Eco Landuse Systems Pty Ltd 
e-mail: biala@optusnet.com.au website www.elspl.com.au
(D25) Biala, J. and Mueller, W.
(2000) 'On-farm composting of organics - a business opportunity for farmers
Johannes Biala, The Organic Force
Executive summary
On-farm composting is not widely used yet as a tool for the appropriate management of agricultural and non-agricultural organic residues. This situation is likely to change in the future primarily due to stricter legal environmental and food safety requirements but also due to the recognition of business opportunities in the processing of organic residues and the sale of compost products. On-farm composting provides for very flexible contractual arrangements among involved parties.
So far,
the agricultural composting and use of municipal and commercial organic
residues seems under-utilised despite the benefits it delivers for waste
management, the environment and the community as well as for the farmer. A
current research project in Crows Nest (QLD) aims to develop a waste management
strategy for rural communities that includes on-farm composting for the
processing of municipal and commercial organics. The processing of organic
residues through on-farm composting can alleviate the common ‘marketing’
problem for compost.
Currently there is very little tangible information available on the economics of on-farm composting operations in Australia. More research and information is required in this field to facilitate adequate planning.
Introduction
Although farm-yard manure has always been one of the principal means of replenishing soil losses, even now the methods by which this substance is prepared are nothing short of deplorable. The making of farm-yard manure is the weakest link in the agriculture of Western countries.
- Sir Albert Howard, 1943
(Quoted in [1])
The above quote
of Sir Howard seems to be as true today as ever. We have arrived at a situation
where the agricultural and food processing sectors produce the bulk of our
national ‘waste’ stream. Examples of two million tonnes of manure being
produced per year on the Eastern Darling Downs [2] and the production of 40 million chicken and their excreta per annum in the Perth region
[3] are a case in point. The agricultural
paradigm shift from ‘mixed farming’ to ‘industry’ that relies predominantly on
foodstuffs from external sources resulted also in a changed attitude towards
manures. Rather than being an asset and used to maintain farm productivity,
animal manures from large-scale intensive livestock units have often become a
liability posing management problems and having the potential of causing
serious detrimental environmental effects. This is particularly the case where
insufficient land is available for manure application in line with good
agricultural practice.
It should be
expected that intensive livestock and other agro-industrial units have to
manage and process their organic waste materials adequately just like any other
industrial operation. If other businesses, i.e. farmers and growers are
expected to use such products as input materials, they have to be of a
sufficiently high quality standard.
The biological processing (e.g. composting or anaerobic digestion) of organic residues can reduce environmental and health risks and enhance the beneficial re-use of agricultural and non-agricultural organic resources. If these activities are conducted on-farm, they can also provide a business opportunity for farmers. Below, various aspects and examples of on-farm composting operations are presented.
Drivers
for changes in the handling and processing of organic residues
In many instances, existing handling and ‘disposal’ procedures for animal manures and other organic residues have already changed substantially or will d o so in the future for any of the following reasons:
Existing re-use and disposal paths cease
to exist or become unviable
In South Australia for example, grape marc has
become a major problem for wineries because of diminished demand for secondary
processing [4]. The broiler industry in South-East Queensland has to look for
other means of disposing its chicken mortalities after the rendering plant
burned down and now refuses to take in chicken after re-opening.
Voluntary action to prevent hazards or
nuisance
In areas in Western Australia where chicken
industries are concentrated, a health threat for animals, primarily cattle and
horses and a nuisance problem for residents developed through infestations of
the stable fly. Research revealed that stable fly infestations are mainly due
to the outdoor storage and more importantly land application of raw chicken
litter under moist conditions and that this was a key component in the stable
fly breeding cycle [3]. This important finding provides a potential management
tool for the control of the stable fly infestations through adequate processing
of the chicken litter prior to land application.
Organic farmers are required that all manures from both certified and uncertified sources shall be composted prior to use, preferably including also the farmers own manure [5,6]. It is emphasised that issues of end product food safety shall guide decision making in relation to manure use and handling at all times.
