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Dairies decline talks on future of rHDPE supply chain

Dairy companies pulled out of WRAP-brokered talks over the troubled recycled HDPE milk bottle sector, saying competition law prevented them from attending.

MRW exclusive

MRW understands that those invited, including Dairy Crest, notified the organisers the day before the Wednesday meeting in London that they would not attend.

Dairy UK, which represents dairies, said competition law had prevented its members from taking part but they were trying to address the issues individually. The full statement is below.

Hardest-hit by the situation is Closed Loop Recycling (CLR), which recycles around two-thirds of Britain’s HDPE. The future of its Dagenham plant is under severe threat because the cost of making rHDPE is higher than virgin polymer.

The other major players are the supermarkets, which had not been involved in Wednesday’s talks.

CLR chief executive Chris Dow said: “We remain confident that the retailers will confirm with the dairy supply chain their specification for the use of 30% recycled content as agreed under the Dairy Roadmap.”

The development came as Nampak Plastics, the UK’s largest milk bottle producer, issued a rallying cry to the supply chain to maintain its commitment to the use of recycled content as specified in the roadmap.

Eric Collins, managing director, said: “This issue has been at the very heart of the Nampak business from the very beginning, when we worked with recycling suppliers to introduce rHDPE into milk bottles as a world first. We will continue to support the industry despite the uncertain economic future and pledge to maintain levels of rHDPE in our bottles.”

The price of rHDPE is contractually linked to that of virgin polymers, but HDPE reprocessors in the UK are under increasing financial pressure following five-year lows in the price of oil and an increase in the cost of the recovered bottles themselves.

Supermarkets and dairies have been urged to give ground because they have already benefitted from the lower oil prices. In 2008, they signed up to the voluntary Dairy Roadmap with a target of 30% rHDPE in milk bottles by the end of the year and 50% by 2020.

It is estimated that a contribution from the supply chain of an extra 0.1p for each two-pint plastic milk bottle would bridge the gap.

A Sainsbury’s spokesman said: “We remain committed to including recycled material in our milk bottles as part of the Dairy Roadmap and the work we do with our milk suppliers. Our dairy suppliers have been using, and still are using, recycled material from Closed Loop as well as other recyclers in the UK.”

Dr Judith Bryans, chief executive of Dairy UK, said:

“It would not have been possible for dairy companies to attend Wednesday’s WRAP meeting without being exposed to competition law issues. We understand the agenda could have led to discussions on price and business plans, and the industry simply cannot discuss these things collectively under competition law.

“Dairy companies are seeking to address the current issue through bilateral discussions with their suppliers and they are working hard to achieve their Dairy Roadmap targets. The dairy industry is one of several industries in the UK that use recycled plastic and is keenly aware of the current challenges.

“However, while we remain committed to meeting our targets, and strongly urge all other sectors to make every effort to meet their own targets, all companies working in a commodity-based market must also look to their business model to avoid similar issues in the future.”

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