AFGC

Big players in the food and beverage market, like Coca-Cola and Unilever, are already putting processes in place to reduce waste.

Policy makers need to lead the way with circular economy transition

There are barriers that need to be overcome if Australia is to meet its packaging targets. Barry Cosier, AFGC director of sustainability, explains.

In 2020, we are going to hear a lot more about the circular economy. While it is a catch cry that has existed for years, across the globe the push to embrace circular economy principles is accelerating with unprecedented pace. And, while Australia’s food, beverage, and grocery manufacturing sector is working hard to embrace the change that comes with the circular economy, policy makers also need to ensure appropriate time frames and incentivisation schemes are in place to help business transition.

What is the circular economy? Establishing a circular economy means much more than recycling – that is only a small part of the equation. It is restorative by design, focused on extracting maximum value from resources through continued re-use, using as few resources as possible.

Central to the concept is the idea that things should be designed to be maintained and reused and, when no longer useful in their original form, can be used for something else. The loop is closed. In terms of the food, beverage and grocery manufacturing sector, the obvious area where the concept of the circular economy can be applied is in regards to packaging, especially plastic packaging. And in Australia, the sector is collaborating to make it happen.

Food waste With a rapidly growing global population, a reduction in agricultural land, and increasing climate change concerns, reducing food waste is now a global priority. If food waste was a country, it is estimated it would be the world’s third largest carbon emitter (after the USA and China) and utilise a cropland area the size of China. Currently, Australia generates an estimated 11.3 million tonnes of food waste per year, with 2.3 million and 2.5 million tonnes being generated on farm and in the home respectively. Currently a mere five per cent of household food waste is diverted from landfill, presenting an opportunity to embrace circular economy principles.

Food manufacturers are leading the charge and have focused on reducing food waste. Currently, they divert 95 per cent from landfill to higher order uses such as food rescue, animal feed, application to land and composting, which are already driving significant circular economy outcomes.

2025 National Packaging Targets Across the board, Australian food, beverage and grocery companies are working hard to increase the recycling rate of packaging and reducing the impacts of litter. Many are playing an important part through their commitments to the 2025 National Packaging Targets, led by the Australian Packaging Covenant Organisation (APCO).

The four targets, which were set in 2018, are: • to make all packaging 100 per cent recyclable, re-usable or compostable; • to ensure 70 per cent of plastic packaging is recycled or compostable; • to ensure 30 per cent average recycled content in packaging; and • to phase out problematic and unnecessary single-use plastics packaging.

Recent research undertaken by APCO has confirmed that industry has already exceeded the recycled content target and is now collaborating with Government to set a more ambitious target to stimulate demand in the circular economy.

With a rapidly growing global population, a reduction in agricultural land and increasing climate change concerns, reducing food waste is now a global priority. If food waste was a country, it is estimated it would be the world’s third largest carbon emitter.

As members of APCO, companies are collaborating to reduce the harmful impact of packaging. Membership extends across organisational size and industry and enables “the sharing of best practice resources and strategies to improve packaging design, optimise waste management processes and reduce business costs relating to packaging waste”.

There is increasing demand for packaging that includes recycled content and some of the largest companies are leading the way. For example, Unilever has committed to halving its use of virgin plastics, Coca Cola is using 100 per cent recycled plastic content in 70 per cent of its bottles, and Lion Dairy & Drinks’ Dairy Farmers Heritage 1.5L milk bottle is already made with 50 per cent recycled content, with all Juice Brothers 1.5L bottles to be made using 50 per cent recycled content by end of March. There is also a focus on consumers, with the increasing adoption of the Australian Recyclability Label on packaging helping guide them on what can be recycled.

While the industry is wholly supportive of the national packaging targets, achieving them is not without its challenges.

Barriers to achieving 2025 National Packaging Targets The key barriers facing the industry as it strives to achieve the 2025 National Packaging Targets are many and varied. They include: the lack of clean glass from kerbside collections, which limits the recycled content in local bottles; the lack of availability of recycled foodgrade plastic packaging; a need to review quality standards of recycled content to ensure food safety is not compromised; the ability to ensure traceability around the packaging supply chain to prevent modern slavery; and a general lack of local processing infrastructure.

