For years, many in the industry viewed extended producer responsibility (EPR) laws as a distant regulatory cloud — something to worry about when the time came. But the co-founders of supply chain advisory firm Recirculated say reality is officially setting in, and companies across the fresh produce supply chain can no longer afford to wait.
As states begin clamping down on packaging waste, the financial stakes are skyrocketing, leaving retailers and suppliers scrambling to understand how these impending fees will impact their bottom lines.
“We’ve been screaming about it — talking about it — and no one was listening,” says David Kalan, president and chief client officer of Recirculated, reflecting on early meetings with Fortune 50 corporate executives. “People looked at us like, ‘We’ll worry about it when we have to worry about it.’ But now they’re worrying about it.”
Along with Recirculated’s chief principal consultant Patrick Owens — a sustainability expert currently advising the Circular Action Alliance (CAA) — Kalan helps companies audit their entire supply chains to identify liabilities and potential savings in the face of state mandated fees.
While EPR fees can be difficult to untangle, Recirculated points to immediate operational adjustments where the industry can mitigate costs. One of the single biggest, overlooked financial triggers sitting in almost every produce warehouse? Stretch film.
“The EPR fee on stretch film is anywhere from 52 cents to 72 cents a pound,” Kalan warns. “It’s incredibly high. Think about it this way: A typical pallet has a pound to a pound and a half of stretch film on it.”
For a high-volume facility wrapping thousands of pallets a day — like a prominent California retailer with which Recirculated is currently working — those pennies per pound can quickly become $225 million in liabilities on stretch film alone, he says.
Recirculated’s business model is built on offering advisory services completely free to the client, says Kalan.
“We look at their entire supply chain — all the waste they’re producing — and advise them on what their potential EPR fees could be and give them solutions as how to minimize or hopefully totally avoid them,” he says.
Kalan says typically EPR fees stem from the use of one-way packaging, so the company’s goal is to identify specific opportunities where they can transition to alternative packaging solutions or eliminate secondary packaging.
By auditing film usage, shifting away from one-way single-use packaging, and optimizing wrapping efficiency right now, produce operations can convert a looming regulatory threat into immediate cost savings, says Kalan.
Making Sense of Compliance Chaos
As an adviser to the CAA, the producer responsibility organization managing these state programs, and a board member of the Reusable Packaging Association with certifications in zero waste, Owens is keenly aware of upcoming laws, regulations and compliance deadlines.
“Sustainability and compliance are smashing into each other right now with all these new laws,” he says. “In California, there’s this convergence right now of so much going on in the area of compliance with new laws and regulations. 2026 is a major year for new statutes, whether it’s SB 54 or 261 or 253.”
Owens says while litigation is still ongoing with these regulations, companies can’t afford to wait and see how it all shakes out.
“Those statutes are on the books, so the impacts are still occurring, and obviously the longer you wait to take action, the more your possible obligations will be down the road,” he says. “So, we’re trying to help companies … to navigate some of these complexities, and try to make sense of, OK, what can you do today that’s not going to further burden your bottom line and also help you anticipate the changes that are currently coming up with these new statutes that have big impacts.”
Kalan says Recirculated thinks it has a responsibility to help the produce industry with EPR.
A former founder of plastic pallet pooling provider Intelligent Global Pooling Systems, or iGPS, Kalan has worked closely with growers over the years and says he understands their perspective.
“I think the industry has unfairly attacked produce with these laws,” he says. “[Produce] is a different industry. There are no big profit margins. They can’t ramp up the price overnight, and they have the most responsibility for our food prices of anybody. We’re trying to cut the cost of food, and this makes no sense. It makes zero sense.”
Kalan says while he can’t change the laws, he can help inform produce industry stakeholders who can put pressure on politicians and policymakers to enact laws that do make sense.
“The reason I’m so passionate about this is I’ve never met a grower that doesn’t take the treatment of land and the environment with responsibility,” he says. “They do everything they can to keep the water, the soil, the air —everything clean. They’re good people trying to do what they should be doing. We shouldn’t penalize them with some of these ridiculous fees.”
Produce Packaging Can’t Be Changed Overnight
As EPR regulations begin to rewrite the rules of packaging, the fresh produce sector faces a unique set of hurdles. Owens notes that while consumer-facing primary packaging gets most of the public attention, the produce industry relies heavily on secondary and transport packaging — and it’s there that changes may be more easily made.
Applying his background in Six Sigma and lean methodologies, Owens views the issue through an efficiency lens, candidly saying, “all waste is dumb.” However, optimizing supply chains to eliminate that waste under new laws is far from simple.
Having spent part of his career in the chemical industry at DuPont, Owens is highly familiar with plastics and cautions against the “oversimplification of making some of these changes.”
For decades, agricultural packaging has been meticulously engineered to optimize shelf life and minimize transit damage. Suddenly shifting away from these materials creates an immediate operational shockwave.
“We’re overnight saying, hey, you’ve got to change it, because this one plastic over here that you’ve been using, because it’s perfect for the application, it’s now going to be charged a significant amount of fees, because it’s hard to recycle,” Owens explains.
This difficulty in recycling isn’t an accident; it is the result of prioritizing food safety and longevity, he says. Modern packaging has been designed to avoid shelf-life loss. For produce shippers, a material that cannot be easily recycled is often the exact same material that keeps berries from molding or leafy greens from wilting on a cross-country trip.
