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Bottling a good idea: Mexico's soft-drinks businesses push recycling, hoping to get plastic out of the dumps.

On the northeast side of Mexico City a cavernous warehouse strands as a monument to a new experiment in both recycling and commodity economics. Its freshly painted company name: Ecoce, for Ecologia y Compromiso Empresatial. Like any recycling enterprise, workers sort and bale for sale tons of used material--soda and water bottles, in this case, made of the thin plastic known as PET, or polyethylene terephthalate.

What's most important about the privately funded environmental concern is that it offers a guaranteed minimum price of one peso per kilo of used PET. Through Ecoce, Mexico's bottling and plastics industries have launched an unprecedented effort to stabilize the nationwide market for used PET. To that end, the coalition has put up US$20 million this year to cover expenses. If the program can generate a steady volume of plastic for recycling and break even, it could provide a blueprint for dealing with the disposal of one of the country's largest ecological challenges in the last decade.

At the start of the 1990s, Mexican bottling companies Fomanto Economico Mexicano (FEMSA), Panamerican Beverages (Panamco) and Pepsi-Gemex, among others, embraced plastic containers over returnable glass bottles because the packaging allowed low-cost, one-way delivery of liquids. PET quickly became a widely used bottling material, making Mexico the world's second-largest consumer, after the United States. Mexicans use some 460,000 tons of the plastic a year, according to industry officials. Less than 7%--an estimated 30,000 tons in 2002--is recycled. The rest ands up strewn about the country, clogging drains and causing floods, providing perfect incubators for mosquitos and making the country look a mess.

The PET industry has been trying to encourage recyclers to invest in Mexico since 1993, but unstable prices for used plastic foiled efforts. With the Ecoce program, the plastic industry has shifted focus. "At first, we thought that the problem could be resolved by creating recycling companies," says Jaime Camara, a spokesman for the recycling effort. "Then we realized that we had to first create that crucial link, which is the collection and storage."

So, instead of persuading executives at recycling companies to invest, the group is turning its attention to garbage-pickers like Guillermo Padilla. Padilla works a one-acre patch in a garbage dump bordering Nezahualcoyoll, a poor Mexico City suburb a few miles east of the recycling warehouse. Every day, he sifts through the garbage for material he can sell.

In Mexico, where garbage separation at home is all but unheard of, recycling is accomplished through pickers like Padilla. Thousands of people across Mexico live from picking through the loads of garbage that municipal trucks pour into local dumps every day. Padilla, 39, has been a pepenador (a garbage picker) for 15 years and has collected PET for much of that time. "When the price for it is low, you don't collect it as much," he says.

That, in a nutshell, has been the problem for recycling. As with coffee beans or sow bellies, an international market exists for used PET. And like any commodity, the price can fluctuate wildly Those price swings have played havoc with Mexico's ability to recycle.

When international prices reached record highs of $350 per ton in 1995, PET recycling infrastructure was built. But the price plummeted to less than $80 per ton in December 1996, so people like Padilla collected plastic containers less enthusiastically Recyclers sometimes would face a precipitous drop in raw materials and go under. "The main reason why any recycling enterprise fails anywhere in the world is for the lack of continuous supply of recyclable material," says Camara.

That explains Ecoce's focus on a stable price for the material, and pepenadores like Padilla. "Before pepenadores didn't know who would buy it from them if they collected it," says Ecoce President Jorge Trevino. "Now, we say, 'You separate it and we'll buy it all from you." When pepenadores see certainty, Trevino believes that they will collect the material regularly.

With a more reliable flow, recyclers will be encouraged to invest in infrastructure in Mexico. That's the hope.

So far, a $7 million plant is slated to open this year at a site close to a Ecoce warehouse to recycle bottles into PET fiber, says Trevino. Another is trader consideration. Plants that turn used bottles back into bottles--a much costlier operation--are under consideration for the western state of Jalisco and the state of Mexico. In November, Ecoce opened the PET separation warehouse in northeast Mexico City, fed by 20 trucks that visit 15 dumps in the region, buying used containers from the pickers. Soon, mini-storage centers will open in districts around the city, so consumers can drop off plastic for recycling.

