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Producers must take responsibility for commodity risk

Biffa chief executive Ian Wakelin has called for a “volatile” gate fee in line with fluctuating commodity prices and the buck stopping at the customer.

Although Wakelin said there were signs that while prices and volumes were starting to recover, the industry was no longer willing to bear the risk and those generating waste ought to take more responsibility.

He told MRW that the prices customers are charged, be it a local authority or commercial and industrial client, had to be “equally volatile” to support continued investment in recycling infrastructure.

“It’s wrong for the industry to bear the risk – we don’t produce it or use it. Somebody has to bear the risk. Unfortunately the price of recycling commodities will go up or down and it could be a good or bad thing.

“Historically, our industry has accepted that risk, but all that is changing. Really the person that’s generating that material should be responsible.”

Wakelin was echoing Resources and Waste UK (R&WUK), the collective voice of the Chartered Institution of Wastes Management and the Environmental Services Association, which in September published a report, Managing the Risk from Secondary Raw Material (SRM) Price Movements, to explore what price risk management mechanisms could be used to reduce the impact on the whole supply chain from a downturn in prices since 2011.

It also suggested that the producer responsibility regime should be reformed and that a centrally managed investment fund would “buffer” tough market conditions.

Wakelin added that he expected to see improving prices and that the sector would see increased consolidation, a return to the pre-2008 crash trend.

He added: “The industry is now returning to a phase of growth, and we are expecting waste volumes to grow very slightly in the coming years and a degree of price re-inflation. We expect to see revenue growth from those investing in the sector.”

His comments came during an interview on investment in the waste management and recycling sector to be included in the next issue of MRW.

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