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Consultation Paper on Producer Responsibility for Non-Packaging Waste Agricultural Plastics

INITIAL REGULATORY IMPACT ASSESSMENT

WASTE NON-PACKAGING FARM PLASTICS

OPTIONS FOR RECYCLING

Scottish Executive

Purpose and intended effect of measure

(i) The objective

1.1 The proposed options are intended to provide an efficient and cost-effective means of introducing a system for collecting and recycling non-packaging waste farm plastics.

(ii) The background

1.2 Consultation took place in October 1998 on various options for disposal of this waste. There was a low response rate and hence an inconclusive response to the consultation paper and at that time there seemed to be no clear preference for regulation as a way forward. Following the launch of the Action Plan For Farming in March 2000, Defra held a series of meetings with the National Farmers Union ("NFU") to enable the agricultural industry to inform the development of the Regulations necessary to apply the Waste Framework Directive to agricultural waste. One of the main issues raised by the NFU was waste plastics. The Department therefore called a meeting in November 2000 with a wide range of organisations with an interest in the issue. The broad conclusion of the organisations present at that meeting was that a regulatory scheme might be necessary to encourage the recovery of this waste stream. A conference/workshop organised by the Cumbria Farm Plastic Recycling Scheme in November 2001 also concluded that legislation to underpin waste plastics recovery schemes in this sector was necessary. In Scotland, the Landfill Directive Working Group (on which NFU Scotland, the Crofters' Commission and the Scottish Rural Property and Business Association are represented) has been considering this matter.

1.3 The aim of the proposed measure is to ensure that waste from non-packaging farm plastics is collected for recycling. The current uncontrolled practice of either burning or burying waste in farm dumps will cease on the introduction of the Regulations applying the Waste Framework Directive and the Landfill Directive to agricultural waste. Controlled incineration of plastics in drum incinerators will still be permitted provided they are not contaminated by hazardous substances, eg, pesticides or animal treatments. This is likely to reduce the amount of waste plastics available for collection, but only to a modest extent; in practice, farmers will be unwilling to incinerate plastics contaminated by soil since this will inhibit the effective operation of the incinerator. Against that, if only largely clean plastics are burnt sending mostly contaminated plastics for recovery under a scheme may increase the unit cost of treating the waste.

1.4 This RIA has been prepared by considering the costs of the three options set out below, including a regulatory producer responsibility scheme. It follows from the brief discussion of the problem of dealing with non-packaging farm plastics in the Executive's consultation document Farm Wastes and Non-Mineral Wastes from Mines and Quarries.

(iii) Risk assessment

1.5 Non-packaging farm plastics are used in agriculture mainly for silage wrap, crop sheeting and tunnel covers, particularly in the livestock sector and in horticulture and in market gardening. The material is often heavy and dirty after use. The extent to which the various disposal options are used is contradictory. On the one hand surveys by ADAS and the Environment Agency in Wales indicate that 33% of farmers burn their waste plastics and 30% bury it on the farm. On the other, the Agricultural Waste Survey 2003 ⁹ found that 90% of farmers burnt waste plastics and 32% buried them. It also found that the disposal of waste by burning is less common in Scotland - 77% of farmers in Scotland burn waste packaging compared to 91% in England and 50% burn waste silage plastics compared to 70% in England. Conversely, 33% of farmers in Scotland use farm tips compared to 27% in England. Only a small amount - some 20% - is currently collected for recycling where schemes exist. The RIA ¹⁰ for the agricultural and mines and quarries waste provisions of the prospective Waste (Scotland) Regulations 2005 found that, in Scotland, 90% of holdings disposed of at least one form of waste through on-farm burning and 32% had used farm tips. Anecdotal though this may be, it does suggest that significant numbers of farmers may be disposing of their waste plastics in an environmentally unsound way.

1.6 It is estimated ¹¹ that about 20,000 tonnes a year of non-packaging plastic waste is produced by the agricultural sector. This consists of:-

1.7 The estimated 20,000 tonnes a year of non-packaging plastic waste produced by the agricultural sector represents only 0.24% of the 8.51m tonnes of waste disposed of to landfill in Scotland ¹² but it represents 20.1% of the 99,450 tonnes of agricultural waste estimated to be produced. ¹³. Regulations applying the Waste Framework Directive and the Landfill Directive to agricultural waste will make it necessary for farmers to adapt to both more practical and cost-effective means of avoiding waste generation in the first place and to recovering or recycling waste that is produced.

