Waste management companies will find themselves in financial difficulty if they keep reducing gate fees to the detriment of treatment operations, Association for Organics Recycling vice chair Charlie Trousdell has told MRW.
As a result of increasing competition between waste management companies, many continue to reduce their gate fee in order to secure material. However, Trousdell believes this is an ill-advised strategy that will eventually see more companies getting into difficulties becausethe low fees are not commercially viable.
“Quite a few company failures are a result of competitive behaviour because they are desperate for material,” he added. “I think it is inevitable there will be more companies entering administration for this reason in future.
“Sensible gate fees have to be charged to ensure the proper operation of plants. When they charge such low gate fees, standards also drop, which isn’t a good image for the industry.”
A recent WRAP report showed anaerobic digestion gate fees in 2011 have dropped the most within the organics sector to £43 per tonne this year from £57 per tonne in 2010. MRF gate fees have more than halved from an average of £33 per tonne in 2010 to £15 per tonne in 2011.
Trousdell, who is also the planning estates & licensing manager for organics recycler Countrystyle Group, believes the solution is better regulation. He said: “We need good, even regulation from the Environment Agency. It needs to implement key legislation-driven guidance, so there is a minimum standard that everyone must adhere to, and companies can be confident to spend money on investing in compliance, knowing they won’t be undercut by other companies.”
The comments follow the joint acquisition of County Mulch - which had entered administration - by Countrystyle and Material Change.