Amcor sells more than $2.2 billion worth of flexible wrapping each year and the joint research program represents a big break for Plantic, which has only been in operation for about two years.

"This is a great opportunity for Plantic," its chief operating officer, Brendan Morris, said yesterday.

Plantic has already achieved a lot of success with its patented plastic, which is derived from corn starch and is soluble in water.

It is used by a range of companies in Australia, including Cadbury Schweppes, and has recently signed a deal with Nestlé in the UK, which will use 13 million Plantic chocolate trays a year.

"The market for flexible packaging is one of the largest in the world," Mr Morris said.

The research deal is expected to take two years and cost about $4 million, with about half of that covered by a Government Start grant.

Amcor wants a biodegradable flexible wrap to meet the demands of its customers and consumers generally for packaging which is environmentally friendly.

"Plantic is an international leader in the field of biodegradable plastics and therefore the logical partner for Amcor, given our leading position globally in flexible packaging," Amcor's general manager for research and technology, Michele Allan, said.

Mr Morris said the corn-based Plantic plastic had a crucial advantage over oil-based plastics in that its price was nowhere near as volatile as the price of oil.

"People love the environment and producers need stable pricing and they need costs they can rely on."

"That's one advantage Plantic has. The price of corn is pretty stable," Mr Morris said.

Plantic is one of the spin-off companies to spring out of the Federal Government's co-operative research centre scheme.

The corn-based plastic was developed by the CRC for International Food Manufacture and Packaging Science, headed by Roger Edwards.