1.8 An environmental assessment of agricultural plastics recycling was carried out in Wales in October 2000 to compare the environmental impacts of one waste management route - the scheme for collecting farm plastics in South Wales - with those of other waste management options for this material. This addressed the requirement by the Welsh Assembly Government for an environmental study as part of its agreement to fund the collection of agricultural plastics in Wales.

1.9 The results of the study, commissioned from Arena Network by the Environment Agency (Wales), indicated that there were strong environmental benefits associated with the recycling of farm plastics into low-density polyethylene (LDPE). The study indicated that recycling involves much lower impacts on the environment, in terms of air acidification, greenhouse gas emissions, photochemical oxidant formation, eutrophication and non-renewal material depletion, than the alternative options of landfill disposal or off-site incineration with energy recovery.

1.10 Recycling leads to slightly higher releases of ozone-depleting substances and to higher releases of dioxins than landfill or incineration, although these are not directly from the recycling operations. The present operation involves shipping around 1,000 tonnes a year of Welsh soil (on contaminated farm plastic waste) to Dumfries for no useful purpose. Environmental impacts associated with recycling could be therefore be reduced by washing the waste plastic as close to source as possible and by using cleaner vehicles than those currently used in collection and transportation. Both these measures would lead to lower polluting emissions to air. However, precautions would need to be taken to avoid pollution of water courses.

1.11 Incineration has not been assessed as an option in this RIA.

1. Options

1.1 The three options are:-

(a) Retain status quo of local voluntary schemes;

(b) Introduce a voluntary scheme; and

(c) Introduce a Statutory Producer Responsibility Scheme.

2. Benefits

2.1 Option 1 - Do nothing : Maintaining the status quo will not deliver the policy objective of increasing the recovery rate for farm plastics. At best the collection and recovery of waste plastics will depend on local initiatives to set up and operate local or regional voluntary schemes. Schemes of this nature which have existed hitherto were mainly dependent on grant funding, suggesting that voluntary schemes are intrinsically unsustainable.. Maintaining the status quo will therefore continue the current experience of instability of stakeholder commitment and uncertainty of supply of waste plastics. On that basis it is difficult to see how producers and the management waste industry will have the confidence - or even be able - to develop the collection and reprocessing infrastructure necessary to increase plastics recovery.

2.2 The majority of farmers do not currently have a collection scheme available to them to recycle non-packaging plastic waste. This means that the main options for disposal currently available to them (landfill, stockpiling, burying and incineration) will continue. However, as the Waste Framework Directive and the Landfill Directive are fully applied to agricultural waste this will only be possible on-site under the terms of a permit/licence issued by SEPA. It is unlikely that many farmers will want to lose valuable agricultural capacity by using it to dispose of waste so it is probable that it will be consigned for disposal off-farm at appropriately licensed sites.

2.3 Option 2 - A voluntary scheme : This would involve establishing a more formal, but still voluntary scheme for collecting and recycling farm plastics. The model for such a scheme is the Farm Film Producers Group (FFPG) which operated from 1994 to 1997. This required manufacturers of farm plastics to pay a levy which funded a nationwide collection system relying on local agents, often farmers, to collect plastics for recycling. Such a scheme can be successful in providing a comprehensive network for the collection and recycling of farm plastics but its weakness lies in its voluntary basis. A manufacturer may decide to offer cheaper plastics by opting out of paying the levy. This would undermine the entire system and was, in fact, the cause of the downfall of the FFPG.

2.4 Option 3 - A statutory producer responsibility scheme : The introduction of a statutory scheme would entail Regulations prescribing how the scheme would operate. The Regulations would most likely place statutory obligations on companies in one or more sectors of the economy to ensure the collection, recycling and recovery (including setting targets) and the environmentally-secure disposal (including setting treatment standards) of waste farm plastics. There would be advantages in paralleling such a scheme with the packaging recovery scheme. Waste plastics packaging already has to be recovered and the collection and reprocessing infrastructure for that would be instantly available for non-packaging plastics. It is also likely that many of the same players would wish to become involved since there would be economies of scale in collecting both packaging and non-packaging plastics from the same farm. A statutory scheme for non-packaging plastics is therefore likely to have the knock-on benefit increasing the amount of packaging plastics being recovered.

