Pressure is growing on the government to find ways to mitigate the cost of major environmental regulations, including extended producer responsibility (EPR) and the deposit return scheme (DRS), following a fourth straight month of food inflation and predictions of worse to come.
Today the FDF said it was “critical” that the new government works with the industry to mitigate the impact of the new taxes and regulation. EPR alone is set to add £1.5bn a year to industry costs, with the first invoices due to land in October.
Defra is due to hold talks with hundreds of companies tomorrow after admitting it received an “overwhelming” response after publishing the latest estimated fees for EPR over the Christmas period.
Sources said they expected the talks to see companies raise “huge concern” over the level of charges to be faced by producers, especially for materials such as glass.
The Grocer exclusively revealed new figures from Valpak last week which showed costs of up to 12.2p per unit would be added to manufacturer costs when the charges come in, with products including wine, spirits and bottled soft drinks among those hardest hit.
Meanwhile, under plans for EPR to be developed in the future, sources warned the cost to companies could rise by a further £800 million a year under “lunatic” plans to pay for the cost of local authority emissions.
Last week Tesco boss Ken Murphy called for the government to rethink the timeframe for EPR and DRS, which is due to come into force in 2027. Sainsbury’s CEO Simon Roberts echoed his concerns.
Read more: 12p a bottle: ‘huge’ EPR costs to consumers revealed
“Despite all the work manufacturers have done over the last couple of years to keep costs down for UK consumers, unfortunately food and drink price inflation persists,” said Balwinder Dhoot, director of industry growth and sustainability at the FDF.
“Unexpected increases to National Insurance, rises in the minimum wage, and the introduction of multibillion-pound fees to businesses to pay for recycling reforms will add to the costs of food production.”
Valpak’s figures suggest EPR will add more than 10p to the cost of a bottle of wine, with Defra saying it expects 80% of the costs to be passed on to customers. Other glass products including beers and cider, soft drinks and water would all see costs rise by more than 5p per unit, reveal figures from its Packflow database.
“It’s critical that government works with industry to mitigate the impact of new taxes and regulation, to minimise price rises for consumers, and to help businesses continue to make the case for investment.
“We’d urge government to sharpen its focus on accelerating growth by creating a more supportive business environment for UK manufacturers, with a particular focus on the quality and cost of regulation.”
The BRC claimed this morning that inflation could rise to 4.2% this year unless the government took steps to mitigate price pressures.
A supplier source told The Grocer: “It is vital that, given the threat of food inflation of up to 4% or even higher this year, the government works with the industry to prevent ill-thought-out legislation adding unnecessary costs.”
No comments yet