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7. Agrecovery Programme Design Decisions

7.1. Programme governance structure

A separate Agrecovery Foundation has been set up as a not-for-profit trust for a number of reasons:

i. The diverse range of stakeholders involved in the sector needed a neutral mechanism to develop the Agrecovery solution. The Foundation provides representation for each of the key stakeholder groups and an advisory group to capture all stakeholder views.

ii. The trust enables a commercial solution to exist with contractual arrangements to a single representative entity.

iii. The trustees have strong grower/farmer representation and will ensure that every endeavour is made to keep the cost of the programme to a minimum as it is the grower/farmer who will ultimately pay for it in the price of the product they purchase.

iv. The trust provides a mechanism for transparency in developing the Agrecovery solution. The representatives on the trust link/consult with a wider range of stakeholders in order to ensure that the needs of all stakeholders are met through the system.

v. Using a trust structure has made it easier to access public funding for the implementation phase.

vi. A trust is independent from any existing organisation or business within the sector. This means there is no "baggage" or agendas brought into the running of the system.

7.2. Location of collection points

The decision has been made to locate Agrecovery collection points at local authority transfer stations. Whilst some international evidence suggests that higher participation rates are achieved through retail take-back, there are a number of hurdles to achieving that in a New Zealand context.

i. There are multiple retail locations in many parts of NZ. Issues of competitive advantage arise if only one site is chosen over another and there are too many to service them all for a realistic cost.

ii. Retail sites are often in urban locations with limited footprints for collection infrastructure. There can also be consenting issues at these sites that make it difficult to service them readily.

Transfer stations do not have these issues so are the best starting point. Over time the sites may migrate to better locations as a result of local knowledge. The site systems (moveable containers) are designed to enable them to be shifted readily as better siting is identified and consented accordingly.

The siting at transfer stations also gives local government the opportunity to participate practically in solving a longstanding issue for their rural ratepayers. Very strong support has been received and is evident from local government as the programme moves towards implementation.

7.3. Involvement of retailers

All the major agricultural retail chains are members of Agcarm Inc. This means they are engaged in the development of Agrecovery. While retailers are not currently included in the design of the take-back system, they are engaged in the process of designing the Agrecovery solution. The potential therefore exists for future changes to be shaped with retailers included.

7.4. Mobile shredder

In order to keep programme costs as low as possible, a mobile shredder collection system has been designed. The shredder reduces the amount of "air" transported with the collected containers. Shredding will minimise transport costs between collection points and regional hubs. Pre-processing of the plastic waste by shredding at the initial collection stage will also reduce the need for double handling and improve the potential value of the material (plastic) as it adds value by pre-processing the material for the end-user.

7.5. Levy collection

The value of the recycled materials (ie plastic) is not sufficient to sustain a programme for the collection of plastic containers from farms. No agrichemical container recovery system in the world is funded through recycling revenue alone. If material prices were significant enough there would be no need for a product stewardship system - the market would take care of the problem.

The most cost-effective method of gathering a levy is directly from the brand owner. The collection of the levy at the point of retail would introduce another level of administration, and therefore cost, to the system.

Capturing fees at farmer (take-back point) level is even more costly and would be a barrier to participation. The preference for participating brand owners is to have the levy shown visibly at the point of purchase although this cannot be compulsory due to there being no legal framework available to this programme that allows for the industry to set a uniform price.

There is an obligation on the Agrecovery programme manager to maximise the value of recovered material in order to reduce the overall costs of the programme. This performance measure is written into the Agrecovery business plan and, as such, is a condition of the management contract.

7.6. Voluntary approach

There is currently no legislation in place in New Zealand that would allow the regulation of free riders. The Agrecovery programme has therefore been set up on a voluntary basis. Participating brand owners are setting up the programme in "good faith" with the view that future requirements under product stewardship legislation will act to level the playing field in their sector. The expectation is, assuming product stewardship framework legislation comes into being, that the principles of the Agrecovery programme will form a basis for the industry standard and that free riders will be required to join or emulate but not opt out.

7.7. A collective solution

The Agrecovery system is a collective product stewardship scheme. Such schemes are often criticised for the lack of incentives they provide for sustainable changes in product design. The argument is that paying a universal levy into a collective take-back scheme would not reward a company that develops a more recyclable chemical container and therefore makes their product cheaper to recycle.

However, the design of agrichemical containers is, to a large extent, relatively uniform in the material used (high density polyethylene, commonly known as HDPE) and in the design of the containers. This means there are significant cost-saving advantages through the economies of scale a collective system creates. The Agrecovery programme is linked to the Global Container Management Group which is a group of around 50 such programmes worldwide. This group has an expert packaging group which is constantly looking for "design for environment" (DfE) opportunities to improve the recyclability of packaging and lowering the cost of recovery.

Agrecovery only levies HDPE plastic containers, because these are by far the most common container used in the market. This means that companies developing alternative, easier to recycle containers will not have to pay the Agrecovery levy. So a brand owner who moves to sell chemical in a powder form using soluble packaging and a cardboard outer (for example) would not be a participant in the programme.

The levy value is quite low in relation to the total value of the product sold. It should not be sufficient to encourage a brand owner to use non-recoverable packaging in order to avoid participation in the programme. If anything, the use of non-recoverable packaging will be discouraged in the future as farmers and growers will put pressure on brand owners to be part of the programme so they can not only get their containers recycled but can show compliance with approved international practices for export of their products.