2.5 At present, except in the few areas where a collection scheme has operated, farmers have not been able to dispose of their plastics waste by recycling. Environmental problems are caused if the waste is left unsecured. It may be blown around on the land, creating eyesore or hazards to wildlife. It is also environmentally detrimental to dispose of it by burial or burning on site. In particular, burning in an uncontrolled manner leads to the release of dioxins and other toxic substances. Disposal by controlled incineration in drum incinerators will not be available for all types of waste plastics. Incinerating plastics contaminated by hazardous substances will be banned and farmers may not be willing, or able, to incinerate plastics contaminated by more than very modest amounts of soil.

2.6 There is therefore a clear environmental benefit to be gained from increasing the level of recovery and recycling. This alone may be sufficient to justify a regulatory or formal voluntary regime. In any case, however, most farmers will have to send their waste off-farm for recovery or disposal when agricultural waste is bought within the scope of the Waste Framework and Landfill Directives.

Business sectors affected

2.7 There are about 50,000 farms in Scotland, including crofts. There are about 20 UK and EU companies supplying farm plastics to the agricultural markets.

2.8 It is clear that the existing small number of schemes run on a voluntary basis are largely dependent on grants for financial support. They are probably not therefore viable in the longer term. The previous national voluntary scheme placed the obligation on manufacturers and importers. The proposed producer responsibility scheme would also obligate these producers. Given the nature and scale of the farm plastics industry it is envisaged that every company would be obligated, that is, it is not proposed to exempt companies below a certain threshold in the same way that the Packaging Regulations do.

2.9 There are only two reprocessing facilities for farm plastics in Great Britain. These are operated by British Polythene Industries (BPI) and Solway Recycling. Both are located in the Dumfries area.

2.10 At present, the BPI plant depends largely on waste plastics sent from the Irish Republic, which has a statutory scheme for the collection and recycling of this material. The plant has the capacity to recycle 12,000 tonnes per annum of post-use agricultural plastic into 5,000 tonnes of polythene granules (58% is lost in sand, soil and water). A statutory producer responsibility scheme would provide that plant with guaranteed volumes of domestic waste. If the targets were set at a sufficiently demanding level, a statutory scheme ought also encourage the setting up of additional capacity.

2.11 Solway Recycling operates a farm plastic collection and reprocessing service for waste plastics from rural land based industries, including waste farm films. This collection scheme is the only self-sustainable farm plastic collection scheme operating in the UK. More than 500 farmers are using its system. Once reprocessed, the material is sold on to recyclers who manufacture a range of recycled products used in the agricultural industry. All farmers who take part in the Solway Recycling scheme are issued with a recycling certificate which demonstrates that they have taken the correct steps to dispose of their plastic wastes. This recycling certificate is validated by the company database which records the location of each uplift as well as the type, and quantity, of material collected.

Issues of equity and fairness

2.12 Disposal of agricultural waste is an issue for all farmers, but costs of collection schemes which have existed hitherto largely depended on the weight of material collected. The proposed producer responsibility scheme would impact across all obligated companies - that is the manufacturers and importers who put the plastics into the market place. It is not proposed to set a threshold in any Regulations exempting small businesses, whether defined by amount of plastics handled, financial turnover, size of premises or number of employees, from the statutory requirements.

3. Costs

3.1 It is not easy at this stage to assess the respective costs of the three options. The costs involved in collecting and recycling waste plastic vary depending on location and the methods of collection used. Moreover, in 2001 existing schemes were effected by the introduction of a 30 per tonne gate fee at the BPI recycling plant in Dumfries, which has recently been increased to 40 per tonne, and by the foot and mouth outbreak, which prevented collection of plastics from farms for some months.