Legal requirements
Overwhelmingly, changes to the handling and
disposal/re-use of organic residues are brought about by legal requirements,
which are introduced primarily to prevent and minimise adverse environmental
effects. However, food safety and consumer protection aspects become also
increasingly important issues. In Queensland for example the operation of
feedlots and piggeries is classified as an ‘Environmentally Relevant Activity’,
which require a license. The Department of Primary Industries assesses
applications, establishes operating conditions and monitors compliance on
behalf of the EPA. This includes not only the handling and processing of organics
but also the appropriate use of such materials (e.g. nutrient budget). However,
as soon as external organic residues are accepted for co-composting on a farm,
e.g. sawdust or shredded garden organics as bulking agents, the
responsibilities become ill defined and still have to be worked out.
It can be assumed that each State has
produced industry specific manure (effluent) management and handling
guidelines. However, the Victorian Department of Natural Resources and
Environment (NRE) are only just developing comprehensive Guidelines for Manure
Management, which apply across the board to all types of manures. The
Guidelines aim to provide technical guidance in the following areas:
Recommended manure uses based on Grading according to pathogen risks, monitoring
manure for residues, treatment, stockpiling/storage, transport, transfer of
ownership, site selection for land application and land application. The draft
guidelines require that the grading and
use of manure must be based on current scientific knowledge and that a risk
management approach to environment, food safety and livestock health is applied
[7]. While heavy metals and therapeutic compounds are not seen as a major risk
factor, pathogens are. Therefore, one of the centrepieces of the proposed
guidelines was the grading of manures according to pathogen risks and the
establishment of withholding periods (Table 1). This section however is no longer contained in the Draft Guidelines
due to the current lack of scientific knowledge on these issues. The Victorian
Department therefore called on the various industries to undertake relevant
research and pledged to re-assess the situation in three years time. Even
though the manure grading according to pathogen risks and withholding periods
are no longer part of the proposed Victorian Guidelines for Manure Management,
it is a clear sign of things to come.
Recognition of business opportunities
The situation is considered ideal when the
appropriate handling, processing and re-use / sale of animal manures and
organic residues translates into a business opportunity for farmers. This
implies that additional handling and processing cost are covered and income can
be generated. Nevertheless, from a whole business point of view it may also be
a wise business decision to adopt for example composting in order to comply
with certain regulations and prevent problems with regulatory authorities, even
if costs are not recovered directly through the sale or use of the composted
product.
Table 1: Grading of manures according to pathogen risk, Draft Guideline for Manure Management [7]
Grading manures according to
pathogen risks.
a. As there is
a direct link between manure pathogen levels and risks to food and livestock
safety when manure is used on pastures and food crops in certain circumstances,
grading of manures in accordance with pathogen levels is supported.
b. T1 grade
manure: A key principle is to provide for a
grade of manure which has no food safety or odour based restrictions on agricultural
uses.
c. T2 grade
manure: It is proposed that there be three
pathogen-based grades with T2 forming the intermediate grade (intermediate
risk). T2 can be characterised as
having very low pathogen levels with some pathogen regrowth potential. Some controls or agricultural use
restrictions may be necessary.
d. Certification
of T1 and T2 grades by composters and users: As a principle, the processing of both T1 and T2
manures should be accompanied by recognised HACCP programs to authenticate the
grades and provide assurance to consumers of the food safety aspects.
e. T3 grade
manure: It is proposed that there
be one further grade, T3, covering all other manures that do not achieve either
a T1 or T2 microbiological standard, or have not been independently certified
as either T1 or T2. It may be necessary
to apply controls and/or agricultural use restrictions to T3 grades in some
circumstances.
f.