Five more warehouses opened in January in Cancun, Guadalajara, Monterrey, San Luis Potosi, and Veracruz. The company plans to open a center every two months until each state and major urban area has one.

Though only a few months old, Ecoce is already a departure from the past. It marks the first time that a Mexican industry has taken national responsibility for the waste its product creates, let alone attempted to create a stable market for it.

"Before, we just didn't have that culture of taking responsibility," says Sergio Gasca, project director for Mexico City's Environment Ministry, which first urged the PET industry to address its waste problem. "This is what we're trying to promote now: Each industry [should] be responsible for its own waste." Gasca says the city is urging the construction industry to do something similar to recycle worksite debris, which is often dumped illegally in ravines or forests. Negotiations with manufacturers of tires and batteries are underway as well, Gasca says.

Beyond efforts to extend recycling to other industries, though, Ecoce is unprecedented because the PET industry insists on sharing the responsibility with government and consumers. "We believe that the responsibility (for waste management) doesn't lie only with one sector of society," Trevino says.

This is a radical concept in Mexico. Environmental problems have long been viewed as the responsibility of either industry or the government alone. But Ecoce executives say they will fail if they cannot convince consumers to separate and recycle bottles. Thus a large part of the organization's budget will go to promote recycling in schools and advertising. Indestructible. These programs will focus on the proper way to dispose of PET bottles: with the caps off. Though thin, it is a tremendously tough plastic. When capped, a bottle becomes "an indestructible bubble," Camara says. "That bubble fills up your garbage can, the truck that picks up your garbage, the transfer station, and the landfill where it ends up."

With the cap off, the bottles slowly compress during collection, taking up less space. However, two-thirds of all PET bottles are thrown away with the cap on. Ecoce trucks pick up 3,000 pounds of bottles per trip. If people routinely Look the caps off and flattened bottles, Camara says, each truck would be able to pick up as much as 9,000 pounds.

As the Ecoce recycling and price support program evolves, its executives are still tinkering with the details. "What we're looking for is a project that corresponds to the idiosyncrasy of Mexico's culture, economy, climate, consumption habits, infrastructure and so one' says Trevino.

One idiosyncrasy is pepenador politics. At the dump where Padilla works, for example, Ecoce pays $0.08 a kilo, with a bonus of $0.02 a kilo when pickers collect more than 30 tons in a month. However, it has to pay this money to the leader of the garbage pickers at this particular dump, a man named Sebastian Hernandez. Hernandez, in turn, pays his pickers $0.04 a kilo for what they collect, pocketing the rest, though the pickers are supposedly independent, do all the work, and run all the risks amid the muck.

This system emerged during the 71-year rule of the Partido de la Revolucion Institucional (PRI). The PRI used self-anointed leaders to control groups of people and deliver their votes to the party. Tiffs political control was especially rigid at garbage dumps, where pepenadores worked almost like serfs. Leaders like Hernandez were allowed to decide who could pick and who couldn't.

Though the PRI no longer controls the country, this system remains at most Mexican dumps. So to secure a steady flow of used PET, Ecoce finds that, for the Lime being, it must deal with people like Hernandez, who, if displeased, can keep the recycling trucks out of the public dumps.

Nevertheless, the Ecoce experiment in commodity-market stabilization continues.

Producers say PET is light, durable and safe for workers and consumers. It won't explode when dropped, like glass or aluminum and costs less than both to transport. It doesn't decompose and leach chemicals into the groundwater.

"With all these benefits, the industry wants to work on the only problem it has, which is the image problems says Camara. "The [PET] industry's brand is out there on the streets and in the gutters."
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Title Annotation:The Top 100 Companies
Author:Quinones, Sam
Publication:Latin Trade
Geographic Code:1MEX
Date:Jul 1, 2003
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