(i) Compliance costs

3.2 Option 1 : The costs of operating a voluntary scheme are not quantifiable. Each scheme will have its own base costs which will be dependent on both the scale and extent of the scheme and the strength of commitment of those participating. As an illustration, however, collection charges for farmers for the scheme operating in South Wales are based on the weight of material collected. The first 700 kg is covered by the membership fee of 27.50: material collected above that is charged at a rate of 40.50 a tonne. Cost to farmers for collection of waste in the other main existing voluntary scheme, in Cumbria, are 10.84 per tonne. The operators estimate, however, that the total cost of each tonne collected is 45.99, before the gate fee at Dumfries is included.

3.3 Option 2 : The best guide to the possible costs of a national voluntary scheme is the costs of the FFPG. This scheme operated by charging manufacturers of farm plastics a levy of 100 per tonne which was put through a central clearing house run by KPMG. The resources collected were used to fund a national collection scheme relying on local agents paid at 80 per tonne. At the time of the collapse of the scheme in 1997, farmers were paying about 25 a year in the additional cost for farm plastics passed on by manufacturers to fund the levy.

3.4 Option 3 : It is likely that a regulatory scheme for the collection and recycling of waste non-packaging farm plastics would be more expensive than a voluntary system, particularly as it would be necessary to ensure monitoring and compliance. This would be covered by a scheme of fees and charges by the Scottish Environment Protection Agency (SEPA). Companies would also have to introduce in-house record and audit systems to demonstrate compliance. If compliance schemes are established, their operating costs would be reflected in the fees charged to members. Producers may pass costs incurred on to farmers through higher prices for the material. Should a statutory scheme be deemed to be the way forward a future consultation on potential models will address costs in more detail. Respondents are, of course, welcome to express their views now on how much these are likely to be. In particular, we should be grateful to know if producers and waste management companies would be willing to cooperate with a consultant on quantifying compliance costs for inclusion in a more detailed RIA.

(ii) Other costs

3.5 Charities, as defined in section 506 of the Income and Corporation Taxes Act 1988, would be exempt from any Regulations drafted to bring the scheme into effect.

(iii) Costs for a typical business

3.6 The total costs for collection and disposal/recovery of farm plastics vary greatly depending on a range of factors, such as the farm location and distance to a suitable facility; quantity and state of waste; final treatment method and the market demand for secondary materials. It is therefore difficult at this stage to estimate the costs of compliance for a "typical business".

3.7 Option 1 - Do nothing : Currently, there are no voluntary schemes in Scotland on which to base cost assumptions. However, the methods of charging by the existing voluntary schemes in England and Wales are not uniform, although it is based generally on the amount of waste plastic collected by weight. In Cumbria, for example, the total cost of recycling is about 75.99 per tonne, but this, and other voluntary schemes, are supported by grant funding and it is unlikely that the full costs are passed on to the farmers (in Scotland the RSABI scheme received only about 16% of its income from farmers). Moreover, such collection and recycling schemes are only available to farmers in limited areas.

3.8 Option 2 - A voluntary scheme : The national voluntary scheme would ideally be available to all farmers, but it would be funded by a levy on plastics paid by the manufacturers. The levy charged for the previous voluntary scheme, which operated between 1994 and 1997, was 100 per tonne. The additional cost of farm plastics to farmers resulting from this levy was on average about 25 a year. Since the levy is paid on a voluntary basis, this sort of scheme is always at risk of free-riders who can undercut these costs.

3.9 Option 3 - A statutory producer responsibility scheme : Manufacturers and importers would be obligated under a producer responsibility scheme. Those companies that made arrangements themselves to comply with the legal requirements would probably pay more than those that joined compliance schemes that would take on the obligations for them. If compliance schemes were set up, the costs are likely to be lower and would be reflected in the fees charged to their members. The industry would have to establish systems of record keeping to demonstrate compliance. Should a statutory scheme be deemed to be the way forward a future consultation on potential models will address costs in more detail. Respondents are, of course, welcome to express their views now on how much these are likely to be. In particular, we should be grateful to know if producers and waste management companies would be willing to cooperate with a consultant on quantifying compliance costs for inclusion in a more detailed RIA.

