Food giants warn of price hikes as recycling scheme costs soar

18 November 2019, 17:47 | Updated: 19 November 2019, 08:23

Britain's biggest food and drink producers are warning that consumers face having to pay more for popular brands because of the soaring cost of a government-led recycling scheme.

Sky News has obtained a letter sent last week by Ian Wright, chief executive of the Food and Drink Federation (FDF), in which he highlighted fears of "profiteering" at its members' expense by other parts of the industry supply chain.

Mr Wright's letter, which alerted ministers to the consequences of a hike in the cost of Packaging Recovery Notes (PRNs), was sent on November 12 - after Whitehall's pre-election purdah period had been triggered.

The warning of price increases from a body representing companies such as Robinsons-owner Britvic and Lucozade Ribena Suntory comes as Britain's future environmental commitments emerge as a central battleground in the general election campaign.

The PRN scheme is a UK-wide initiative that obliges packaging producers to demonstrate that they have met recycling obligations by purchasing the notes directly or through a compliance scheme.

Industry sources say the cost of PRNs has ballooned to hundreds of pounds per tonne of material processed, with countries previously receptive to waste exports, such as China, now imposing far more stringent rules.

In his letter to Theresa Villiers, the environment secretary, and Rebecca Pow, a junior minister at DEFRA, Mr Wright expressed the food industry's disappointment at the lack of momentum in addressing the issue.

He said that the "significant and serious financial hardship faced by companies large and small in food and drink as a result of the escalation in PRN prices - especially for plastics - over the course of the year" had to be tackled.

The FDF chief wrote that the "huge" and "unjustifiable" cost increases associated with the scheme would add up to an industry-wide bill in the hundreds of millions of pounds this year alone.

Food and drink producers have complained for some time that the mechanism for the pricing of PRNs lacks transparency and requires an urgent overhaul.

Mr Wright's letter went on to say: "If left unchecked, these costs will have to be passed directly on to consumers and shoppers in higher prices.

"Without any evidence that this extra money is delivering higher packaging recycling (the ultimate desired endpoint of the scheme), we ask, who is benefiting?"

Under the terms of the PRN scheme, companies become "obligated" packaging producers if they - or a group of companies they are part of - have handled 50 tonnes of packaging materials or packaging in the previous calendar year, and have an annual turnover of more than £2m.

Mr Wright called for talks with ministers after next month's poll "at the earliest opportunity".