — Cost remains a key obstacle to the proliferation of more environmentally friendly packaging in produce, according to industry members from various parts of the supply chain who spoke on a panel Jan. 10 at the Global Organic Produce Expo.
Reducing plastic and improving sustainability are often considerations associated with organic shoppers, but Walmart’s Ross Farnsworth noted that figuring out how to make sustainable packaging work throughout the entire produce department is the ultimate goal.
“We need to figure out how we leverage out conventional business — because that’s where the volume is — and finding solutions there that can easily be translated over to the organic business,” said Farnsworth, who is the senior director of the Southeast global food sourcing team for Walmart.
However, for regular organic shoppers and those who don’t regularly shop the category, price is always an issue.
“All consumers are sensitive to paying more,” Farnsworth said. “We look at it in Walmart (that) as a buyer we’re our customers’ advocate ... we’re trying to figure out how we can bring whatever we bring to market at the lower possible cost” while still delivering the desired quality.
Shoppers aren’t the only ones who are sometimes hesitant to spend more for more sustainable products.
Tim York, president of Salinas, Calif.-based Markon Cooperative, described mixed reaction to the company’s debut of a 100% recyclable cardboard clamshell for strawberries. Convincing suppliers to carry the more sustainable option was the first hurdle.
“We really had to go to the grower and say, ‘We want to make this happen,’ and they said, ‘Well, we don’t want to do it,’ and we said, ‘Well, we really want to make this happen,’ and, ‘We don’t want to do it,’ and so we just basically said, ‘If you’re going to be our strawberry supplier you are going to do it,’” York said. “That’s how our partnership worked on that particular case ...
“That’s been a challenge for us,” York said. “It’s not inexpensive. It’s about a between 75- and 90-cent markup to move into cardboard versus the plastic.”
Incurring a significant cost to change packaging due to evolving industry norms is not unprecedented, however. More than 25 years ago, the industry switched from packing No. 2 Idaho potatoes in bags to packing them in cartons because the latter worked better in automated facilities, York said.
“Idaho Potato Commission had to go to the state and get permission to make that packaging change, which they did, and we moved from 50-pound (sacks of) No. 2 potatoes into cartons, and that was a dollar markup ... ” York said. “That was about on a $3.50 average price on No. 2 potatoes at that time, so it was a significant markup, so when you look at the markup on the strawberry clamshell against the overall average price from a percentage standpoint, it’s not as bad as it sounds.”
Some of Markon’s customers have been very receptive to the package, while others that are more cost-conscious have been less interested, York said.
Dan Davis, director of business development for Wenatchee, Wash.-based Oneonta Starr Ranch Growers, described the same as holding true with retail customers. Different companies have different priorities when it comes to sustainability, Davis said, so working collaboratively to deliver a product that works for each one is key.
“That dialogue has to start early, before design phase, understand the priorities and work together to get something of value into the market ...” Davis said.
Roger Plank, national graphics packaging sales for Denver-based DeLine Box, also described cost as an overriding concern for many companies.
“There’s always a balance of ‘We need the best-looking carton out there available – at the lowest price,’” Plank said.
Farnsworth gave examples of how Walmart is working with individual suppliers to develop sustainable packaging that works for both sides. Once packages show promise in trials, Walmart has the buying power to make the economics work.
“If we can identify a potential solution, trial it quickly, scale it and move, we have the ability to move that cost structure down pretty quick,” Farnsworth said.
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