Chapter 8 COSTS AND LOSSES OF PACKAGING MATERIAL AND LOSSES OF MILK

Packaging material sold together with the product and losses of packaging material and product during packaging, handling in stores and transportation, represent a substantial part of packaging costs. They may be classified as follows:

1. Packaging material

   1. Value of returnable bottles lost or broken during distribution.

   2. Value of returnable bottles damaged during washing, filling and handling at the milk plant.

   3. Loss, depreciation and maintenance of cans.

   4. Value of single-service containers purchased by the customer together with milk.

   5. Value of single-service containers damaged during packaging and transportation.

   6. Loss, depreciation and maintenance of crates.

   7. Value of packaging material for single-service wraps.

2. Milk

   Losses due to over-filling or measuring and wastage through spillage and breakage during packaging and transportation.

The incidence of these costs and losses in the various packaging systems is shown in Table 17.

Table 17 Incidence of costs and losses in packaging systems

Except for costs specified under A.5 above, the throughput of the plant has little effect on the listed costs and losses per 1 000 litres. The value of A.5 even at its highest percentage level (low plant capacity, say 10 000 1/day) increases the costs of packaging by a negligible amount and, therefore, is assumed also to be independent of throughout.

In the following summary of the various costs in US$/1 000 litres the values of buildings, equipment, vehicles, energy, etc. have been estimated by applying world market prices. However, this criterion cannot be applied to milk for which the farm-gate prices and transportation costs depend entirely on the situation in the area under consideration. The losses listed under B are therefore not included in the summarized cost estimates.

Packaging material

Pasteurized milk in glass bottles. The impact of the cost of the bottle on the retail price depends on the trippage of the bottle. The relation between cost and trippage is demonstrated in Fig. 51. With a reasonable quality of bottles it seems to be fair to assume that a glass bottle for pasteurized milk can be re-used at least 20 times* which means that about 5% of the value of the bottle covers items A1 and A2 as specified above.

Fig. 51 Relationships between bottle trippage and trip cost

* In the United Kingdom where about 90% of pasteurized milk is delivered to the home, trippage in well-controlled distribution systems may be as high as 50. In other countries, e.g. the Netherlands, a deposit equal to the full cost of the bottle is charged: thus the consumer pays for all bottles losses occurring after delivery.

A well-designed crate for twenty half-litre bottles should be suitable for 1 000 trips, i.e. to carry about 20 000 bottles or 10 000 litres of milk.

The cost of a bottle is assumed to be US$ 0.08 and to be US$ 5.00 for a crate. The approximate costs and losses of packaging material for 1 000 litres of milk may therefore be estimated as:

		US$
bottle 1000 × 2 × 0.08 × 0.05	=	8.00
create	=	0.50
	total	8.50

Sterilized milk in glass bottles. For reasons stated in Chapter 2, the trippage of bottles for sterilized milk is lower and re-utilization is assumed to be 15 times. The cost of a bottle is taken as US$ 0.10. The cost and utilization of crates could be assumed to be the same as for pasteurized milk. The approximate cost for 1 000 litres of milk is therefore:

		US$
bottle 1000 × 2 × 0.10 × 0.07	=	14.00
create	=	0.50
	total	14.50

Pasteurized milk in 40-litre cans. The cost of a can, including maintenance, can be estimated at US$ 40.00 and it is assumed that it can be re-used 1 000 times. The approximate cost of the packaging material for 1 000 litres is therefore:

  =   US$ 1.00

Pasteurized milk in tetrahedral cartons in returnable crates. The cost of 1 000 cartons (equivalent to 500 litres of milk) is about US$ 15.00 i.e. US$ 30.00 per 1 000 litres. Loss during packaging and transportation (about 1%) increases the cost to US$ 30.30.

The cost of a crate is estimated at US$ 2.80. The crate is re-usable for about 1 000 trips, i.e. for 9 000 litres. The approximate cost of packaging material per 1 000 litres is therefore:

		US$
carton	=	30.30
create	=	0.30
	total	30.60

UHT milk in rectangular cartons in single-service wraps. The cost of 1 000 cartons (equivalent to 500 litres of milk) is about US$ 30.00 i.e. US$ 60.00 per 1 000 litres. Loss during packaging and transportation is about 2% which increases the cost to US$ 61.20 for 1 000 litres. The material for single-service wrapping is about US$ 100.00 per 1 000 packs, holding 6 000 litres. The approximate cost of packaging material for 1 000 litres is therefore:

		US$
carton	=	61.20
single-service wrapping material	=	16.70
	total	77.90

Pasteurized milk in plastic sachets in returnable crates. The cost of polyethylene film in three colours can be estimated at US$ 2.00 per kg which is equivalent to about 250 1/2-litre sachets or 125 litres of milk. Packaging and transportation damage is rather high and should be estimated at 4%. The resulting approximate cost of sachets is therefore about US$ 16.34 per 1 000 litres. The price of a crate for 10 litres, usable for 1 000 trips, is about US$ 3.50. The resulting total packaging material cost for 1 000 litres is therefore:

		US$
sachet	=	16.64
create	=	0.35
	total	16.99

Losses of milk

The seven liquid milk processing and distribution systems considered in this study may be divided in four groups with respect to filling/measuring accuracy:

• filling of glass bottles

• filling of single-service containers

• filling of milk cans

• dispatch in tankers to automatic vending machines

The accuracy of filling returnable bottles and single-service containers directly affects the consumer whereas filling of cans or tankers does not. In the latter case the consumer receives the milk measured out of the can or dispensed by the vending machine and it is therefore the accuracy of the means of dispensing at this second stage which affects the consumer.

Glass bottles are filled by the machine to a level which is at a constant distance from the top of the bottle and, therefore, the accuracy of filling depends mainly on the appropriate standards and uniformity of the bottles. The tolerance for bottles may permit differences in the filled quantity as high as -15 ml + 7.5 ml, which in a 1/2-litre bottle may mean -3.0% + 1.5%. Usually control by check tests on new bottles delivered and well-managed filling operations keep the actual tolerance in filling to within ± 1%, without significant losses to the milk plant due to overfilling.

Single-service containers are normally filled with a very high accuracy, normally within the range of ± 0.2 to 0.4%, also with practically no losses to the plant due to over-filling. Milk cans and road tankers are most often filled by means of milk flowmeters which operate within ± 0.3% if properly maintained. Measuring from the can depends on the dispensing system used. Volumetric dispensing by a metering pot is very inaccurate and the customer may receive, particularly when the can is less than half full, less than 90% of the quantity paid for if measuring is not done very carefully. A manually-operated mechanized dispenser mounted on top of the can is a better alternative. This operates with an accuracy within ± 1.0%. Automatic vending machines, if properly maintained, dispense the milk within a tolerance of ± 1.0%, normally without losses due to over-dispensing.

The wastage of milk during packaging and transportation may differ considerably depending on the quality of the packaging material, maintenance of machines and management of the packaging division, storage and transport. Not all the milk from damaged packages is wasted: a substantial proportion, basically from packages damaged during the packaging process, is usually recovered. Even in well-managed plants with supplies of packaging material of appropriate quality the losses are seldom less than 0.5%. They may become significantly higher particularly with sterilized milk in bottles when the bottles do not withstand the thermal and mechanical shocks during sterilization and after-cooling. They may also become very high with pasteurized milk in plastic sachets because of faulty packaging material and the general fragility of the package.