The Returnable Plastic Crate rental model — Increasing Returnable Plastic Crates access to reduce Post-Harvest Losses in fresh perishables
Recently, Nigerians learnt of train movement of tomatoes from Kano to Lagos. There was a significant amount of fanfare surrounding the events. One thing that caught the eye of a lot of people was the packaging material, those dark green plastic crates used to stack the tomatoes in the rail wagon.
Fresh produce packaging in Nigeria is primarily done using raffia baskets. These baskets are made mainly in the South-Eastern part of the country and are transported to the various fresh produce hubs in Northern Nigeria. The raffia baskets are used throughout the wholesale section of the supply chain from the farmer to the retailer in the South. Given the perishable nature of fresh fruits and vegetables such as tomatoes, raffia baskets come with their major challenges. The weave is closely knit so aeration of contents is virtually impossible and internal heat generation of its organic contents is not preventable. The baskets are also not rigid thus under low levels of physical pressure, they easily get compressed. This compression adversely affects the contents of the baskets either from protruding raffia prongs puncturing the tomatoes or from tomatoes bursting from basket compression. The loss obtained using raffia baskets is further compounded by the fact that the baskets sit on the contents of the baskets beneath thereby squashing tomatoes during the treacherous journey from north to south. It is estimated that about 40% of post-harvest losses are attributable to these poor packaging and handling practices.
The alternative packaging material is the returnable plastic crate (RPC).
The returnable plastic crates are the standard packaging for fresh perishables globally. These are perforated plastic containers with HDPE to help the crates withstand high temperatures during use. The perforation allows for better aeration of the RPC contents thereby preventing heat generation. The plastics are also designed to sit on one another rather than sit on the contents of the crates beneath. Some are designed to sit in one another when empty thereby reducing the space required to convey the crates for reuse.
The aeration and rigidity of the crates helps reduce the percentage of tomatoes damaged in transit to less than 5% thereby leading to more income for the farmers and dealers of tomatoes. Practical use by value chain actors in 2017 have shown that with the use of Good Handling Practices, the percentage loss is less than 1%. The crates are also known to last for up to 3 years if manufactured to standard.
Despite the clear advantages the RPCs have over raffia baskets, a major disincentive to their wide adoption is the capital investment required to possess the crates. RPCs currently cost 5–6 times the price of the raffia basket. Also, 2–3 RPCs are required per raffia basket. A smallholder farmer with one hectare of tomatoes will harvest about 120 raffia baskets of tomatoes in a low yield situation. That will require at least 240 RPCs. That is a capital cost that no smallholder farmer will want to incur.
The need to solve this capital issue brought about the development of the plastic crate rental model. The model transfers the capital cost of purchase to a bulk purchaser that offers RPC rental services to various actors in the fresh perishables supply chain. The service provider purchases the RPCs from the manufacturers/distributors in bulk and rents the crates to various market actors across various sections of the supply chain, for instance, farmers moving produce from farm to aggregation centre or dealers moving produce from North to South. This allows the market actors enjoy the benefits of the RPCs without the need to cough out the costs required in purchasing them.
Running an RPC rental business will require the operator to have the capacity to get his RPCs to the point of use and to return his crates back to source for reuse — a challenge for newbies in logistics management. The current nature of the Nigerian fresh perishables market makes Northern Nigeria the primary client base for this business i.e. the farmers and the dealers. This is because most of the fresh perishables save leafy vegetables, in Nigeria are cultivated in the North and the major dealers that control the movement around the country are based there as well.
Running this model therefore requires the operator to have representatives at source and destination to coordinate the movement of RPCs back and forth. Depending on the logistics arrangements, there may also be a need for temporary warehousing at destination points. There is definitively a need for it at the source point.
The pilot phase of the model is already running in Zaria, Kaduna State (4,000 RPCs) and Danja, Katsina State (2,000 RPCs) with very impressive responses from the farmers and the dealers. Rental prices range from N200 — N250 per crate depending on demand and crate availability (for a shipment to Lagos). The cost of movement to destination is borne by the client while the cost of return of the empty crates (between N100 — N120 per crate) is borne by the rental service provider.
No business is without risk so mitigation techniques should be in place. There is the risk of breakage due to mishandling or road traffic accidents. The quality of the plastic from the manufacturers will determine the ease of breakage of the plastic. There is also the risk of theft. The Nigerian Agricultural Insurance Corporation (NAIC) is an option available to insurance cover for the RPCs. The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) is another risk sharing option.
There is also the risk of demand. Though it is a new model for the fresh perishables market, the demand is rising fast and the video link is proof. The demand side i.e. Lagos is being sensitized on the use of RPCs by the state government and this activity is also a demand driver for the products.[1]
CONCLUSION
The returnable plastic crate is the proper packaging container for fresh perishables such as tomatoes particularly for long distance travel. Its advantages over the raffia basket in the reduction of post-harvest losses are not in doubt. However, its relatively high cost is a factor that discourages its potential users from making purchases of the product. The RPC rental model is a viable means of increasing the product penetration while easing the burden of bulk purchase from its target users.
‡‡ Costing based on 2,000 RPC stock
** Costs exclude fees for a manager assumed to be on a monthly salary
Video: Tomato section of the Mile 12 market on June 6 2017
[1] https://www.pmnewsnigeria.com/2017/05/29/lagos-begins-sensitization-produce-vehicle-crate-project/