Length of withholding periods: The length of withholding periods for T2 and
T3 manures is likely to depend on pathogen die off data and intended end-use
and will be determined. The pathogens of concern will be identified.
g. T3 manure
use controls on pastures: Particularly
where faeces is introduced from outside the grazing system, there is a
potential for introduction and build-up of new pathogens. For example, exposure of a dairy herd to T3
pig, poultry, feedlot manures (or even the manure of a different dairy herd),
imposes a risk to livestock health and food safety. Where potentially unacceptable risks are posed, controls or
withholding periods are appropriate for the application of T3 pig or poultry
manure to pastures.
h. T3 manure risk
factors that affect withholding periods or other required controls or
agricultural use restrictions include (but are not limited to):
§
situations where a food producing animal is exposed to
faeces from a different herd/species;
§
the period of time between application and
harvest/grazing;
§
the likelihood of the edible portion coming into contact
with the manure;
§
the type of pathogen present in the manure;
§
cooking or processing which will eliminate any pathogens.
Organisational structures
Origin of input material
According
to the origin of the manures and organic residues, processing on-farm can be
distinguished as follows:
1.
manures
and agricultural residues originating solely from the farm’s own agricultural
activities
2.
co-composting
of manures / agricultural residues from internal and external sources and
possibly also incorporating municipal and commercial organic residues;
3.
processing
of organic materials that originate solely from external sources.
Brian
Barrett [8] provided an example of the latter in the description of his on-farm
composting operation (Kyneton Compost), where he co-composts liquid food wastes
and sawdust for his organic beef farm and also external sale.
Operation and ownership
As far as
the operation and ownership of on-farm composting enterprises are concerned
many different arrangements are possible and can be negotiated freely between
involved parties. With on-farm composting operations it is common that the
farmer owns the site and equipment and is the operator also. Hence, the farmer
carries all risks and takes the profits. However, other arrangements, which
generally involve subcontracting and joint ventures are also possible. It is
not uncommon that subcontractors are responsible for the handling of manures
and the subsequent on-farm composting operation. Such arrangements are in place
for example in some feedlots in Queensland, a piggery in Western Australia
(co-composting with garden organics, [9]) and some of Southcorp’s vineries in
South Australia (co-composting of grape marc and chicken litter [4]).
Financial
arrangements among partners can vary anywhere from the payment of a service fee
if the farmer retains all of the compost to the payment of a gate fee by the
farmer if the contractor is solely responsible for the composting operation and
carries the risk of marketing the end product.
Joint
ventures are also possible but are more likely where on-farm composting
involves the provision of composting services for local authorities. Such
schemes are popular in Austria, Switzerland and the UK (until recently).
Municipal garden and kitchen organics are either taken to one or more farms
where they are composted or one or more farmers process the organic materials
at the local composting site. Assistance is often provided to establish the
on-farm facility through capital grants and/or long-term contracts. In one case
a joint venture saw the local authority provide the site for an enclosed
composting plant, a waste management company built it and a group of 20 – 25
farmers provide the labour force (each part-time on a 1-3 day/week roster) and
used some of their machinery to operate the plant.
Improved environmental and social sustainability
for rural communities
As shown above, on-farm composting can be used not only for the processing of agricultural by-products but likewise for the processing of municipal and commercial organic residues. Such schemes in fact are able to deliver substantial environmental and social benefits, particularly for rural communities.
Recycling schemes in rural communities were often adopted from urban centres and hence focused primarily on the collection of dry recyclables. However, such schemes may not necessarily represent the best option for rural communities and may not make best use of limited resources. The transportation of dry recyclables to distant processing plants is expensive, the reduction of the municipal waste stream is limited and the reduction of negative effects caused by landfilling in non-engineered rural ‘tips’ is minimal. Rural and semi-rural communities need to take a fresh look at their recycling and waste management schemes and develop strategies that are well adapted to their circumstances and also benefit their own community. The segregation of municipal and commercial organics and their subsequent processing and use by local farmers represents such a recycling and resource recovery scheme that is well-adapted and appropriate for rural communities. On-farm composting of municipal and commercial organics provides a broad range of benefits:
Waste
management benefits
· The recycling of organics diverts the single largest fraction in the domestic waste stream from being landfilled, hence has the highest potential for waste reduction and the best chance of being cost efficient
· The diversion of organics from the waste stream reduces some of the most environmentally detrimental effects of landfilling, methane and leachate emissions, which are generally unabated in non-engineered rural landfills.
