Making recycling a profitable business in Peru

Marienella Ortiz for El Comercio

Is there a situation in which everyone – from the recyclers who sort trash on the street to the big businesses who buy raw material – can win?

Making recycling a profitable business in Peru

(Photo: El Comercio/Reference)

The smelly trash that everyone forgets about after throwing it out shouldn’t be a problem for this country, but rather a source of income. This year, every Peruvian, on average, will throw out 800g of solid waste per day, but by 2021 this number could increase to 2 kg. The Environment Ministry (Minam) estimates that between 2013 and 2021, we will have tripled the amount of trash in the environment. With the current poor waste management system, this number is really worrying. Soon, we could literally be drowning in trash.

To confront this growing problem, the government is pushing a plan to separate and recycle at least 25 percent of the total waste. Recyclable materials include glass, plastic, paper and metal products. The more ambitious goal is to recycle 100 percent of these recyclable materials by 2021, according to the National Environmental Action Plan.

Looking at it realistically, this hurdle is pretty high. According to a national study by Minam, municipal governments were able to recycle 85,000 tons of material in 2011, which represents only 5 percent of total recyclable products. If by 2021 there are, as predicted, 5 million tons of total recyclable material, will we ever be able to achieve 100 percent?

Recycling pioneers

Recycling is not new to this country. With the help of the non-profit “Ciudad Saludable,” individual people who collect recyclable goods from local trash have been able to organize themselves, and in turn were able to help get the 2009 law 29419 passed, which regulated the collection of discarded waste.

Now the issue is to give the municipalities more legal power over recycling regulation, and to assure that individuals who take the recyclable materials out of the trash are seen not as beggars but as business people.

The universe of the individual recyclers has been studied by Albina Ruiz, the founder and president of Ciudad Saludable. She explains that the chain of value is very extensive in this business, and the base of that pyramid is the 100,000 recyclers. In this category are the “cachineros” (those who buy and sell things that others would consider waste), the “buzos” (those who are in the trash dumps), the “recaladores” (those who open the bags of trash on the street before the trash trucks come) and the “chancheros” (those who collect organic waste).

Although conditions have gotten better for the recyclers, there is still a long way to go, says Ruiz. For example, the Municipal Modernization Program (PMM) was created to give economic incentives to local municipalities to improve the recycling process and to separate trash. While municipalities are obligated to work with the recyclers in this process, few do, but Ruiz claims that recycling programs won’t become sustainable until the recyclers are able to participate in the collection and commercialization process.

Let’s make it a business

The only way to get to the goal of 100 percent recycling by 2021 is to make the process a real business in which everyone wins, and thereby increase the number of people who are adding value to the collection of recyclable materials, Ruiz says.

Ruiz also insists that the recyclers must work directly with the municipality in the process. This way, the municipalities will be motivated also to work with education programs in communities, teaching people to use three types of bins: one of recyclable materials, one for organic waste, and a third for what will ultimately go to a landfill.

Javier Perla, manager of sustainable businesses with the non-profit Libélula, adds that the goal of 100 percent recycling also depends on social marketing.

“We have to communicate about the importance of recycling,” he said. “We have to generate more information, and quality information, and talk about these subjects in various forums.”

At the moment, the business of recycling is growing, though not as fast as would be ideal. About 80 percent of separated waste supports the local market, while 20 percent is exported, so the financial crisis had a huge impact on this business.

The manager of Recicladores y Artesanos de Amancaes, Milagros Castro, says that a kilogram of bottles was S/. 2 before the 2008 crisis, but now it is, on average, S/. 1. Likewise, white paper was S/. 0.9 per kilogram, and is now S/. 0.65.

But Castro does say that formal businesses, like her own, have an advantage when it comes to prices because they are able to get better prices for the raw material than those wor.

“The company Trupal pays three points more than on the informal market,” she stated as an example. “If cardboard is making S/.0.25 per kilo, they will pay S/. 0.28. They are afraid that the informal vendors wet the cardboard to make it weigh more.”

Exports have been able to take off in the last couple of years. In 2011, US$70 million worth of material was exported, primarily in recycled copper.

Business presence

In Peru, there are 78 industrial businesses in different parts of the country that work with recyclable material, and another 62 that are dedicated to the export of these materials, many concentrating on plastic that gets shipped to China.

Some businesses have developed campaigns to collect and recycle materials that are directly related to their own work.

For example, Juan Carlos Belaunde, manager of corporate business at Kimberly Clark, says that last year he and his team were able to collect 2,000 tons of recycled paper with the help of 600 businesses across the capital. This paper was then used to create napkins and paper towels. But this amount is still minimal in comparison to what the business actually uses to create its products, Belaunde admits.

Juan Alberto Flores, the director of institutional affairs of the Lindley group, says that, with Coca-Cola, they are able to collect an average of 130 tons of plastic containers per year, and the goal is to increase this volume by 10 percent every year.

These materials are sold to other businesses because they cannot use the raw materials because of current legislation of food and drink packaging.

A few months ago, the companies Kimberly Clark, Coca-Cola, Tetra Pack, San Miguel Industrial and Owens Illinois formed an association designed to encourage recycling among the general population.

Additionally, electronic companies in Peru and preparing a plan to collect used products, according to new rules from 2012.

Raúl Roca, a specialist at Minam, says that European countries have included a tax in the purchasing of electronic goods that supports the cost of recycling it. In Peru, the businesses will be in charge of getting the products, but the government has promised to promote an initiative to get residents to return their used products for recycling. This new system should be ready by 2014.

It is clear that the process of recycling must include everyone, from the person who discards his waste in separate bins, to the businesses that recycle used products, and to the authorities that promote recycling programs and stick to recycling goals.

This way, recycling will not only have a positive environmental impact on this country, but also an economic and a social one.