Government Policy Reversal Causes Anger Among Paper Straw Producers
Paper Straw Industry Faces Financial Crisis
In a sudden policy reversal, the South Korean government announced an indefinite extension of the guideline period for regulating the use of plastic straws, causing significant financial damage to the paper straw industry. Producers of paper straws had anticipated an increase in demand with the expected ban on plastic straws, only to face a sudden reversal that has left them in a dire situation.
Prior to the government’s announcement, paper straw producers had ramped up production in anticipation of the increased demand, only to be left with excess inventory and rapidly mounting financial losses.
According to data from the Ministry of Environment, the unit cost of producing paper straws is more than twice that of plastic straws. As a result, businesses are facing an additional cost of approximately 50,000 won per month due to the switch from plastic to paper straws.
On the 16th, the Paper Straw Survival Countermeasures Council revealed that the industry is facing a total debt of about 200 million won, with production machines urgently halted and sales channels blocked. The situation has led to fears of impending bankruptcy for many small and medium-sized companies in the industry.
Industry Seeks Government Support
Amidst the crisis, paper straw producers are calling on the government to provide emergency funding, set a clear deadline for the guideline period, and secure sales channels. The lack of government action in the aftermath of the policy reversal has only added to the industry’s frustrations.
While the Ministry of Environment has reportedly been in discussions with related ministries to support paper straw companies, there has been no official response to the industry’s plea for urgent assistance.
For now, the paper straw industry remains in a state of uncertainty, grappling with the financial fallout of a government policy that has left them in dire straits.
Hundreds of millions in debt due to deficit management, including plant costs
Industry: “Urgent to finance and secure sales channels”
Paper straws for shop use are provided at a cafe in downtown Seoul [사진 = 연합뉴스]
Paper straw producers express their anger. This is because the government suddenly announced on the 7th that it would extend indefinitely the guideline period for regulating the use of plastic straws, which was originally due to end on the 23rd.
Paper straw producers expected that the use of paper straws would increase as the use of plastic straws was banned at the end of the guidance period, but as the policy was reversed with just 15 days left, damage such as inventory adds up quickly. After the government’s policy was announced, requests poured in to return paper straw to the industry.
According to comparative data on the Ministry of Environment’s ‘unit cost of straw production by material’ on the 18th, plastic straws cost 10 to 15 each, and paper straws cost 35 to 45. Each piece is more than twice the difference. Replacing plastic straws with paper straws means an additional cost of around 50,000 won per month (based on the shop’s average usage of around 2,500 straws).
Producers are upset that they only produce paper straw believing that using paper straw would be mandatory, but end up bearing the burden of the material and operating costs. Paper straws, which were mass-produced in advance to prepare for increased demand before the end of the guidance period, will remain in stock.
On the 16th, the Paper Straw Survival Countermeasures Council (Council) said, “If you combine the current list of about 10 member companies, there are about 140 million, and if you add the list of companies other than member companies, it is about 200 million,” adding, “The monthly production of member companies is about 200 million.” “There are 270 million units, but the sales channels have been blocked and production machines have been urgently stopped,” he said.
The majority of companies have suffered a lack of control in order to invest in eco-friendliness. Until now, paper straws have not been an item in high demand among business partners with the exception of Starbucks, a large franchise company. However, as the demand for environmental friendliness increases, there are many predictions that the use of paper straws will become common after the end of the guidance period.
The paper straw production industry said, “Most companies have looked to the future and invested with the idea of pioneering new markets in line with eco-friendly policies and contributing to environmental protection,” adding , “The extent of the damage is different, but the companies that have made money so far are “The situation is almost non-existent,” he complained.
The CEO of Manufacturer A said, “As the plastic straw ban guideline period was announced, business partners canceled orders or withdrew their purchase plans for next year. “Finished paper straw products and raw materials have become paper waste, and more than 100 pyeong factories have also become waste storage areas,” he said. “With paper straws in stock reaching 10 million, we cannot produce more, and as a result, no more than 10 employees can work with us anymore.” “It’s done,” he complained.
The industry claims that the government is largely responsible as the damage is caused by a sudden change in policy. A production company representative said, “I regret trusting government policy and investing in the paper straw business. “The 7th, when the Ministry of Environment announced an indefinite extension of the guidance period, was the day to install machinery in the factory, but the pride I felt in helping to protect the environment through research and development day and night went to waste,” he said angrily.
Another company representative said, “Suddenly the business that had been built on technology development and research for several years lost its ground. He raised his voice, saying, “This is a disaster that happened not because of a natural disaster or a change in the market, but because of the failure of government policy.”
The industry is asking the government to provide emergency funding, set a deadline for the guidance period, and secure sales channels. An official from the council said, “If you look at the status of companies across the country, most small and medium-sized companies will go bankrupt within this year,” and added, “Emergency financial support must be provided immediately. ” He added, “It is urgent to publish and implement an accurate timetable for the guideline period for regulating the use of plastic straws.”
The government has not released any position more than 10 days after the policy was announced. However, it is reported that the Ministry of Environment is discussing with related ministries ways to support paper straw companies.
The Ministry of Environment also met with food and beverage franchise companies on the 13th and asked them to provide plastic straws only when consumers request them and to install only paper straws in shops visible to consumers.
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