Commodity prices to go up by 16% on new producer rule

Consumers will pay more for key commodities as importers and suppliers indicate they will pass on costs associated with the new environmental rule.  

Extended Producer Responsibility (EPR) compliance becomes mandatory for all manufacturers, importers, and brand owners who place products on the market on May 4. 

Under the EPR which is anchored within the Sustainable Waste Management Act 2022, players in the value chain will be held accountable for the entire lifecycle of their products, including post-consumer waste management and environmental impacts, which comes with an extra cost.

Large consumer goods manufacturers such as Coca-Cola, East African Breweries, Bidco Africa, Unilever, manufacturers of medical equipment among others, will have to create additional budgets for the tracing, collection and recycling or disposal of packages for their products.

This is mainly plastic packages and products, beverage cans, electronics among others.

Importers will also be required to pay $1 (Sh129) per item imported into the country payable to the National Environment Management Authority (NEMA) for end-of-life management, including research, recycling and disposal, with raw materials and industrial input imports also on the list.

A Sh150 charge is imposed per item for all imports with nylon packaging, on top of an already existing waste management annual fee currently being paid.

EPR fee on a 40-foot of diapers for instance will average Sh334,950 while those of detergents and sanitary towel will be at an average Sh381,450 and Sh561,000, respectively.

According to the Kenya Association of Manufacturers (KAM), companies are also required to pay Sh5,000 to NEMA for administrative services.

Producers and traders have now indicated most consumer goods prices could increase as they will be forced to pass on the extra costs of doing business, amid calls to defer the implementation for further consultations.

Commodities that will be most affected include cooking oil, diapers, detergents, sanitary towels, bottled water, canned food products, alcoholic drinks, among others, a move that will add pressure to an already struggling consumer who has been battling reduced spending power amid high taxation in the country.

The Association of Kenya Suppliers which also represents the interest of importers in the country yesterday warned of a sharp increase in commodity prices, which could lead to low sales by businesses and drop in consumption taxes for the government.

“The cost has to be absorbed somewhere and the biggest casualty is the consumer who is already struggling with a high cost of living and low disposable income. There will be a huge implication across the value chain including raw material imports and finished goods,” the association’s CEO Ishmael Bett told the Star on phone.

The Shippers Council of Eastern Africa (SCEA) which also represents importers and exporters said SMEs and micro enterprises will be adversely affected by the proposed levy of Sh150 per item and “which does not consider equity.”

“The levy shall aggravate the already difficult business environment. The intention to protect the environment is noble, but further consultations and understanding of the regulations and what levies are to be imposed are important,” SCEA chief executive Agayo Ogambi said.

This, amid concerns over low awareness in the industry over the new regulations.

The Kenya Extended Producer Responsibility Organisation (KEPRO) puts compliance rate at an estimated five per cent.

“This can be attributed to existing gaps in the regulations or a lack of clarity around compliance requirements,” KEPRO chief executive James Odongo said.

Registered members are also required to declare the volume of packaging or products they introduce into the market monthly.

At present, the compliance rate for this requirement under KEPRO stands at about 60 per cent, he said, signaling the need for ongoing awareness and support to achieve full adherence to EPR obligations.

On consumers, KEPRO has been intentional in promoting awareness and driving behavior change.

“Through our Consumer-Led Transformation Initiative, we have conducted regional awareness drives that have reached over 1,000 direct participants to date. In addition, we are working closely with churches and schools to reinforce our messaging. We believe that children are the champions of tomorrow, and fostering environmental responsibility from an early age is key to achieving long-term, transformative change,” said Odongo.

KEPRO has so far collected and recycled 64,000 metric tonnes for all packaging fractions over the last four years.

While industry players support the drive towards a circular economy which ensures resource efficiency, reduce waste and generate new economic opportunities, they want proper structures in place before the EPR is fully implemented.

“KAM is advocating for the government to prioritise adopting an environment incentive policy to support provision of incentives to businesses including small and medium-term businesses and to support the waste value chain players such as collectors and recyclers who play acritical role in ensuring that the circular economy and EPR approach works,” CEO Tobias Alando said.