During the past decade there has been considerable development around beverage container stewardship. Milk packaging has traditionally been considered sacrosanct in part because it is a so-called “basis staple” and therefore should not carry any additional costs, including packaging stewardship costs.
More recently, however, milk packaging has been pulled into the stewardship arena. In provinces such as Alberta, Saskatchewan and Nova Scotia where there was a threat that milk containers would be included in the existing provincial deposit-return sys- tems, industry voluntarily entered into various stewardship agreements.
By summer 2003 the Ontario dairy industry will be required to subsidize municipal blue box programs collecting milk and dairy product packaging. The following provides an update on the changing landscape of dairy packaging stewardship in Canada.
The beginning: Alberta
It all started in Alberta in fall 1998 when the provincial environment minister gave the Alberta dairies an ultimatum to either implement a voluntary recycling initiative or join the deposit-return program. The industry was given two years to meet a 75 per cent recovery rate for HDPE milk jugs. In July 2001 the program expanded to include polycoat milk cartons.
The Alberta Dairy Council administers the program, which relies on community and municipal participation to drive the collection of used containers. The key financial instrument is a “top-up” payment that helps provide a guaranteed “floor price” to recycling authorities for milk jugs and cartons collected and shipped to market. A transportation supplement is offered to recycling authorities outside of urban centers to help offset the costs of moving material to markets. Funds are gained through fees provided by the dairy industry on each unit sold in the province (see chart).
While the dairy industry is proud of its initiative, the performance falls far short of what the government had asked for. Before the program began, the recovery rate on milk jugs was 31 per cent. By 2001, the recovery rate rose to just 42 per cent. While the province continues to provide the dairy industry with extensions on the targets, pressure is mounting to include these containers in the successful deposit-return program.
Established in early 2001, Saskatchewan’s program is similar to that of Alberta. Consumers are asked to voluntarily return empty milk containers to bottle depots or participate in local municipal recycling initiatives. In general the per-unit fees are passed on to the consumer; sales have not been affected in spite of the price increase.
In 2000 a group of environmentalists and municipal authorities initiated a petition that called for expansion of the deposit-return program to include milk containers. In response, the B.C. Dairy Council (BCDC) undertook a pilot project in Abbotsford-Mission for about 35,000 households to collect milk cartons and jugs via the curbside program. BCDC and beverage industry group Encorp Pacific provided funding.
(Note: Encorp Pacific provided upwards of $30,000 to support the pilot. This was a dubious expenditure given that Encorp is responsible for managing the deposit-return program for non-alcohol containers; this money came out of the pockets of non-alcohol beverage consumers via their container recycling fee intended to support only the deposit-return program.)
Results of the pilot will be released in early 2003.
In February 2000 the Atlantic Dairy Council and the Nova Scotia Milk Processors signed an agreement with the province and municipal authorities to implement a milk-carton recovery program. Municipal authorities collect containers through their curbside program and receive funds for collection, processing, transportation, marketing, promotion, education, administration and amortized capital costs involved in carton recycling.
In 2001 municipalities received about $326/tonne of material recovered. In 2002 per-tonne revenues went up slightly. Municipalities keep any revenues generated from the sale of the material. Costs are estimated based on the “basket of goods” gross cost, multiplied by three per cent (representing the weight of cartons in the recycling stream). For the dairy industry this represents half a penny per fluid litre sold in the province.
The greatest change in Nova Scotia, however, is the recent introduction of two new milk packages. What was traditionally a polycoat or carton container is being replaced with one- and two-litre HDPE plastic jugs and “Tetra Tops.” Marketed by Farmers Dairy the new Tetra Tops are recycled, but with some difficulty due to their plastic tops. Surprisingly the public was outraged with the less “environmentally friendly” container. The Chronicle Herald featured two front-page stories on the Tetra Top. The issue also received press in other provinces. The price of milk in the new containers increased by five cents to cover the increased packaging costs.
In Manitoba, municipalities that choose to include dairy packaging in their curbside or drop-off program receive a financial subsidy from the Manitoba Product Stewardship Corporation (MPSC) of about $192, $152 and $128/tonne for northern and rural areas and the City of Winnipeg respectively. This represents about 80 per cent of the net system costs for the “basket of goods.” In Manitoba all funds are raised through a consumer-based two-cent eco-tax placed on all non-refillable, non-dairy beverage containers.
Big changes for Ontario and Quebec
For Quebec and Ontario, the future of dairy packaging recycling lies in the hands of municipal authorities. Both provinces have passed legislation that will require brand owners to help finance municipal recycling efforts to the tune of 50 per cent.
Stewardship Ontario, a new industry funding organization whose secretariat is Corporations Supporting Recycling is scheduled to begin charging brand owners and first importers of packaging sold in Ontario stewardship levies as early as summer 2003. Still in draft form, initial estimates have been determined.
Plastic film, which makes up about 70 per cent of all milk-based packaging and is recovered at a rate of 2.6 per cent, costs about $894/tonne to recover and will carry an industry levy of $100.12/tonne sold. Carton material, which makes up at least 20 per cent of milk sales and is recovered at a rate of 5.25 per cent, costs about $299/tonne to recover. It will carry a levy of $63.32/ tonne. Milk containers sold with a deposit such as two and four-litre milk jugs from Becker’s convenience stores will be exempt.
Quebec’s program is expected to levy about $25-million from brand owners of packaging and printed papers ($31-million in Ontario). The levy methodology is likely to be consistent with Ontario’s model. Quebec dairies will have some time to prepare for these new stewardship fees, as the program is unlikely to be developed until 2004.
The message is clear
The dairy industry is being forced to take responsibility for milk container recovery and recycling through two different stewardship model options.
The first is deposit return (untried with milk beverages), where, in general, the beverage industry has control over the system and costs are externalized through small visible fees to consumers. Experience has shown little resistance to container recycling fees, eco-fees or half-backs. In addition, consumers do not seem to mind the so-called “inconvenience” of returning their containers to retailers or depots. Finally, performance is consistently high, with average recovery rates ranging from 75 per cent to 85 per cent.
The other model is the shared financing scheme with municipalities. Here the dairy industry has little or no control over the system costs, and will pay directly out-of-pocket to support municipalities. Whether the recovery rate for milk packaging experiences substantial gains through a subsidized curbside system has yet to be seen.
Clarissa Morawski is principal
of CM Consulting, based in Toronto, Ontario. E-mail Clarissa at email@example.com