More than 100 small food companies are campaigning for the government to rethink new Extended Producer Responsibility (EPR) levy and to stagger the introduction of fees to reduce their impact.
The group is being led by Stu Macdonald, the founder of Manilife, a natural peanut butter brand, who described the tax as “shambolic”.
"It’s existential for lots of businesses, and the people who came up with the rules aren’t even aware of this. We will survive it but had it happened a year ago, I’m not sure we would have done," The Times quoted Macdonald as saying.
Macdonald also claim that “the majority” of the businesses that are part of his protest group “had no idea about this until a month or two ago” stating that small companies that are not members of trade bodies were not properly consulted about the changes.
EPR must be followed by any company that had sales of at least £1 million last year and used more than 25 tonnes of packaging. The government says the money raised will be spent on improving local recycling facilities.
A business with sales of between £1 million and £2 million is classed as a “small” producer, while a company with sales of more than £2 million is classed as “large”. There are also annual registration fees of up to £2,620.
The Food and Drink Federation, an industry trade body, estimates that EPR compliance will cost businesses £1.4 billion in the first year.
However, many claim that the new tax will result in a bill of £50,000 for small to medium firms.
Since the rates are charged per tonne, rather than per unit, companies whose products are packaged in glass will be most hard-hit since glass is obviously significantly heavier than less sustainable materials, such as plastic.
Katie Jewitt, who is chief operating officer of Momo Kombucha, told The Times that rules as “catastrophic” for small food companies.
“It’s caused a lot of panic and frustration where people are just finding out about it now and realising if they have to take on the full liability of the costs, there are hundreds of businesses that will go out of business," she said.
Department for Environment, Food and Rural Affairs. said,“We are committed to cracking down on waste and boosting recycling, with the extended producer responsibility for packaging being a vital first step for our packaging reforms.”
It added that the reforms will “create 21,000 jobs and help stimulate more than £10 billion investment in recycling over the next decade”.
