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Publications archive - Waste and recycling

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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Much of the material listed on these archived web pages has been superseded, or served a particular purpose at a particular time.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


15 The Wider Perspective

(Instead of a Discussion)

Composting is an agricultural activity, which is said to have been practised by Chinese farmers for millennia. The composting and beneficial use of non-agricultural, organic waste materials for crop production is also well established and has been described for example by Howard in 1940. However, interest in this concept was lost with the advance and widespread use of cheap synthetic fertilisers, and early research into the beneficial effects of compost (disease suppression) was abandoned prematurely in the 1960's (see Biala, 2001). The situation changed once again when landfill space became scarce and expensive, first of all in densely populated Western Europe, prompting MSW composting to be advocated as a means of waste minimisation.

In response to resistance against the use of poor quality MSW compost the concept of source separating garden and kitchen organics from the municipal waste stream and composting it for agricultural use was developed. It should be noted that this concept was developed at an agricultural faculty and did not originate from the waste management industry. Source separation of municipal garden and kitchen organics was first trialled and implemented in a rural town in Germany in 1983 and composting trials were conducted on a farm (Fricke et al., 1985). The initial concept envisaged that composting of municipal organics would take place on farms and that farmers would play a key role in processing and utilising the organic materials.

While the source separation and composting model was adopted very widely, in Germany it was in most cases not farmers who engaged in composting but rather local authorities and waste management companies. Referring to this situation Vogtmann (1999), the instigator of the source separation concept, called the development that led to large scale composting plants 'misguided' since, in his view, large composting operations are not as sound as smaller ones. According to his view, the development of organic resource management strategies should take an approach, which aims to ensure that composting facilities are ecologically sound, economically sound and socially sound in accordance with Local Agenda 21 goals. However, there are several other countries where, due to different political and economic conditions, on-farm composting of municipal and commercial organics plays a more dominant role in the processing of municipal organics (Biala and Henty, 2002).

In Australia, on-farm composting is gaining momentum (Biala, 2001b) and progress is being made with regard to the on-farm composting of manures from intensive livestock industries and by-products from food and fibre processing. Advances in this area were brought about by state and federally funded projects such as the 'Co-Composting Timber Residues and Feedlot Manure Project' (Potts and Casey, 1999) and the AGWISE Project that aimed at developing 'waste reuse strategies for rural development and sustainability' (Pittaway et al., 2001).

However, there are only few on-farm composting plants in Australia that process municipal organics. One such documented facility in Western Australia co-composts pig effluent with shredded garden organics (Gulliver, 2000). EcoRecycle Victoria provided funding to progress on-farm composting in Victoria but unfortunately the project was ill conceived and did little to advance on-farm composting and co-processing of municipal and agricultural organic residues (Pinegrow Products, 2000).

Overall, relatively few resources were directed towards improving waste management in rural and regional areas and the lack of appropriate recycling and resource recovery models for conditions in rural/regional communities (as outlined in Section 1) should not come as a surprise. This situation, in combination with potential waste management, environmental, social and economic benefits offered by on-farm composting of municipal organics, justified the establishment and testing of a resource recovery model for rural and regional areas that comprises the integrated collection of municipal and commercial organics and their subsequent processing (composting) and beneficial use at local farms.

This organics recycling model was evaluated by establishing the Highfields Organic Recycling Project. Overall, the project was very successful even though not all aspects could be realised (e.g. co-collection of municipal and commercial organics) and not everything turned out as desired (e.g. small bins and low presentation rate). Nevertheless, most results were positive and suggested that kerbside collection of organics in combination with on-farm composting was superior and offered more benefits than kerbside collection of co-mingled recyclables. In a planning scenario for 1,000 recycling services it was shown that the organics recycling scheme provided better efficiency and considerably improved waste management and environmental performance compared to the standard kerbside recycling service. Most importantly for local authorities, it also provided substantial savings, ranging between $8 and $13 per household per year.

Where appropriate, individual technical and financial results have been discussed already in the relevant sections of the report. Instead of repeating detailed technical discussion of the assessed organics recycling scheme, it appears more valuable to address overarching issues that impact on the likelihood of on-farm composting schemes being considered and, if proven advantageous, established as viable recycling and resource recovery schemes.

Local authorities will play a key role in deciding whether on-farm composting of municipal and commercial organics will become an accepted recycling option in rural and regional areas. Usually, municipal waste management and recycling services are provided either in-house or by members of the waste management industry. At this stage, farmers are not considered as potential service providers in this context, at best they are seen as potential end-users and buyers of recycled organic products, including biosolids. This has to change and farmers have to be recognised as potential full commercial partners in the recovery, processing and beneficial use of organic resources if on-farm composting is to succeed. This approach needs to be adopted if on-farm composting is to become part of a well-adapted and sustainable resource recovery and waste management strategy for rural/regional areas.

