How BC Quietly Pushed up the Cost of Milk

Two years ago when the B.C. government introduced a deposit on milk and similar containers it shifted a $22.9-million-a-year cost onto consumers.

But according to government documents, there is no evidence the added fees have led to any increase in the number of containers recycled.

For many years, B.C. residents put empty containers from milk and similar plant-based beverages into curbside blue boxes to be handled through the Recycle BC program. The $6.7-million annual cost to handle the material was covered by the dairy industry and other producers and embedded in the price of their products.

But starting in February 2022, the province reclassified the containers so that they would instead be handled through the Return-It deposit system run by Encorp Pacific. That made the containers subject to a 10-cent refundable deposit, plus a non-refundable container recycling fee that could be as much as 16 cents depending on the type of container.

The government’s 2022 announcement said “shifting milk containers to the deposit-refund system will capture the millions of additional plastic and fibre-based containers that were otherwise being thrown out, such as those from restaurants, schools and offices that did not have access to the residential recycling system.”

Consumers could still put the containers in the blue box, it said, though they would forgo the refund of their deposits.

While each charge was small at the point of purchase, the province was aware that they would add up. The government expected the shift would add $7.2 million in container recycling fee charges, plus an estimated $15.7 million for unclaimed deposits, both paid by consumers.

Nor did the provincial government expect the corporations would pass on the savings once the charges were shifted to consumers. “While milk producers will no longer pay a similar fee to Recycle BC,” a February 2020 document said, “it is highly unlikely that they would choose to decrease the price on milk to reflect the pennies per item in cost savings.”

The documents were among 130 pages the Ministry of Environment and Climate Change Strategy released in response to a request The Tyee made under the Freedom of Information and Protection of Privacy Act.

Some material was withheld under sections of the act allowing public bodies to keep secret cabinet and local public body confidences, disclosure harmful to intergovernmental relations or negotiations, and disclosure harmful to business interests of a third party.

The released documents do not directly answer the basic question of how the shift has affected the recovery rate of milk containers.

From what’s included, the decision appears to have been made with little evidence to support why the change was needed and there does not appear to have been any evaluation of whether it has made a difference.

The documents do show there was concern in the ministry that “the expansion of the deposit-refund system to include milk and milk alternatives could lead to confusion amongst consumers who have been educated to include these materials in the blue box.” But they said the ministry would ensure the industry conducted “extensive outreach” to let residents know about the change to the collection system.

There was also some worry the government would be criticized for making life less affordable, but the documents noted that a similar change in Alberta in 2009 led to little criticism other than concerns expressed by a Calgary food bank.

They also noted that in Saskatchewan the industry “disliked” paying stewardship fees and “in 2017, when milk was added to the deposit refund program, industry was happy, as fees are passed to consumers.”

The documents make clear that the deposit system involves a great deal more bureaucracy and requires retailers, in the middle between manufacturers and consumers, to process payments to and from consumers and manufacturers.

A bullet point describes the complex role of retailers and how money would move in the new system: “Both the deposit and the eco fee (if not embedded in price) are charged by manufacturers at time of sale to retailers. Retailers are reimbursed on both by consumers at point of sale. When consumers return containers for refund, the retailer is out the deposit (again). The retailer is reimbursed the deposit when containers collected (by a depot [or] direct from Encorp). Encorp is paid by the manufacturers (that initially collected deposits and eco fees) for the ultimate collection and processing of their materials.”

The cost and effort could be worth it if it resulted in a greater number of containers being recycled instead of ending up in landfills, but there is debate in the documents about whether that was likely.

One document estimated the change could mean somewhere between 20 million and 40 million more milk containers would be recycled each year, but it acknowledged the Environment Ministry had a poor grasp of the number of containers already being processed. “This is a broad estimate as these containers are currently not reported to the Ministry,” it said.

Someone else in the ministry wrote that they “would strongly argue” that the estimated increase in milk container returns “is inaccurate even as an approximate estimate and I have not seen any data to support such an estimate.”

Through the blue box program, the recovery rate for all materials was 78 per cent, they said, and the rate was higher than that for milk containers.

“Milk containers are one of the highest performing material categories in the program and there has been extensive outreach done by both Recycle BC and local governments for a number of years targeting milk containers to ensure consumers put milk containers into the blue box,” they said.

Surveys done by a Recycle BC consultant found that the number of respondents reporting they properly recycled was 89 per cent for milk jugs and 82 per cent for other types of milk containers. Some respondents might claim to recycle the containers even if they don’t, they acknowledged, but that number was likely no more than 10 per cent.

“As they are a top performer, there is no reason to believe that milk container [recovery rate] would be lower than overall program recovery rate,” they said. “The most accurate assumption that we can make for household milk containers is that the baseline recovery rate is 75 to 85 per cent and a deposit is highly unlikely to bring in more of them as other beverage containers that are already subject to deposit are performing at the same level.”

They concluded, “I strongly believe using the 20 to 40 [million] containers estimate is grossly misleading information to provide to decision-makers and I am not aware of data that supports such an estimate.”

Despite the disagreement and the uncertainty around the numbers, the ministry proceeded with the change, and in February 2022 consumers began paying deposits and a container recycling fee on milk containers.

The little media coverage the change received then was generally favourable.

A year after the switch, the president and CEO of Return-It, Cindy Coutts, sent an email to Daisy Lilley, an official in the Environment Ministry, with “some very preliminary recovery rate estimates.”

In the first 11 months after milk and plant-based beverage containers had been added to the deposit return system, the recovery rate was estimated to be 59 per cent.

“This is quite impressive given that it was the first year of the program and a testament to the promotion and education plan executed over 2021 and 2022,” Coutts wrote.

It is not, however, clear that the recovery rate is any higher than it was before the shift. For a program that costs consumers $22.9 million a year and saves industry $6.7 million, a more thorough assessment is needed.