(D16) Biala, J. (2000) 'Putting a price on the production of compost', Materials Recycling Week, Vol. 175, No. 5, January 14 2000, 13 - 15.

It is undisputed that the agricultural use of organic waste derived compost is able to deliver a range of beneficial effects to the soil, crop and the farmer. However, on the downside of compost use, the issue of costs to the farmer associated with the purchase, transport and application of compost are often critical and pose reasons why many farmers find it uneconomic to utilise compost. Many potential users are unable or unwilling to pay the extra costs to purchase, transport and apply compost. But as source separation and composting develops, more possibilities are opening up.

Broadly speaking, the current system works in such a way that the composter who processes organic waste material charges the local authority or any other producer of organic waste material a gate fee which covers all associated costs and includes a profit margin, hence generating income for the composter. What is often not covered by the gate fee, it seems are the costs for marketing, transport and application of the compost, since it is anticipated that the farmer has to cover these costs.

Where the market is able and willing to absorb these costs the system works well and compost should, first of all be supplied to these markets. There is no dispute that compost use results in a range of beneficial effects, some of which can be expressed in monetary terms (nutrients, organic matter, potential disease suppression, tilth, reduced erosion etc.). Hence, compost should have a price. However, not all potential user groups are able or willing to pay the full value of the product. In the case of farmers this is mainly due to high additional costs associated with the use of compost (transport, application), the frequent need for additional nitrogen fertilisation in conventional agriculture and alternatives which are currently cheaper on a nutrient supply basis (chemical fertilisers).

However, as the UK will adopt more and more source separation and composting schemes, more and more compost will become available and markets other than the more lucrative landscaping or horticultural markets will have to be found. Clearly, agriculture is an obvious market for compost but nowhere near as easily accessible as is suggested by the fact that only approximately 1 per cent of the arable farming area in the UK is required to absorb all compost potentially available by 2020 (at an application rate of 25 t/ha which is the rate recommended according to good agricultural practice).

A similar figure was used in Germany in 1984 to demonstrate the huge potential of agriculture to absorb compost and to show that compost marketing should not be a problem. However, 16 years later, only approximately one third of the 5 million tonnes of compost is used in agriculture.

Generally, for farmers it does not make economic sense to use compost, at least not at costs of £191/ha. This is understandable if one knows that a typical high yielding arable farm (100 – 200 ha) has a surplus of £131/ha, after deducting all variable and fixed costs. If compost use does not show immediate returns most farmers are very reluctant to spend money for compost, particularly given the current economic climate for agriculture. And the question remains as to why farmers should pay part of the bill for the solution of mainly urban waste management problems? Shouldn’t the "polluter" or "user-pays-principle" be applied also in this case and the waste generator be asked to also cover transport and application costs, at least to the point where compost use is cost neutral for the farmer?

There is no question at all that the organic matter and nutrients contained in organic waste should be brought to a beneficial use and returned to the land. Currently, our urban areas are huge nutrient sinks and if the notion of sustainability is taken seriously this situation needs to be brought closer to equilibrium through the recycling of organic waste materials.

Over the past few years many British farmers have been facing increasing economic hardship. Rather than being a commodity which is uneconomic to use, compost in fact could be a saviour for some farmers and provide relieve from economic pressures. There are two fundamentally different ways in which this could be achieved.

This option has been discussed above and essentially means that waste management charges for generators of organic waste (householders, commerce and industry) cover not only the collection and processing costs but also a certain proportion of transport and application costs. Once compost use is made economically attractive for farmers, agricultural compost use may increase sharply and possibly result in considerable gains for the nation as a whole through a win-win situation. Farmers who are using compost can reduce their fertiliser input since compost generally supplies adequate Phosphorus, Potassium, Calcium, Magnesium and all micronutrients for most field crops.

Nitrogen supply however, is often considered inadequate for conventional farming and supplied additionally. Many trials have shown that fertilising regimes that combine organic and soluble fertilisers result in higher yields than when the two options are used exclusively. In any case, the farmer will experience a real reduction of production costs due to reduced fertiliser inputs and in addition gain a wide range of other than purely nutrient derived benefits which can not yet be quantified in monetary terms.

This option where waste management charges cover all costs to the farm gate or even to the field, would result in substantial agricultural compost use, accommodate the "polluter pays principle", solve a huge, predominantly urban waste management problem, prevent future environmental problems (landfill, incineration and agriculture) and associated costs and could therefore form the basis for a new rural - urban alliance for sustainability.

Currently, many farmers are actively looking to supplement their diminishing income – and on-farm composting can be one such option. Of course, farmers see the use of compost quite differently, depending on whether they merely have to pay for its purchase and application or whether they can also derive income from its production. At a recent meeting of farmers in Wiltshire, one presented his on-farm composting operation saying it’s his most profitable enterprise. The Environment Agency makes provision for on-farm composting by providing a site licence exemption if the operation does not process more than 1,000 m³ at any one time (equal to approximately 3,000 tonnes per year of waste material) and if all the produced compost is used on the farm. The Organic Resource Agency has assisted in the negotiations and establishment of several on-farm composting operations and is still involved in their on-going management.

It is obvious that on-farm composting has its legal and logistical limitations. However, on-farm composting can deliver many advantages, such as:

• facilitating the Government’s proximity principle,
• providing local solutions for local problems,
• reducing transport costs (waste and compost),
• excluding marketing costs and problems,
• ensuring the production of relatively high quality compost, since the end product will be applied to the farmers own fields,
• utilising farmers’ skills in managing biological /mechanical systems
• incurring relatively low processing costs by using the farm’s existing machinery and infrastructure

Therefore, on-farm composting can be the ideal solution for rural and semi-rural councils. Even a city with approximately 100,000 residents could easily have its organic waste fraction processed in an on-farm composting scheme. Only three or four farms surrounding the city would be needed to process the source separated organic waste materials. There are various ways in which the composting operations or the large machinery could be shared by farmers to keep operating costs at a minimum.

However, as with any other composting operation, the gate fee would have to cover processing costs and make the operation profitable for the farmer. In this case no extra expenses for transport, purchase or field application would have to be paid. Farmers who take up on-farm composting receive additional income rather than having to pay for the use of compost. This may improve their financial situation considerably and therefore prove to have the potential of becoming a driving force in rural-development schemes. The on-farm composting scenario seems like a smart way in which the urban population can support the farming community and, at the same time bring about major environmental and social gains while solving one of their own major problems in a very cost effective way. It is time to realise that compost has the potential to become the facilitator for a new rural – urban alliance for sustainability.