4. Consultation with small business: the Small Firms' Impact Test

4.1 Preliminary consultation on the proposals contained within this consultation document has taken place with the Farm Landfill Working Group, including representatives of NFU(Scotland), the Crofters' Commission, and the Scottish Rural Property and Business Association. Their views are also being sought formally as part of the consultation process. The consultation is also seeking views from bodies representing the small firms and micro-businesses sectors as a whole.

5. Competition Assessment

5.1 The introduction of producer responsibility for non-packaging agricultural plastics will affect all of the small number of manufacturers of these products supplying the Scottish market. Subject to the outcome of the consultation, we do not propose to provide for any exemptions. Neither will there be a differential obligation between companies supplying this particular market.

5.2 A producer responsibility scheme will not obligate the owners and tenants of agricultural holdings to use it. However, they will derive benefit as the scheme will provide an additional disposal route for non-packaging agricultural plastics when they become waste.

6. Enforcement and sanctions

6.1 This would be more informal in the case of voluntary schemes - options 1 and 2, but in the case of option 3, these tasks would fall to SEPA. Enforcement of a statutory scheme would most likely follow the packaging model; that is, it would be an offence for a producer not to register, to supply false or misleading data or to fail to meet his recovery target, punishable by a fine on conviction by the Courts. It would also be an offence for reprocessors to supply false or misleading data about the nature, volume or source of waste plastics supplied to them for reprocessing, also punishable by a fine. A reprocessor who transgresses may also have his accreditation, or authorisation, to handle waste plastics under the scheme revoked by SEPA.

7. Monitoring and review

7.1 This would be more informal in the case of voluntary schemes - options 1 and 2, but in the case of option 3, these tasks would fall to SEPA. Again, the packaging recovery scheme is likely to provide the model. SEPA would publish estimates of the volumes of farm plastics being placed on the market for the forthcoming year and the volumes of waste plastics that had been processed under the scheme after the end of the year. A formal review of the relevant Regulations and RIA will be conducted within 10 years of the scheme coming into force.

8. Consultation

(i) Within government

8.1 Consultation has taken place with the UK Government's Department of Environment, Food and Rural Affairs.

(ii) Public consultation

8.2 The proposed scheme will be developed in consultation with the Farm Landfill Working Group. Consultation on these proposals will also form part of the wider consultation on the extension of waste management controls to agriculture. The consultation will invite views from individuals, as well as from representative bodies.

9. Summary and recommendation

9.1 There is considerable pressure, particularly from the agricultural sector, for a solution to the problem of disposing sensibly of waste non-packaging farm plastics. Voluntary schemes play an important role in establishing the basic infrastructure, raising the awareness of farmers and providing a short-term disposal/recovery option. However, voluntary schemes rely on grant funding and may therefore not be viable in the longer term. That there is only one existing scheme in Scotland only serves to reinforce the suspicion that voluntary arrangements are not intrinsically sustainable over the medium to long term. Remote areas of the country are always likely to be excluded by virtue of distance and low volumes, while a national voluntary scheme would always be at risk from free-riding by non-participating suppliers.

9.2 The best solution may well therefore be a national statutory scheme operating on producer responsibility principles. Without proper legislative backing, and financing, the UK is unlikely ever to be able to recycle meaningful quantities of waste farm plastics; the transient nature and limited scope of voluntary schemes simply do not instil confidence in farmers to enter into long-term commitments for the reprocessing of their waste plastics. On the other hand, a mandatory collection and recycling scheme, set out in legislation, would provide a structured and sustainable solution to the problems associated with the disposal of non-packaging farm plastics.

Declaration

I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify the costs.

Signed…………………………………………………………………………..

[This remains blank until the legislation is to be sent to Parliament. It then becomes a final RIA]

Date……………………………………………………………………………….

Minister's name, title, Department

10. CONTACT POINT

John Convery
Waste Regulation Unit
Scottish Executive Environment & Rural Affairs Department
Mailpoint 12
Victoria Quay
Edinburgh
EH6 6QQ
Tel: 0131 244 0100
Fax : 0131 244 0245
e-mail: waste.team@scotland.gsi.gov.uk
SEPA Sponsorship & Waste Unit
Scottish Executive Environment & Rural Affairs Department

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