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API Assignment Q2

The document discusses the issue of counterfeit products and companies in Pakistan's food processing industry. It notes that in the absence of adequate regulations, many informal and under-taxed entrants produce cheaper but lower quality food items, posing a challenge to larger formal firms. It recommends establishing minimum quality standards, protecting intellectual property through patents and trademarks, and ensuring all entities are properly documented and taxed to create a level playing field. Companies can also use smart coding techniques and online platforms to distinguish authentic products and combat counterfeits. Lastly, encouraging cooperative farming models and the growth of online food ordering could help address challenges facing the industry.

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Salman Farooq
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61 views

API Assignment Q2

The document discusses the issue of counterfeit products and companies in Pakistan's food processing industry. It notes that in the absence of adequate regulations, many informal and under-taxed entrants produce cheaper but lower quality food items, posing a challenge to larger formal firms. It recommends establishing minimum quality standards, protecting intellectual property through patents and trademarks, and ensuring all entities are properly documented and taxed to create a level playing field. Companies can also use smart coding techniques and online platforms to distinguish authentic products and combat counterfeits. Lastly, encouraging cooperative farming models and the growth of online food ordering could help address challenges facing the industry.

Uploaded by

Salman Farooq
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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S.

Abbas Ali Mehdi


ID: 18550
Sec: Mon/Wed 4th Slot

Q2:

Food Processing Industry Issue: Counterfeit Products/Companies

In the absence of adequate regulations, a number of undocumented and under-taxed new


entrants in the processed food industry have been producing cheaper products because of the
low quality standard and the situation poses a major challenge to larger firms, said the State
Bank of Pakistan (SBP). The SBP in its first quarterly report for Fiscal Year 2016-17 (FY17) said,
“The processed food industry still holds significant potential for growth due to the country’s
strong agriculture base. However, in order to harness this potential, the industry needs a level
playing field where every entity is properly documented and taxed, adequate protection of
innovations; minimum quality standards; and a setting that allow firms and growers to achieve
benefits from economies of scale”. Moreover companies can take action on their part by using
coding techniques and internet platforms.

The SBP added a number of the new entrants in the processed food industry belong to the
informal sector, which is largely undocumented and under-taxed. The food items produced by
these firms are cheaper also because of the low quality standards. These manufacturers pose a
major challenge to larger firms in the formal sector who invest heavily in innovation and media
campaigns to seek product differentiation and convince

In simple terms, the entire process of product development and marketing is capital intensive.
However, inadequate protection through patents and trademarks allows small manufacturers
to easily copy the label and packaging of branded products. Such counterfeit products generally
offer high margins to retailers especially in small karyana stores in villages. Thus, making R&D
investment in the presence of free riders becomes quite challenging. Moreover quality
standards must be checked and reviewed. ‘Quality standards are needed across the entire
supply chain maintaining the quality of food products is one of the major challenges for the
industry. The food quality depends on several factors, such as quality of the raw materials, state
of logistic facilities (transport, storage), and conditions at the point of sale, etc. This means,
ensuring quality would involve working with every player in the supply chains, such as farmers
and wholesalers, transporters and retailers’. Any company that falls short should be dealt with.
Counterfeit product companies usually fall short in quality standards.

Another approach that manufactures can take to separate their products from counterfeits is
by Smart or Overt coding. Smart coding enhances a basic lot or batch code by altering and
verifying specific characters within it using algorithmic software. By simply removing the centre
dot of ink from an ‘X’, for example, you make your codes far more difficult for unauthorized
parties to replicate.

Overt coding, such as laser marked codes, are permanent and are therefore near impossible to
remove by third parties, while covert codes are completely concealed to all but authorized
distribution partners. Both Ultraviolet (UV) and Infrared (IR) inks can be applied using
Continuous Inkjet or Thermal Inkjet technology. These covert codes are then read using
available vision technologies. 

Moreover, the strong competitive pressure compels processing firms to seek economies of
scale by integrating farmers into the supply chain. As a result, a number of firms are going into
corporate farming. One possible solution is to encourage cooperative farming which allows
economy of scale by forming vibrant clusters of farmers’, SBP suggested.

Lastly, an increase in the internet usage, the growing confidence of customers in buying online,
and the availability of more reliable delivery networks have encouraged customers to opt for
web-based food ordering platforms.

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