· Relatively low organics processing costs through the use of existing machinery and infrastructure
· Ensuring the production of high quality compost that will meet the user’s specific needs since the end product will be applied to the fields of the compost producer (farmer)
· Avoidance of compost marketing costs and marketing problems since the farmer will guarantee to use the finished product
Environmental
benefits
· Recovery and beneficial use of an otherwise wasted resource
· Reduction of methane and leachate emissions from rural ‘tips’
· Reduced need for transportation of organic input materials and finished products due to the close proximity of collection areas, processing site and receiving farmland.
· Beneficial effects of compost use on soil fertility and productivity and hence reduced reliance on external farm inputs
Social/community
benefits
· Establishment of resource recovery scheme that is well-adapted for rural communities
· Money spent on the on-farm processing of organics stays within the community and provides support for the local economy
· The on-farm composting of organics provides a business opportunity for the agricultural sector
Benefits for the farmer (composter)
· Opportunity to generate supplementary income
· Opportunity to make use of available machinery and infrastructure
· Use of “free” compost
· Advantage through the beneficial effects of compost use, some of which may have a direct cost reduction or yield effect (e.g. nutrient content, improved water holding capacity)
· Savings through reduced need for external inputs (fertiliser)
On-farm composting schemes provide local solutions for local problems and they make use of farmers’ existing skills in managing biological / mechanical systems. Therefore, on-farm composting can be the ideal solution for rural and semi-rural councils. Even regional centres with 100,000 people can easily process their organic waste fraction through on-farm composting schemes. If more than one farm and more than one farmer are involved, there are various ways in which farmers can share large machinery in order to keep operating costs at a minimum or how several farmers could jointly operate and run a larger composting facility.
The Federal Department for the Environment (Environment Australia) has recognised the potential benefits on-farm composting schemes can deliver in improving resource recovery and waste management in rural areas. Therefore, it supports a research project that seeks to develop and implement an environmentally and socially sustainable resource recovery scheme for rural communities. The project will be realised in the Shire of Crows Nest, which is located approximately 170 km WNW of Brisbane.
The project encompasses the development of a strategy for the integrated collection and processing of municipal and commercial organics as well as locally available biosolids and septic waste. Subsequent to public consultation and education the strategy will be implemented and the on-farm composting operations will be planned according to the types and quantities of organics received. The composting operation as well as the input/output material will be monitored. Costs and benefits of the entire organic resource recovery scheme will be determined from the point of view of the council, the community, the farmer and the environment.
This pilot project will have value and be
useful for all rural communities in Australia by developing and showing models
and guide-lines for the collection, processing and use of organics in rural
areas.
Compost use and marketing
Ever since I became involved in composting
and compost use in Australia, the single biggest problem was the lack of
markets for recycled and composted organic products – and it still is not
resolved. Once the easily accessible but limited urban markets are satisfied,
compost producers turn their marketing efforts to farmers and growers in rural
areas. However, farmers are generally not very willing to pay the costs to
cover purchase, transport and application of recycled organic products.
However, farmers see the use of compost quite differently, depending on whether
they are asked to pay for its purchase and application or whether they can
derive income from its production and still have a valuable product they can
use.
Compost
marketing costs can be avoided in cases where gate fees cover all processing costs
and where the end product is used solely on-farm. Where the end product is
marketed externally, on-farm use can provide a buffer and prevent the build-up
of stockpiles. Contract on-farm composting at intensive livestock units will
most likely require intensive marketing efforts to sell the generated products.
This can create increased difficulties for the marketing of urban recycled
organic products in agricultural markets.
Economics
On-farm composting, 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). Therefore, farmers who take up on-farm composting should receive additional income. Cost and benefits, hence profitability are more difficult to determine where no direct income from gate fees or sales is generated. In such cases, i.e. where manure and/or agricultural by-products are composted and used solely on the farm, benefits have to be gained exclusively through improved soil fertility, water use efficiency and yields induced by the use of compost.
