Bag ban won’t do enough on its own

Moves by major supermarkets to stop providing free plastic bags could earn these businesses more than A$1 million ($1.07m) a year, but may only have a small impact on the environment.

Australia’s two supermarket giants, Woolworths and Coles, have announced their stores will stop offering their regular plastic bags within 12 months. Instead, customers will be able to buy a more durable plastic bag at A15 cents apiece, or simply bring their own.

These bags are factored into the cost of doing business for these supermarkets. There are costs beyond just the bags themselves, such as the costs associated with sourcing and negotiating with suppliers, procuring them, shipping and warehousing them, and distributing them to stores only to then give them away.

Supermarket margins are already feeling the strain of price deflation. These businesses are generally making less than 6c in the dollar, so the chance to phase out this cost makes good business sense. But the switch to stronger, multi-use plastic bag brings its own costs. To begin with, the bags alone cost more (9c each) and also have procurement costs.

However, the new scheme will immediately reduce customers’ bag usage. Being optimistic, it would be reasonable to see an 80 per cent decline in plastic bag use as shoppers actively search for alternatives to free bags.

Most shoppers will probably reuse the A15c bag, or look to other options like canvas bags, polyethylene bags or cardboard boxes. In turn, while the new re-usable bag may cost more than the thinner single-use bag, fewer will be used and therefore ordered. Retailers can expect a drop in these packaging costs.

It’s estimated that Australian retailers give away 6 billion plastic bags each year. Woolworths alone say they provide 3.2 billion each year.

With each bag costing almost 3c, retailers stand to save more than A$170 million a year in direct costs. Selling these new bags at A15c each effectively creates another revenue stream potentially adding up to A$71m in gross profit (6c x 1.18 billion units).

The past impact of applying a charge to the use of plastic bags has provided positive, but mixed results. In Australia, Bunnings reported an 80 per cent reduction after implementing a charge for plastic bags, while a 2008 trial undertaken in three Victorian regional towns by Coles, Woolworths and IGA resulted in a 79 per cent reduction.

Unfortunately, introducing a charge for bags doesn’t help the environment in isolation. While plastic bags represent only about 2 per cent of landfill, there is certainly sufficient scientific evidence that plastic bags do present risks to marine life and clog waterways.

However, simply charging for a plastic bag, without directing these funds into environmental programmes, does not necessarily resolve the problem. Shoppers slowly return to old habits, governments and retailers stop educating consumers and re-usable bags soon make their way into water ways and landfill.

In the US, studies indicated 40 per cent of shoppers continued to use disposable bags, despite a 5 cent levy.

Ultimately, “banning the bag” is only the beginning. Retailers will need to remedy customer complaints as the phasing out of plastic bags begins.

Australian supermarkets could put some of the profits derived from the A15c re-usable bag into community schemes or environmental groups. Australian governments will also need to fund ongoing education campaigns to promote bans, alternatives and outcomes.