Rectifying these issues requires all stakeholders to collaborate and mandating targets for one stakeholder group will not go far in achieving a circular economy. The responsibility must be shared by the food and grocery manufacturing sector, the packaging industry, retailers, the waste sector, government and APCO. Working together the actions required to address these barriers can be adequately addressed, National Packaging Targets reached and, ultimately, a circular economy achieved.

APCO recognises an interrelated, whole-of-supply-chain approach is needed, and has established working groups, comprising of industry and other stakeholders, to address specific issues identified with the recoverability of ‘problematic’ packaging materials.

Collaboration between all levels of government and jurisdictions, all stakeholders along the packaging supply chain, and secondary processors is required. As highlighted in the recent APCO baseline report, 86 per cent of packaging is currently recyclable, yet only 49 per cent is actually recycled. This is due to a combination of factors ranging from product design, community

Case study: Unilever

Unilever has committed to removing more than 100,000 tonnes of plastic packaging across its global operations by accelerating multi-use packs – such as reusable and refillable formats – and ‘no plastic’ solutions, by 2025. The company will also accelerate use of recycled plastic in packaging and help collect and process more plastic packaging than it sells. In addition, Unilever Australia and New Zealand uses least 25 per cent Australianrecycled plastic in bottles for its key beauty and personal care brands, equating to about 750 tonnes of recycled plastic a year.

education and collection methods, to a lack of specific local recycling infrastructure. APCO is playing an active role in facilitating this collaboration and encouraging whole-of-supply-chain enablers to meet the targets.

Moving towards a circular economy While there is ever-growing momentum within the sector to embrace circular economy principles, there are several key barriers standing in its way.

Currently, the demand for recycled plastics exceeds the supply, resulting in a lack of availability and inflated pricing. Increased availability of post-consumer plastics and increased competition in its supply is required to reduce costs for brand owners procuring recycled plastic. This will protect local manufacturing jobs and assist Australian companies to compete with low cost imports.

Incentivisation from state and federal governments through capital funding assistance will be essential moving forward.

Collaboration between all levels of government and jurisdictions, all stakeholders along the packaging supply chain, and secondary processors is required. As highlighted in the recent APCO baseline report, 86 per cent of packaging is currently recyclable, yet only 49 per cent is actually recycled.

This is because: • Recyclers need funds to install improved optical sorting equipment to increase the availability of clean uncontaminated PET and HDPE. • Packaging companies need funds to install decontamination infrastructure in order to meet food grade packaging specifications. • Brand owners need funds to modify production lines.

Fiscal support for research and development into alternate uses of plastics, such as chemical recycling or use in roads, is also necessary.

Finally, there is need for a nationally consistent approach.

While the independence of the states allows governments to implement waste policies tailored to their needs, it can also produce adverse impacts that ultimately produce commercial inefficiencies, undermine commercial confidence for circular economy stakeholders to invest, and reduce potential environmental gains. Nationally, consistent kerbside collections will allow brand owners to design products to a national recycling specification and allow recyclers to design recycling infrastructure to sort a set of common household materials into high-value commodities for further processing and ultimately manufacturing into new products. F

Food plastics are also an issue when it comes to food waste.

Case study: Coca-Cola Amatil Coca-Cola Amatil is one of Australia’s largest users of recycled PET. At the end of 2019, 7 out of 10 of its plastic bottles in Australia were being made from 100 per cent recycled PET – which will be 16,000 tonnes of recycled plastic in a year. Amatil also ceased distributing plastic straws and stirrers, publicly supported costeffective, well-run container deposit schemes, produced the world’s first 100 per cent recycled sparkling beverage bottles and was a founding supporter of the Australian Packaging Covenant. In addition, last November the company announced it was exploring opportunities for a recycled plastic processing plant in Australia with Veolia. The proposed new plant would focus on recycling PET plastic and growing circular economy sustainability solutions.

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Simplifying and integrating the supply chain journey

GS1 Australia account director, Andrew Steele, explains how the company’s Supply Chain Improvement project will deliver better traceability and transparency of food ingredients for manufacturers.