There is
only very little detailed information available as far as the economics of
on-farm composting are concerned, and even less with an Australian background.
On the other hand, considerable information is available from Europe but
generally, regulations, conditions and gate fees are completely different to
those encountered here. However, the fact that on-farm composting operations
such as Kyneton Compost in Victoria, Custom Compost in Western Australia and
Envirorganics in Queensland have been operating for several years now (at
least) indicates that their businesses are sound and viable.
It can be
expected that the forthcoming final report of the AGWISE project (aims to
develop viable organic waste re-use strategies for the QLD Murray-Darling Basin
[10] will provide economic data on the composting of manures and the above
mentioned project in Crows Nest will gather data on the composting of municipal
and commercial organics in a farming environment.
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. [11]. Examples of compost production costs per cubic meter were estimated to amount to US$ 5.2, 13.1 and 20.9 for three surveyed operations, while their sales prices per cubic meter of compost ranged between US$ 16 – 20, 21 – 31 and 35 – 46, respectively. Overall, the author concludes that ‘based on the information compiled, the economics of on-farm composting generally appear to be positive’.
Conclusion
In
Australia, on-farm composting is still in its infancy but gaining momentum. It
is likely that legal requirements concerning environmental and food safety
aspects of manure management will result in an increase in on-farm composting
operations. So far, the agricultural composting and use of municipal and
commercial organic residues seems under-utilised despite the benefits it
delivers for waste management, the environment and the community as well as for
the farmer.
Existing
on-farm composting operations in Australia and even more so overseas indicate
that these businesses are sound and viable. However, currently there is very
little tangible information available on the economics of on-farm composting
operations and it is not possible to transpose the economics of overseas
operations to Australian conditions, particularly not from Europe. The AGWISE
project, which focused on manure processing, and the Crows Nest project which
investigates the on-farm composting of municipal and commercial organics should
provide detailed technical and economic data and hence facilitate proper
planning (including business planning) for on-farm composting operations.
References
1.
Sims
F, Fletcher Sims’ Compost, Acres U.S.A. Publishers, Kansas, USA, 1993
2.
Schuster
M, From farm to industry: addressing the challenges and opportunities of
‘waste’, AGWISE Organic Waste Forum, p 6 - 8, The University of Southern
Queensland, Toowoomba, 1999
3. Hofstede H, Towards sustainable chicken litter management in Western Australia, ORBIT Magazine, Issue 1, ORBIT Assocition, Weimar, Germany, 2001, http://www.orbit-online.net/magazine
4.
Wadewitz
P, pers. comm., Peat & Soils, Willunga, SA, 2001
5.
Biological
Farmers of Australia, Standard Organic and Bio-dynamic Produce, Version
3, Biological Farmers of Australia Co-op Ltd, Toowoomba, QLD, 2000
6.
National Association for Sustainable
Agriculture, Australia, The Standards for Organic Agricultural Production,
amended and reprinted, National Association for Sustainable Agriculture,
Australia Ltd, Stirling, SA, June 2000
7.
Anonymous, Manure Guidelines:
Principles on which to base the determination of grades and uses of manures, as
agreed at the 28 Feb 2001 meeting of the Consultative Committee on Manure,
Facilitated by the Victorian Department of Natural Resources and Environment
8.
Barrett
B, Closing the circle for organic waste to agriculture, paper presented at the Compost 2000 Down Under Conference in
Melbourne, 14 – 16 November 2000
9. Gulliver A, Integrated farming, recycling and compost operation, paper presented at the Compost 2000 Down Under Conference in Melbourne, 14 – 16 November 2000
10.
Green
B, AGWISE Organic Waste Forum, Foreword, The University of Southern
Queensland, Toowoomba, 1999
11.
Rynk
R, Exploring the economics of on-farm composting, Biocycle Vol. 42 (4),
2001, 62 - 70