If this seems like a 'radical' new approach, it is exactly what Government is starting to demand since 'it is becoming increasingly obvious that the incremental change approach has not resulted in the significant change at the scale necessary to achieve sustainable development' (Government of Western Australia, 2002). In its Draft State Sustainability Strategy, the Western Australian Government (2002) requires all levels of Government to 'ensure that the way we govern is driving the transition to a sustainable future'.

A very clear political decision on the part of the local authority to involve the agricultural sector in the processing and use of organic resources was at the heart of most, if not all, on-farm composting schemes that were established in Germany. Political aims were to provide additional income for the ailing agricultural sector and to support local economies.

Despite a prolonged debate over whether large 'centralised' or small 'de-centralised' composting operations were preferential and simplified planning and licensing procedures for plants with a design capacity of less than 6,500 tonnes/year (tpa), not many on-farm composting operations for municipal and commercial organics were established in Germany. As shown by Biala and Henty (2002), this was due to a range of reasons, some of which may be also important for the development of on-farm composting in Australia:

  1. In general, farmers were not involved in waste management activities and therefore were often not considered as viable partners other than potential end-users.
  2. Generally, local authorities preferred 'complete solution packages' which combine kerbside collection, processing and marketing of organics as well as planning, building and financing of the composting plant. Only waste management companies could offer such packages.
  3. Composting became financially very attractive due to high gate fees. Farmers were not able to compete with waste management companies in the world of 'big business'.
  4. Contracts for the composting of municipal organics were decided through a competitive tendering process, which placed waste management companies at an advantage.
  5. Identical operating and licensing conditions for small and large as well as for on-farm and off-farm operations resulted in very high processing costs per tonne for small plants, making them unviable.
  6. The average farm size in Germany was relatively small. Consequently, farmers lacked often the capital needed to establish composting plants and they also may have lacked the land to utilise all produced compost on their own land.
  7. Farmers were unsure whether their tax status would change from 'Agricultural Operation', to 'Fully Commercial Enterprise', resulting in the loss of many tax concessions.

This list demonstrates that, if on-farm composting of municipal and commercial organics is the preferred rural/regional recycling scheme and if it is to become reality, farmers need support in achieving this goal. One way of providing support is by means of modifying licensing regulations for on-farm composting. In the UK, for example, on-farm composting is supported by means of licensing exemptions. The UK Environment Agency as regulating body provides a site licence exemption for on-farm composting operations if not more than 1,000 m3 are processed at any one time (equal to approximately 3,000 tpa of organic materials) and if all the produced compost is used on the farm. In Queensland, on-farm composting does not require a licence as long as this is not done for 'commercial gain', i.e. that the recycled organic products are not sold. Charging of a gate fee is not seen as 'commercial gain'. However, even if licensing regulations and conditions are relaxed for on-farm composting, environmental impacts still need to be kept at a minimum.

It becomes obvious from the above list that the main obligation in making on-farm composting a reality lies with local authorities. In their own interest they have to ensure that this option is considered and assessed. Since on-farm composting is a generic system that depends largely on local conditions and opportunities and that is not presented and promoted by large companies, local authorities may have to provide extra support for this approach. Once on-farm composting has been established as the preferred recycling option and a contract has been awarded, the situation should be no different than with any other waste management or recycling service provider.

Operational and contractual arrangements for on-farm composting schemes can vary widely to suit local conditions. The following general variations are possible:

Scale - Local
- Regional
Operator - Single farmer
- Several farmers
- Farming organisation
Investment - Public
- Private
- Public Private Partnership
Machinery - Available farm machinery
- New machinery
- Machinery dedicated to individual site
- Mobile machinery servicing several sites
Labour - Individual farm operation
- Several part-time farmers
Compost use - On-farm
- Sale

The most common arrangement is for individual farmers to be contracted by local authorities for the processing and use of its organic residues. However, opportunities exist for different arrangements as is shown in the following two examples from Germany.

1. District of Ebersberg

In this case the district council decided to engage 14 farmers to compost the organic residues of its 110,000 residents at 14 on-farm composting sites with a capacity of 650 tpa each (Jungwirth, 1992). Each farmer built and financed his own plant according to a standard design, which was a miniature version of a large scale composting operation. Farmers entered into a 15-year supply and processing contract with council. Even though some machinery was shared among the operators, the scheme turned out to be relatively expensive for the following reasons:

  1. Design, construction and regulatory requirements were identical to large-scale operations. This was inappropriate.
  2. Plants were too small to capture any economies of scale.
  3. Elimination of impurities had to be done manually due to the small scale of operations. This proved very costly.

