Department of the Environment

About us | Contact us | Publications

Settlements Header ImageSettlements Header ImageSettlements Header Image

Publications archive - Waste and recycling

Disclaimer

Key departmental publications, e.g. annual reports, budget papers and program guidelines are available in our online archive.

Much of the material listed on these archived web pages has been superseded, or served a particular purpose at a particular time. It may contain references to activities or policies that have no current application. Many archived documents may link to web pages that have moved or no longer exist, or may refer to other documents that are no longer available.

On-farm Composting of Municipal and Commercial Organics as an Environmentally and Socially SustainableResource Recovery Scheme for Rural Communities

June 2003,
Environment Australia


9 Costs of On-farm Composting

Unfortunately, the scale of the composting activities during the trial was too small to provide meaningful information about operating costs and economic outcomes for on-farm composting.

9.1 Cost Scenarios

Nevertheless, investment and processing costs were determined for three hypothetical on-farm composting operations that processed 1,000 tonnes (Scenario A), 5,000 tonnes (Scenario B) or 10,000 tonnes (Scenario C) of municipal / commercial organics per year. Each of these imaginary composting operations is briefly outlined below. Turning of windrows with a tractor mounted front-end loader (similar to trial operation, Scenario A-1) or a dedicated tractor driven windrow turner (Scenario A-2) was compared for the smallest operation.

Scenario A: Composting of 1,000 t/year
Material processed: 1,000 t/year municipal / commercial organics
200 t/year farm manures
Machinery used: A-1: Tractor front-end loader with retrofitted bucket (0.75 m3)
A-2: Tractor driven windrow turner (400 m3/h)
Spatial requirements: A-1: 2,730 m2 hardstand for composting and storage
A-2: 2,150 m2 hardstand for composting and storage
Composting: Open windrow composting
A-1: 26-week composting cycle
Turning interval once every two weeks
A-2: 12 week composting cycle
Turning interval: once per week during week 1-6
once per fortnight during week 7-12
Loss of volume during composting: 60.5%
Loss of weight during composting: 55.7%
Screening: Finished compost is not screened
Finished compost: Volume: 1,063 m3/year
Tonnage: 531 t/year
Scenario B: Composting of 5,000 t/year
Material processed: 5,000 t/year municipal / commercial organics
500 t/year farm manures
Machinery used: Tractor driven windrow turner (400 m3/h) and tractor with retrofitted front-end loader (0.75 m3 bucket) to move material
Spatial requirements: 6,230 m2 hardstand for composting and storage
Composting: Open windrow composting
12 week composting cycle
Turning interval: once per week during week 1-6
once per fortnight during week 7-12
Loss of volume during composting: 60.5%
Loss of weight during composting: 55.7%
Screening: Finished compost is not screened
Finished compost: Volume: 4,734 m3/year
Tonnage: 2,367 t/year
Scenario C: Composting of 10,000 t/year
Material processed: 10,000 t/year municipal/ commercial organics
1,000 t/year farm manures
Machinery used: Tractor driven windrow turner (400 m3/h) and second-hand front-end loader to move material
Spatial requirements: 11,500 m2 hardstand for composting and storage
Composting: Open windrow composting
12 week composting cycle
Turning interval: once per week during week 1-6
once per fortnight during week 7-12
Loss of volume during composting: 60.5%
Loss of weight during composting: 55.7%
Screening: Finished compost is not screened
Finished compost: Volume: 9,468 m3/year
Tonnage: 4,734 t/year

9.1.1 Investment costs

Establishing a composting operation incurs up-front investment costs for civil construction, including planning and design, and purchase of machinery for processing and handling. Purchase or leasing costs for land are not considered here. An overview of investment costs for the considered composting operations is provided in Table 9.

Table 9 Investment costs ($) covering site works and equipment for on-farm composting operations with various processing capacities
Item / Service
Scenario / Design capacity
A-1
1,200 t/yr
A-2
1,200 t/yr
B
5,500 t/yr
C
11,000 t/yr
Civil construction *
21,617
17,232
48,375
88,464
Windrow turner
-
35,000
35,000
35,000
Retrofitted bucket + misc.
3,500
3,500
4,000
2,000
Loader (second-hand)
-
-
-
50,000
Total investment
25,117
55,732
87,375
175,464
Investment / t capacity
20.93
46.44
15.80
15.95
* Mainly hardstand for composting and storage, incl. planning and design

Naturally, investment costs increase with increasing plant capacity. The small plant with a design capacity of 1,200 tonnes per year requires an investment of approximately $25,000 or more than $55,000 if a windrow turner is part of the operation. The larger plants require about $87,000 (5,500 t/yr) or more than $175,000 (11,000 t/yr) to establish. However, investment costs per tonne design capacity are lowest for the large plants at less than $16 per tonne.

