Thu | Oct 18, 2018

Paper bags looking to make a comeback amid plastic ban

Published:Wednesday | September 26, 2018 | 12:00 AMSteven Jackson/ Senior Business Reporter

The ban on single-use plastic bags could create a market opportunity prospectively valued at around $3 billion for suppliers of alternative packaging.

The ban has local cardboard box maker Jamaica Packaging Industries Limited, JPI, considering whether the retail sector would return to using paper bags.

JPI already imports paper bags in small quantities from an overseas partner in Latin America, and is now mulling whether to increase its order to supply the retail trade with packaging. Another large box maker, AMG Packaging & Paper Company, said it would evaluate the feasibility.

Together, JPI and AMG account for more than $1.5 billion in annual cardboard box sales.

"With the ban, there has to be a solution and we have to figure it out," JPI Commercial Manager Julian Lazarus told the Financial Gleaner, while noting that he expects the plastic bag ban, which begins to take effect next January 1, to spark a rise in demand for paper bags.

 

LEVEL OF DEMAND

 

What needs to be assessed, he said, is whether the actual level of demand is sufficient to make business sense for both box markers and retailers to invest in as alternatives.

"The drawback is that plastic [bags]costs literally a fraction to make than paper bags. To move from plastic to paper will be higher costs. It will be difficult for supermarkets to give away paper bags for free," said Lazarus, who estimates that it would cost about 75 per cent more to make or import a paper bag.

"The sector will have to decide how to make paper bags in such a way as to make it viable," he said.

Jamaica in 2017 imported more than US$76 million worth of polymer of ethylene material, which are the specific building blocks for light plastics, according to the global trade data from the United Nations. Of that figure, US$26 million or J$3.25 billion represented the lightest grades, which would capture shopping bags.

Lazarus agreed that at least half of those polymer imports could constitute regular plastic bags.

"Definitely. It all adds up," he said.

The Jamaican Government announced the ban on the importation, manufacturing, distribution, and use of all single-use plastic carrier bags on January 1, 2019, and on the local manufacture and distribution of polystyrene foam, or styrofoam, used as finished goods in the food and beverage industry - that is, food and beverage containers - effective January 1, 2021.

Manufacturers were encouraged to make or distribute paper-based and other environmentally friendly alternatives for the domestic market.

AMG, which recently wrote off its last consumer paper venture after massive losses, says it is researching whether to add paper bags to its production line.

"If we have an interest, we would have to purchase new equipment," said General Manager Michael Chin.

steven.jackson@gleanerjm.com