2. District of Waldeck-Frankenberg

The District of Waldeck- Frankenberg also decided to involve farmers in the composting of its organic residues but went about it in a different way (Dersch and Emde, 1995). Key organisational data of this joint venture are outlined in Table 26. The district provided the land and the local waste management contractor financed and built two composting plants, one with a processing capacity of 6,500 tpa and the other with 16,000 tpa. Approximately 25 farmers satisfied most labour requirements (on a part-time basis). In addition, farmers provided some of the machinery inputs for the composting operation as well as for the shredding service that was provided for the 22 local authorities within the district. This example is not a true representation of on-farm composting but the scheme still provides income support for the agricultural sector and enhances the local economy.

Table 26 Organisational structures of organics processing in the District of Waldeck-Frankenberg (Germany)
Rural district comprising 22 local authorities and 150,000 residents
Two composting plants with design capacities of 6,500 and 16,000 tpa,
- sites provided by district council,
- finance and management provided by waste management company
4-5 agricultural contractors carry out shredding of green organics at 14 sites (2-3 days/week)
20 farmers share the work at the composting facilities and generate additional income during two or three days per week
Use of agricultural machinery is reimbursed separately
On average, 11,000 tonnes of compost are generated annually and supplied to the following markets:
40% agriculture,
30% landscaping industry,
20% home gardener and small quantities,
10% local authorities

For farmers, on-farm composting of municipal and commercial organics has to be a viable business proposition that covers all costs and allows for the usual profit margin. In return the farmer provides organics processing services and guarantees the beneficial use of all generated compost. To minimise marketing and transport costs, it is envisaged that all recycled organic products would be used on the farm. However, if income were generated through compost sales, it would reduce the gate fee charged for incoming material. The value of compost would be insufficient to reimburse the farmer for incurred investment and processing costs in a system where all generated compost is used at the farm. At best it could be argued to offset application costs but this would be a matter for negotiation between council and its contractor. Pittaway et al. (2001) reported that primary producers were reluctant to invest in time, labour and/or capital in the absence of objective information on the Net Present Value of the finished product.

Ensuring that all project partners received financial and other benefits was considered one of the key factors for success in establishing a 'Market Based System of Farm Composting of Food Waste' (CET, 2000). The overarching principle was to establish a market based organics recycling system without on-going subsidy that delivers economic and other benefits to all involved parties. 70 businesses (supermarkets, restaurants etc.), six waste transport companies and seven farms cooperated successfully in this organics recycling project that focused on commercial food organics.

Apart from ensuring economic benefits for all parties, the success of the project was also attributed to progressive state policies, semi-rural demographics in the project area and an interest in composting, or even better previous composting activity (CET, 2000). On the other hand, the following major potential risks for the establishment of on-farm composting schemes were identified during the project:

  1. lack of established infrastructure;
  2. lack of critical mass to make logistics and economics work; and
  3. need for quality control in separation and processing.

The need for critical mass was emphasised by declining processing costs at increasing plant capacities. The waste collection contractor also stressed the need for critical mass to make the collection viable. This demonstrates that, in order to boost collection yields and improve efficiency and economic performance, organics recycling schemes (and non-organic ones) should collect material from both residential and commercial premises.

Compared to the standard kerbside recycling of paper and packaging material, the proposed organics recycling scheme (kerbside collection and on-farm composting) seems to provide significant savings, which could be used to fund other recycling activities and hence achieve an overall superior outcome. One suggestion was to combine the kerbside collection of organics with a high-performance drop-off collection system for dry recyclables. However, unfortunately no planning data were available that would have allowed to predict establishment and operating costs, collection yields and efficiencies. While substantial information is available for kerbside collection schemes, no such data is available for community based drop-off recycling schemes. It has been suggested that the National Packaging Covenant Council should fund a study that provides key performance and planning data for drop-off recycling schemes. Representation will be made to signatories of the National Packaging Covenant, such as the Environmental Protection Agency in Queensland, to instigate the study and make the relevant data available to local authorities.

The 'Independent Assessment of Kerbside Recycling in Australia' (Nolan ITU, 2001) found that the collection and sorting of dry recyclables in regional areas results in net overall annual benefits of $29 per household. These are lower than in metropolitan areas ($46/hh/yr), which is mainly attributed to lower recycling yields in regional areas. The report notes that, in general, the financial costs increase and the environmental benefits decrease as the population density diminishes and the distance to markets increases.

The Nolan ITU (2001) report only assessed financial costs and environmental benefits of kerbside recycling systems for dry recyclables. It would be very interesting to carry out an identical assessment for organics recycling schemes and compare results to those obtained for standard kerbside recycling. As the National Packaging Covenant Council obviously has no interest in funding such a study, it would have to be commissioned by Federal or State Government bodies.