9.1.2 Operating costs

Operating costs cover fixed and variable processing costs that are recurring. Operating costs for composting operations usually account for labour costs, machinery operating costs (including fuel and energy), maintenance, administration as well as depreciation and finance costs.

Operating costs for the hypothetical on-farm composting operations are presented on the following pages (Table 10 to Table 13). It should be noted that neither size reduction (shredding) of the feedstock nor screening of the composted material are part of operational procedures. Feedstock quality determines whether these two processing steps can be omitted from the composting operation. Shredding and screening is not necessary if the feedstock contains only few or no large wooden components and few impurities. Processing costs will increase considerably if either or both of these processing steps become necessary. Costs for shredding of garden organics in South-East Queensland vary between approximately $6.50 and $7.50 per m3 processed material.

Table 10 Operating costs ($) for on-farm composting operation (1,200 t/yr), windrows turned with tractor mounted front-end loader (Scenario A-1)
Costs Item Specifications Operating costs
Investment
Civil construction 18,216.00 2530 m2 compost hardstand x $7.2  
  1,440.00 200 m2 storage hardstand x $7.2  
  1,000.00 Miscellaneous  
Planning/design costs 960.80 5 % of civil construction  
Equipment 2,500.00 Retrofitted 0.75 m3 tractor bucket  
  1,000.00 Various small items  
Maintenance Civil construction 1 % of investments 216.17
  Equipment 10 % of investment 250.00
  Lubricants etc Lump sum 100.00
  Insurance 0.1 % of total investments 25.12
  Subtotal, maintenance   591.28
Personnel Farm labour: 9 h/wk $18.75 / h 8,775.00
  Site manager: 0.5 h/wk $30.00 / h 780.00
  Subtotal, personnel   9,555.00
Operation Tractor 7 h/week (364h @ $15/h) 5,460.00
  Subtotal, tractor operation   5,460.00
Other costs Disposal of impurities   500.00
  Administration   1,000.00
  Subtotal, other costs   1,500.00
Depreciation/Finance Civil construction 20 yr, 6% interest 1,885.00
  Tractor (pro rata 31%) 12 yr, 6 % interest 2,588.00
  Subtotal, depreciation & finance   4,473.00
Total annual operating costs   21,579.28
Costs per tonne Total input (1,200 t)   17.98
  Municipal organics (1,000 t)   21.58
Costs per cubic meter of generated compost (1,063 m3) 20.30
Note: Labour costs include 25% on-costs
Assumed value of new tractor = $70,000
Table 11 Operating costs ($) for on-farm composting operation (1,200 t/yr), windrows turned with tractor driven windrow turner (Scenario A-2)
Costs Item Specifications Operating costs
Investment      
Civil construction 14,040.00 1950 m2 compost hardstand x $7.2  
  1,440.00 200 m2 storage hardstand x $7.2  
  1,000.00 Miscellaneous  
Planning/design costs 752.00 5 % of civil construction  
Equipment 35,000.00 Tractor driven windrow turner  
  2,500.00 Retrofitted 0.75 m3 loader bucket  
  1,000.00 Various small items  
Maintenance Civil construction 1 % of investments 172.32
  Equipment 10 % of investment 3,750.00
  Lubricants etc Lump sum 100.00
  Insurance 0.1 % of total investments 53.23
  Subtotal, maintenance   4,075.55
Personnel Farm labour: 4.1 h/wk $18.75 / h 3,997.50
  Site manager: 0.5 h/wk $30.00 / h 780.00
  Subtotal, personnel   4,777.50
Operation Tractor 3 h/week (156h @ $15/h) 2,340.00
  Subtotal, tractor operation   2,340.00
Other costs Disposal of impurities   500.00
  Administration   1,000.00
  Subtotal, other costs   1,500.00
Depreciation/Finance Civil construction 20 yr, 6% interest 1,437.00
  Windrow turner 7 yr, 6 % interest 6,270.00
