A Cost Benefit Analysis on the use of the LLS smartbag in the cool chain of Sweetcorn from South Africa to the UK

OBJECT:
To illustrate the financial and other benefits which will be derived by growers, importers, and retailers from the introduction of the Long Life Solutions Ltd. (LLS) "smartbag" to the packaging, storage & delivery of sweetcorn to the UK Supermarkets.

BACKGROUND :
Sweetcorn is available throughout the year. During the late summer, some homegrown is available on the UK market but the majority is imported, from Europe, USA, Zimbabwe, South Africa & South America. Sweetcorn's popularity is growing in the UK and Europe but due to supply relying mostly on imports and the fact that freshness & taste are rapidly lost if not handled properly, supply and efficient systems have been the limiting factors. In the USA there is a saying "boil the water before you harvest the corn". In other words, it tastes best the moment it is cut. . The sugar quickly turns to starch, losing flavour, quality and most of all, taste & sweetness.

South Africa grows sweetcorn throughout the year but it is only exported between December and April. Locally sold sweetcorn with husk without any protective packaging or de-husked and stretch wrapped has a life of 4 - 5 days. Exports are either by air (pre-packs of 2 cobs) or in Controlled Atmosphere containers by sea. Both methods are very expensive.

By packing the sweetcorn in LLS smartbags, South African growers may export to European markets using standard RA refrigerated containers instead of Controlled Atmosphere ("CA") containers saving £1,000 per container & also reap the benefits of more consistent prices and programs when compared with South African sales.Indlovu is a South African production and export company that has exported sweetcorn for a number of years using CA containers. In the past, they have tried alternative forms of packaging, Extend (Stepak); Peakfresh, Lifespan and South African variants without success. Last year they used the LLS smartbag with great success for the first time. This year they will use it for all their sweetcorn exports. The way Indlovu handle the sweetcorn in South Africa has meant that between 10% & 15% of their shipments to the UK were poor quality corn. By poor quality, is misshapen; bruised; small; un-formed etc. The shipment of poor quality corn is the result of not being able to fully sort it in South Africa. This year they will weigh each cob & reject all lightweight cobs. This will save them the £0.1127 packaging/freight etc. costs incurred for each cob sent to the UK. A similar proportion has been rejected in previous years because of desiccation etc. It is this that the LLS smartbag can save.

There is another very important change to Indlovu's handling process occurring this year. This change is because of the use of the LLS smartbag. Indlovu have stopped cooling the sweetcorn by using the chlorine-based method. Whilst the monetary saving is minimal, maybe a couple of thousand pounds over the season, it is the removal of the use of chlorine that every supermarket desires.

Indlovu are contracted to supply the UK with 4 containers each week for their summer season. In previous years, the importer rejected 25% or more (as explained in the earlier paragraph) of the contents of the CA container. Last year, because of the LLS smartbag, the pack-out rate was at worst 85%, showing that the LLS smartbag had saved the majority, if not all, of the desiccation/dimpling type of rejections. In volume terms, it gives Indlovu up to 21% increase in volume from the same quantity of shipped sweetcorn. Because of the intention to weigh the corn before packing in South Africa, it is hoped that UK pack out will approach 95%. This will save the UK importer the problems, time & money involved in sorting & discarding 25-30% of the sweetcorn received.

VOLUME / PRICE:
· 4 containers a week for 16 weeks = 64 containers. Giving a saving at £1,000 (16,000 Rand) a container, of £64,000 over the cost of using CA containers.

· Each container holds 20 pallets with each one carrying 70 crates of 40 cobs of sweet corn. This equals 56,000 cobs per container. Over the 16-week season, this amounts to 3,584,000 cobs.

· With a maximum 75% pack out, Indlovu would have sold 2,688,000 cobs. This season they will expect to sell at least 85%, or 3,046,400 cobs, an increase of 358,400 cobs.

· The increased pack out saves on costs throughout the system. By taking out these costs it makes SA corn competitive. Savings include SA costs of packaging, handling and haulage adding up to £18,000. Freight, UK handling and UK import duty at £25,600. Additional sales value for the 358,400 cobs will have to be calculated at each importer/packers cost and sales values. Added savings in the UK are in labour of sorting and packing and waste disposal.

· Therefore, in total, this season there is in excess of £107,600 saved in costs which makes the sea freight corn from South Africa viable and fills an important gap in supply for the UK sweetcorn market · The South African grower is paid for an extra 10 - 15% of his shipped sweetcorn. At between £0.35 & £0.50 per cob, this is an extra £125,000 - £150,000 of income.

COST BENEFITS:
The benefits do not stop at the dockside, the importer now has a fresher product that will reach the supermarket in better condition and Intangible Benefits: There are a number of additional benefits that we are unable to quantify in financial terms. These would include:-