Today, local governments are the primary agent for contracting collection and processing of residential packaging and printed paper (PPP) in British Columbia. Under the PPP Stewardship Plan, MMBC will become the primary agent on behalf of its stewards.
As proposed in MMBC’s PPP Stewardship Plan, MMBC will have contractual relationships with collectors in order for collectors to receive a market-clearing price for the collection of PPP. Similarly, MMBC will have contractual relationships with PPP processors by which those processors will receive payment for the post-collection services they provide to MMBC.
Questions have arisen from local governments, private collection companies and PPP processors as to how they will coordinate their activities under the approach proposed by MMBC.
Some local government collectors have indicated they need to know the location, capacity, sorting technologies and material quality specifications of processors that may be receivers of PPP collected by them to inform decisions about collection technology (i.e. single or multi-stream) and operational risk (i.e. acceptance or rejection of collected materials and capacity to receive materials by processors) that may affect costs and their decision whether to accept the market-clearing price offered by MMBC.
Similarly, processors that will be submitting bids to MMBC to provide post-collection services for PPP have indicated they need to know the volume and quality of PPP and the circumstances under which they will receive the PPP from qualified collectors. Processors will require this information to structure and price their bids for activities that include receiving/picking up PPP from collectors and consolidating and transferring materials where required.
Some have suggested that MMBC take responsibility for defining the relationships between collectors and processors. Under this approach, MMBC would direct the flow of collected PPP to processors for defined periods of time and would effectively control the consolidation and transfer of materials from collectors to processors and the amount and source of PPP each qualified processor would receive.
Experience has shown that producer responsibility programs that allow collectors and processors to directly establish relationships are much more effective at delivering diversion outcomes and establishing complex transactional arrangements, where required. Given that collectors have an incentive to collect materials and have them received by processors (to be eligible for payment of the collection market-clearing price) and processors have an incentive to receive materials for processing and to maximize the output (to be paid for post-collection services), both parties have reasons to work together.
As processors are planning to prepare their bids to MMBC for post-collection services, processors and collectors may establish mutually agreeable terms that would take effect should the processor be selected by MMBC to provide post-collection services for the PPP collected by the collector. Such terms would be outside the terms of the agreement with MMBC and might include:
- Delivery procedures and freight arrangements;
- Consolidation and transfer arrangements;
- Capacity to receive materials for processing including service assurance;
- Material quality requirements including degree of commingling, material quality premiums and material contamination surcharges;
- Payments for services outside of MMBC’s scope of service such as management of ICI PPP;
- Other financial arrangements independent of MMBC; and
- Dispute resolution independent of MMBC.
Free-market negotiations between processors and collectors offer the best opportunity to maximize the quality of materials delivered by collectors and, in turn, maximize the quantity and quality of PPP marketed by processors. As collectors are remunerated by MMBC when primary processors accept their collected PPP, primary processors are able to provide collectors with a strong incentive to ensure that they collect PPP in a manner that maximizes material quality and meets the quality terms previously established between the collector and processor.
Under the PPP Stewardship Plan, collectors and processors will provide defined services to MMBC and will be paid, through market-clearing prices for collection services and payment of bid prices for post-collection services. MMBC’s qualified collectors and processors are also able to provide themselves with mutual clarity and certainty by making arrangements with one another that are specifically suited to their particular geographic and operational realities.