  Tractor (pro rata 10%) 12 yr, 6 % interest 834.90
  Subtotal, depreciation & finance   8,541.90
Total annual operating costs     21,234.95
Costs per tonne Total input (1,200 t)   17.70
  Municipal organics (1,000 t)   21.23
Costs per cubic meter of generated compost (1,063 m3) 19.98
Note: Labour costs include 25% on-costs
Assumed value of new tractor = $70,000
Table 12 Operating costs ($) for on-farm composting operation (5,500 t/yr), windrows turned with tractor driven windrow turner (Scenario B)
Costs Item Specifications Operating costs
Investment      
Civil construction 38,880.00 5400 m2 compost hardstand x $7.2  
5,976.00 830 m2 storage hardstand x $7.2  
  1,500.00 Miscellaneous  
Planning/design costs 2,019.00 5 % of civil construction  
Equipment 35,000.00 Tractor driven windrow turner  
  2,500.00 Retrofitted 0.75 m3 loader bucket  
  1,500.00 Various small items  
Maintenance Civil construction 1 % of investments 483.75
  Equipment 10 % of investment 3,750.00
  Lubricants etc Lump sum 150.00
  Insurance 0.1 % of total investments 84.88
  Subtotal, maintenance   4,468.63
Personnel Farm labour: 18 h/wk $18.75 / h 17,550.00
  Site manager: 1.5 h/wk $30.00 / h 2,340.00
  Subtotal, personnel   19,890.00
Operation Tractor 11 h/week (572h @ $15/h) 8,580.00
  Subtotal, tractor operation   8,580.00
Other costs Disposal of impurities   750.00
  Administration   1,300.00
  Subtotal, other costs   2,050.00
Depreciation/Finance Civil construction 20 yr, 6% interest 4,218.00
  Windrow turner 7 yr, 6 % interest 6,270.00
  Tractor (pro rata 31%) 12 yr, 6 % interest 2,558.00
  Subtotal, depreciation & finance   13,046.00
Total annual operating costs     48,034.63
Costs per tonne Total input (5,500 t)   8.73
  Municipal organics (5,000 t)   9.61
Costs per cubic meter of generated compost (4,700 m3) 10.22
Note: Labour costs include 25% on-costs
Assumed value of new tractor = $70,000
Table 13 Operating costs ($) for on-farm composting operation (11,000 t/yr), use of tractor driven windrow turner and front-end loader (Scenario C)
Costs Item Specifications Operating costs
Investment      
Civil construction 71,280.00 9900 m2 compost hardstand x $7.2  
  11,520.00 1600 m2 storage hardstand x $7.2  
  2,000.00 Miscellaneous  
Planning/design costs 3,664.00 5 % of civil construction  
Equipment 35,000.00 Tractor driven windrow turner  
  50,000.00 Second hand loader  
  2,000.00 Various small items  
Maintenance Civil construction 1 % of investments 884.64
  Equipment 10 % of investment 8,500.00
  Lubricants etc Lump sum 300.00
  Insurance 0.1 % of total investments 125.46
  Subtotal, maintenance   9,810.10
Personnel Farm labour: 29.5 h/wk $18.75 / h 28,762.50
  Site manager: 2.5 h/wk $30.00 / h 3,900.00
  Subtotal, personnel   32,662.50
Operation Tractor 10 h/week (520h @ $15/h) 7,800.00
  Loader 5 h/week (260h @ $35/h) 9,100.00
  Subtotal, tractor operation   16,900.00
Other costs Disposal of impurities   1,000.00
  Administration   3,000.00
  Subtotal, other costs   4,000.00
Depreciation/Finance Civil construction 20 yr, 6% interest 7,713.00
  Windrow turner 7 yr, 6 % interest 6,270.00
  Tractor (pro rata 52%) 12 yr, 6 % interest 4,341.00
  Loader (pro rata 50%) 10 yr, 6 % interest 3,397.00
  Subtotal, depreciation & finance   21,721.00
Total annual operating costs     85,093.60
Costs per tonne Total input (11,000 t)   7.74
  Municipal organics (10,000 t)   8.51
Costs per cubic meter of generated compost (9,400 m3) 9.05
Note: Labour costs include 25% on-costs
Assumed value of new tractor = $70,000

Processing costs for the hypothetical composting operations are summarised in Table 14.