This functional tension is fueling a “tremendous amount of frustration” among growers and shippers, he says. Owens says he has spoken with larger producers who feel caught between conflicting mandates. Their primary mission is supplying fresh, healthy food to consumers, which can lead them to intentionally overdesign packaging to eliminate any risk of spoilage or contamination. Under emerging EPR structures, however, these safety-first designs are being penalized.
The core grievance for many producers is that stepping back to meet strict recycling rules feels entirely “inconsistent with the true spirit of the law,” he says. Fresh produce companies frequently try to go beyond what statutes require to ensure quality, but they now face a reality where compliance fees punish the very materials that prevent food waste.
While the foundational goals of EPR legislation are well intentioned, Owens emphasizes that they were built out with “almost no consideration” for the delicate, high-stakes realities of the fresh food supply chain.
A Tactical Approach to EPR
To help grower-packer-shippers navigate the patchwork of state-level EPR mandates, Owens outlines a clear tactical approach.
Because individual states are actively rolling out their own requirements — and substantial legislation in states like Illinois or New York could soon trigger a shift toward a national framework — producers cannot afford to wait. Owens recommends that companies immediately take the following actions to protect their bottom line and prepare for incoming compliance fees:
- Inventory material by type, not by product — If companies have already registered with regulatory programs like California’s (CalRecycle/CAA), some initial baseline work may be done. However, Owens stresses that the critical next step is a deep operational audit. Shippers must comprehensively inventory every piece of packaging they use, he says. This inventory must be cataloged specifically by material type rather than by individual product lines.
- Identify and target the “low-hanging fruit” — Once a complete material baseline is established, producers should evaluate their packaging footprint against regional recycling capabilities. Line up your inventoried materials directly against standard lists of “difficulty to recycle” materials, he says. Audit these materials to find the easiest, most accessible opportunities where you can make simple “drop-in substitutions.” Ensure these substitutions protect your business on two fronts: They must not erode your bottom line, and they must not shake consumer confidence by trading food safety and compliance away for pure convenience, he says.
- Look at the total packaging spectrum (starting with transport) — Producers frequently get bogged down trying to fix consumer-facing, primary packaging first, which is often the hardest to change due to shelf-life constraints, says Owens, who advises taking a wider view. Analyze your entire packaging spectrum, including secondary and transport materials (such as pallets, wraps and shipping crates), he says. Focus initial substitution efforts here, as secondary transport packaging, in general, serves as the easiest and most practical place to make immediate, impactful changes, he says.
Data Solutions
Driven by the rigorous data requirements of emerging EPR regulations, Recirculated and its strategic partner, Marrad, are leveraging advanced track-and-trace technology to capture and document supply chain waste. Marad removes material like corrugated plastic and pallets from distribution centers, providing companies with the compliance data now required under EPR frameworks.
Kalan says this tracking capability sparked a significant opportunity when a major retail client highlighted millions of protective corner boards — of which the produce industry is the primary user — unnecessarily heading straight into landfills.
To solve this, Recirculated launched a pilot program in Salinas, Calif., alongside Valley Pallet to recover, sort and refurbish these discarded corner boards for multiple reuses rather than single-use recycling. Now in its second phase, the program cleans and trims damaged boards down to shorter, usable sizes, allowing them to be resold to growers at roughly 50% the cost of new ones. By adopting these reused corner boards, growers not only dramatically slash their packaging expenses but also successfully bypass costly EPR fees entirely, Kalan says.
“There’s some nuances to it,” he says. “Some companies use specific types of boards, etc. It’s not going to be a fix for everybody, but for the majority of people it’s going to work. And down the road, we will figure out those fixes for those unique situations. But we’ve got to walk before we run.”
Upcoming EPR Forum
On June 5, Recirculated held an EPR Forum at Tarpy’s Roadhouse in Monterey, Calif., where sustainability representatives from companies including Taylor Farms, Church Brothers and Fresh Express gathered.
Kalan says key takeaways from the discussion included:
- Source reduction requirements under SB 54 are more significant than most anticipated. A 10% reduction in plastic packaging weight against a 2023 baseline is required by 2027, with all packaging recyclable or compostable by 2032.
- Fees are calculated based on material recyclability. Preliminary fee schedules have been released but remain broad. More specific guidance is expected as CAA program plans are published.
- Every packaging category must be reported — primary, secondary and transport packaging. The scope of data tracking required is substantial.
- The food safety exemption pathway exists but requires active industry advocacy to broaden. This is not automatic.
- Collective action matters. The conversation in the room made clear that a co-op or working group approach to compliance is worth revisiting. The right time and right framework can change outcomes.
- Engagement with the CAA is one of the most direct levers the produce industry has right now.
The June 5 forum was so impactful, says Kalan, that Recirculated has already committed to holding a more expansive EPR forum Aug. 21, again at Tarpy’s Roadhouse.
In addition to grower-packer-shippers and packaging companies, Kalan hopes retailers will attend as well.
“We will provide both an EPR update with a panel discussion followed by providing some product solutions that either eliminate or offset EPR fees,” he says.
While Kalan says more details will follow, anyone who wishes to attend can contact him at David.Kalan@recirculated.com.