Consumers’ daily lives revolve around trust. Every day, when peeling an orange, opening a can of baked beans or dining in a favourite restaurant, consumers put their trust in Australia’s food supply chain.

Behind every food and beverage product on the shelf is a supply chain journey that starts with ingredients. The Australian food manufacturing industry is an intricate maze of ingredient and packaging suppliers, most with different supply chain management solutions.

Today, sourcing ingredients without a traceability and food safety protocol invites counterfeit products onto the food chain and an increased risk of contamination. News of unsafe or spoilt food can impact business owner’s livelihoods and the industry’s broader reputation, along with disruption to consumer’s lives.

“To manage ingredient safety and increase the visibility of food ingredients and raw materials in these complex supply chains, a new initiative, the Supply Chain Improvement project, is being implemented using GS1 standards,” said GS1 Australian account director Andrew Steele. “The project’s objective is

"The project’s objective is strengthening integration between the thousands of upstream supply chains in the Australian food manufacturing industry."

strengthening integration between the thousands of upstream supply chains in the Australian food manufacturing industry.”

An industry working group has been set up to drive the project using the GS1 global standards for product identification, data capture and data sharing. GS1’s Global Traceability Standard (GTS) is the foremost traceability framework, allowing businesses to track their products in real-time and have end-to-end visibility of the supply chain.

“The group will work to achieve consensus across the industry to improve food safety, deliver efficiencies and reduce costs,” said Steele.

Representatives from Nestlé, Ingham’s, SPC, Lion Dairy and Drinks, Sanitarium, CHR Hansen, Newly Weds Foods, FPC Food Plastics, Labelmakers, Matthews Australasia and Visy Industries make up the group.

The ability for companies to capture material movements from ‘paddock-to-plate’ provides data integrity and timeliness from receipt to delivery, with traceability back to the source. Through automation, many of the manual processes are eliminated and businesses can be proactive with inventory management and handling systems.

“As a food and beverage business it’s critical for us from a food safety perspective to be able to track ingredients all the way back to the origin,” said SPC’s national logistics manager, Christian Lecompte.

Also critical to business is the capability to support information and production flow within existing systems for integrated supply chains. The project has the capacity to eliminate waste within an organisation’s value stream, reduce non-value-added tasks and ensure cost-effective solutions for customers, leading to a ‘right-firsttime’ approach for all deliveries.

“One of the things we found we could do to be more efficient was to look at opportunities to be able to electronically track all the product ingredients throughout the production cycle – how we identify a product coming into the warehouses, how we receipt goods, how we put our goods away, how we manage our inventory and how we deal with our suppliers,” said Lecompte.

Businesses can track their products in real-time using GS1’s Global Traceability standard.

"One of the things we found we could do to be more efficient was to look at opportunities to be able to electronically track all the product ingredients throughout the production cycle – how we identify a product coming into the warehouses, how we receipt goods, how we put our goods away, how we manage our inventory and how we deal with our suppliers."

The adoption of GS1 standards as the common language for the identification, data capture and data sharing will enable automation of key ingredient sourcing, and traceability between ingredient suppliers and food manufacturers. Using GS1 standards for upstream integration goes well beyond minimum standards and allows businesses to translate their internal processes and approaches into the one common language that all trading partners can use and understand, without having to translate data formats across different supply chain management systems. This is the key as Steele believes interoperability is essential to the future of data sharing.

“Establishing international standards to ensure transparency across the supply chain can help lower existing barriers to the exchange of data between suppliers, trading partners and consumers,” he said.

The Supply Chain Improvement Project has the potential to deliver many benefits to industry, including increased visibility of food ingredients and raw materials, unique identification and traceability to improve food safety, and reduced costs with automated business transactions.

Nestle Australia’s head of digital supply chain, Mandeep Sodhi pointed out the key to the project’s success. “By having consensus across the industry on how to interconnect electronically and exchange critical operational data, we can realise cost-effective solutions across the end-to-end – from manufacturers, to suppliers, to customers – everyone benefits from this improvement in standardisation,” he said.

Looking ahead, the industry working group is encouraging all upstream businesses to adopt the food safety and traceability protocol using GS1 standards.

“With an industry-wide solution in place, your trading partners will have more visibility of your products across the supply chain,” said Steele. F