Manufacturers stock up as ban on plastic straws draws closer
With just weeks until phase three of the plastic ban becomes effective, juice manufacturers say they have stocked two to three months’ supply of paper straws to minimise the risk of global-supply chain disruptions amid concerns of limited...
With just weeks until phase three of the plastic ban becomes effective, juice manufacturers say they have stocked two to three months’ supply of paper straws to minimise the risk of global-supply chain disruptions amid concerns of limited commercial supplies.
The Government of Jamaica twice delayed the third phase of the plastic ban, which is centred around the removal of plastic straws from tetra pak and pouch-packaged beverages in 200 millilitre sizes, to allow the manufacturers more time to prepare for the changes.
Food conglomerate GraceKennedy Limited was the first out of the block with paper straws affixed to juice brands Capri Sun and Tropical Rhythms, last November. Trade Winds Citrus and Seprod Limited more recently began the switch to the paper alternatives.
Paper straws have been coming into the island from Europe, and deals are being brokered with suppliers in Asia to keep supply chains intact.
Amid those developments, however, manufacturers have remained at loggerheads with the Government since Jamaica began implementing the ban on single-use plastic bags, styrofoam containers, and straws in early 2019.
While somewhat satisfied by the pushback of the timeline for implementation of phase three of the ban, the manufacturers say they still await answers from the Government on unresolved issues, including concerns around a loophole in the plastic ban regulation that gives price advantage to importers of tetra pak and pouch-packaged juices if plastic straws attached to the juices are not properly policed by the Jamaica Customs Agency.
The switch to paper straws will also increase the cost of producing the juices, they say, some of which they are contemplating passing on to consumers.
The difference in cost is stark, according to information provided Seprod. The paper straw costs US$9.11 per 1,000 compared to US$3.29 per 1,000 for the plastic straw, making it 275 per cent more expensive. Based on current consumption, this translates to an additional cost of $45 million per year, said Seprod, which manufactures beverages under the Serge, Cool Fruit, and Swizzle brands.
These issues have been the subject of several meetings with the Minister of Housing, Urban Renewal, Environment and Climate Change, Pearnel Charles Jr.
“In all the meetings, there is constant talk about monitoring the local manufacturers, but there is a huge part of the market that is supplied by imports. Enforcement will be needed to ensure that local manufacturers are not put at a massive disadvantage to non-compliant imports,” said Seprod CEO Richard Pandohie.
“I want to see a clear plan as to how the GOJ, through its various agencies, is going to ensure that we have a level playing field,” he said.
Group CEO for GraceKennedy Don Wehby is also backing calls for the Jamaican government to strengthen enforcement of the ban as it relates to the import and distribution, “as we continue to see non-compliant products being distributed in the market,” he told the Financial Gleaner.
“This should include increasing inspections at our ports and in the marketplace. For Jamaica’s manufacturing sector to remain competitive, we must ensure that those in compliance with the ban are not placed at any disadvantage. There also needs to be greater clarity on the way forward regarding the importation of plastic straws to be used in the manufacturing of products designated for export,” he said.
Trade Winds Citrus’ bone of contention with the Government is still around the timing of the ban despite the additional three-month extension from July 1 to October 1. The company wants the ban to be further extended to December 31, specifically on products where the straw is affixed to the packaging.
Managing Director Peter McConnell says Trade Winds continues to face supply challenges and that the high cost of paper straws may eventually lead to price increases for consumers.
The juice manufacturer now has paper straw inventory to last about two months, but McConnell said it’s only enough to cover juices supplied to the local market.
Both McConnell and Pandohie told the Financial Gleaner they have sought permission from the Government to import plastic straws for re-export to trading partners such as the United States and Canada – thereby limiting the quantities of paper straws that they would need to procure at this time – but has made no progress on the matter.
“We have 2.4 million units of plastic straws in stock that we will use on export orders, but when these are depleted in the next two-three months, we will need to stop exporting because we will have inadequate supply of paper straws,” McConnell said.
Paper straws are already produced in limited commercial quantities, but supply-chains disruptions from the COVID-19 pandemic have exacerbated the problem. The manufacturers do not anticipate a steady flow in paper straw supplies until 2022.
“We seek permission to import plastic straws for re-export because not only is the supply of paper straws inadequate, the additional cost of paper straws makes us uncompetitive in the export market. Margins are very thin on export orders,” McConnell added.
The United Kingdom implemented a plastic ban in May this year, taking it off the table as a potential market to which plastic-straw accessorised juices can be supplied.
Pandohie argued that while there is a possibility that the US and Canada may also implement their own bans over time, the window remains open for now, and it would be illogical, he reasoned, to ask manufacturers to produce uncompetitively for export markets based on a domestic legislation.