The government has been accused of “completely failing” to tackle industry fears over spiralling recycling costs, after it published plans to reform the controversial Packaging Recovery Notes (PRN) system.
A raft of industry bodies have been calling for years for action to tackle price volatility and a lack of transparency in the system, which requires suppliers to pay recycling companies or compliance schemes.
Following the launch of a consultation in March, Defra has now set out plans including requiring reprocessors and exporters to publish monthly data on PRN prices and export figures, rather than quarterly.
Suppliers said the moves fell well short of the fundamental shake-up the system needed.
The Grocer first reported in 2019 that a raft of industry bodies had written to ministers calling for urgent action, with the cost of the PRN system surging by fivefold or even more for many businesses.
Since then, prices have continued to be volatile. Last month The Grocer revealed the cost in glass recycling alone had surged in the past year from around £45 to £200 per PRN.
Sources told The Grocer the situation had been compounded by several producers registering late to the system this year, which meant buyers and sellers were speculating demand for PRNs would be higher than published figures.
“This led to market panic, which drove prices up for many materials unnecessarily this year,” said one source.
There are also continuing accusations that sellers have deliberately restricted market supply in order to artificially deflate supply and drive up PRN prices.
However, Defra’s consultation response rejected the notion of a system of compliance fees for producers who fail to meet strict requirements, despite widespread support for the idea from the industry.
“Producers, UK reprocessors and exporters are incentivised to game the system to achieve the price they want, rather than work together to build long-term, strategic partnerships that increase the amount of material recycled,” said Ecosurety innovation and policy director Robbie Staniforth.
“The government’s review was an opportunity to significantly update the system to make it fit for the present world. The minor amendments taken forward go nowhere near far enough towards fixing the issues.”
He called on the government to urgently set annual PRN recycling targets for the next five years to bring stability to the system.
BBPA CEO Emma McClarkin said: “We welcome the decisions within today’s PRN consultation response to introduce monthly reporting of reprocessing and export data, as well as monthly price and revenue data reporting, by reprocessors and exporters.
“However it is disappointing that the government has decided not to bring in a mechanism for extending the compliance period for the trading of PRNs which has previously proved valuable in helping to smooth PRN prices, or introduce a compliance fee at this stage.
“Additionally, today’s government response does nothing to address spiralling costs producers will continue to face this year and into 2023.
“Urgent action remains necessary to alleviate the immense pressures the current volatile PRN market is placing on producers.”
Defra said its plans would “address some of the issues identified in the current system, including PRN price volatility, a lack of transparency, and the potential for fraudulent issuing of PRNs”.
“It is intended that any proposals taken forward from this consultation will be introduced as part of our legislation introducing wider producer responsibility reforms,” it added.
Wine and Spirit Trade Association CEO Miles Beale said: “The PRN market is in crisis, based off a failing system with ‘risks of fraud and error in the system’, according to the National Audit Office.”
Beale said the government’s consultation response had “failed to take any decision that could implement price controls, improve transparency or prevent fraudulent behaviour”.
“These include rolling over compliance periods, introducing a compliance fee, or immediately introducing new reporting obligations,” Beale added.
“Instead, Defra delayed taking action and asked for ‘further development and engagement’. Without action now, we will see non-compliance, increased consumer costs, and recycling targets could be missed.”
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