Table 14 Summary of processing costs ($) for on-farm composting operations with various processing capacities
Criteria
Scenario / Design capacity
 
A-1
1,200 t/yr
A-2
1,200 t/yr
B
5,500 t/yr
C
11,000 t/yr
Total processing costs / year
21,579
21,235
48,035
85,094
Costs / t municipal organics
21.58
21.23
9.61
8.51
Costs / t processed organics
17.98
17.70
8.73
7.74
Costs / m3 generated compost
20.30
19.98
10.22
9.05

Table 14 shows that processing costs for the small operation (1,200 t/yr) differ very little regardless of whether the windrows are turned with a tractor-mounted front end loader or with a dedicated windrow turner. This is based on the assumption that the composting process takes considerably longer (26 weeks) if the unshredded material is not turned and broken up with a windrow turner. Consequently, spatial requirements are higher and the hardstand area has to be larger. Processing costs for municipal organics in both small facilities are above $21 per tonne. Processing costs decrease considerably with increasing plant capacity. Processing costs in the medium size operation (5,500 t/yr) amount to $9.61 per tonne and in the large plant (11,000 t/yr) to $8.51 per tonne, if all costs of the operation are borne by the processed municipal organic materials. These processing costs however, do not include a profit margin. If a return on investment of 10% is expected, processing costs will increase between $1.75 and $5.57 per tonne of municipal organics processed (Table 15). Consequently, gate fees for the processing of municipal / commercial organics at the hypothetical on-farm composting operations range between $10.26 and $11.36 per tonne for the large and medium size operation, respectively and between $24 and $26.80 per tonne for the small plant.

Table 15 Gate fees ($/t) for municipal organics processed at on-farm composting operations with various processing capacities
Item / Service
Scenario / Design capacity
 
A-1
1,200 t/yr
A-2
1,200 t/yr
B
5,500 t/yr
C
11,000 t/yr
Total investment
25,117
55,732
87,375
175,464
Processing costs per tonne municipal organics
21.58
21.23
9.61
8.51
Return on investment (10%) per tonne municipal organics
2.51
5.57
1.75
1.75
Required gate fee per tonne municipal organics
24.09
26.80
11.36
10.26

Presented production costs are similar to those identified for the on-site processing of industrial by-products by means of covered windrow composting with a tractor driven turner (Biala, 2002). In that case processing costs ranged between approximately $19 per tonne if 3,950 tonnes/year were processed and about $12.50 per tonne if more than 13,000 tonnes were composted each year.

Potts and Casey (1999) also presented comparable production costs for the co-composting of feedlot manure and sawdust, even though their figures were based on different premises (purchase of feedstock, screening, no hardstand, no windrow turner). They determined the break-even prices for the sale of compost to be $24.98 per cubic meter if 100 tonnes of material were composted and $12.45 per cubic meter if 10,000 tonnes were processed. In the above-presented scenarios, production costs ranged between $9.05 and $20.30 per cubic meter.

A range of case studies of on-farm composting operations in the US demonstrated that an economic assessment and comparison was difficult due to their diversity in size, management, level of investment, input materials, end-use, etc. (Rynk, 2001). Examples of compost production costs per cubic meter were estimated to amount to AU$ 7.88, $19.85 and $31.67 for three surveyed operations. Overall, Rynk (2001) concluded that 'based on the information compiled, the economics of on-farm composting generally appear to be positive'.

On-farm composting schemes are set up in such a way that the farmer can derive additional income by providing composting services to the community. On-farm composting of municipal / commercial organics, as any other commercial composting operation, has to cover processing costs and be profitable either through gate fees or sales revenue (or a mixture of the two). In the presented cases it is assumed that all generated compost is utilised within the farm, saving on marketing and transport costs. However, this means that all costs associated with the processing of municipal / commercial organics have to be covered by imposed gate fees.

Costs associated with field application of compost are not considered here. Data provided by Biala and Wynen (1998) suggest that application costs for compost can vary between $3.50 and $9 per tonne. However, if small quantities of compost are spread with farm machinery, application costs may exceed $10 per tonne and if compost is applied directly from the transport truck, application costs can be as low as $2 per tonne. Arkwood (2003) suggests that loading, transport and application of animal manures incur costs between $6 and $12 per tonne.