DOWN and DIRTY

Randy Woods

REALITY TV SHOWS ARE earning a small fortune showing how changes in appearance can have dramatic impacts on the lives of their subjects. The composting industry, too, is hoping that a long-overdue “makeover” of its image will jump-start its marketing efforts.

As the recycling of commodities such as paper, metal and plastic turned into mainstream businesses in the 1990s, organics recycling operations often were seen as small-scale, semi-professional businesses. During the past few years, however, this image has begun to evolve as composting operations realize that producing high-quality products are more important than just diverting organic materials from landfills.

For starters, the term “compost” needs an overhaul. “It no longer has any substantive meaning in the marketplace,” says Jim McNelly, president of Renewable Carbon Management, St. Cloud, Minn. “No one type of compost fits all needs.” For every major type of compost feedstock, he says, there are dozens of “subcategorizations of composted products that are specifically related to the type of plant you want to grow.”

This product diversity is evidence of the steady growth in composting from a $100 million industry in the 1970s to one worth an estimated $1 billion today, according to McNelly. Yet many serious composters struggle with products that have been devalued by the majority of operations that ignore markets on the back-end.

“There is a huge dichotomy in the industry,” says Ron Alexander, owner of environmental consulting firm R. Alexander and Associates, Apex, N.C. “There are probably 5,000 composting facilities in the industry, but probably only 1,500 to 2,000 are actively selling compost. Most of the rest still don't have a focused marketing effort.”

“You have to look at compost like it's a feedstock in a manufacturing operation,” says Susan Antler, executive director of the Composting Council of Canada (CCC), Toronto. “Generally, it's a very young industry. The first decade of the CCC was focused mainly on diversion, but the second decade has been all about markets and producing products for the right use.”

Quality and Added Value

The U.S. Composting Council (USCC) has helped to lay the groundwork for compost market development during the past 15 years with projects such as the Test Methods for the Examination of Composting and Compost and the Seal of Testing Approval (STA) program.

Through those efforts, compost marketers have a set of standards they can use to determine the quality of various products. Before these standards were formed, “It was a bit of a Wild West show in regard to quality,” Antler says.

Determining quality level, however, is not enough to build compost markets, says Rod Tyler, owner of Green Horizons, Grafton, Ohio. “You have to demonstrate that compost adds a real value in the marketplace,” he says. “Erosion silt fences are being installed for $40 per cubic yard, but you can sell a compost product that performs just as well for $30 a yard.”

On the agricultural side, Tyler says composters who produce soil amendments need to promote more than just the environmental benefits. “You can tell them that [with compost] they won't need fertilizer or insecticide, and they can get better water retention. You have to focus on the increased performance of the compost.”

Value can be added by making adjustments to feedstocks, McNelly says, especially with regard to nitrogen, a valuable nutrient needed for plant growth. Too little nitrogen can slow down the rate of decomposition, but too much can lead to anaerobic conditions and odor control problems. To keep an optimum carbon-to-nitrogen ratio of about 25:1 — or about 4 percent nitrogen — McNelly says composters located in areas that have a glut of high-carbon materials, such as paper, leaves and wood chips, can add food waste, manure or other fertilizers to increase the nitrogen content.

What's in a Name?

One of the best ways to demonstrate compost's value is to develop a reliable brand name, Tyler says. “People need to get behind a brand. Otherwise, they'll be relegated to competing in the generic marketplace, where you have $5 a yard for dirt instead of paying $15 per yard to $30 per yard for brand name compost.”

For example, Tyler markets the national Filtrexx FilterSoxx brand of compost erosion control products. “All of our products compete with the outside industry,” he says. “They don't cannibalize other segments like peat moss, bark or other fines.”

“Branding is nothing more than a commitment to quality of value,” says Dan Noble, executive director of the California-based Association of Compost Producers (ACP). “Look at Starbucks: It's not just a type of coffee, it delivers a certain experience, a category of value.”

ACP, a nonprofit organization of private companies and public sanitation agencies involved in composting, encourages its members to invest in creating multiple compost brands, Noble says. “One of our retail composters has 400 SKUs, each one with a different use.”

The largest private company member of ACP — and largest single marketer of non-agricultural composted material in the country, Noble adds — is Synagro Composting Co., which produces 400,000 cubic yards per year of soil amendment from its Corona, Calif., facility.

Tom Kelley, Synagro's western regional director of sales and marketing, says being located near Los Angeles, one of the largest compost markets in the world, has helped to establish his brand of top dressing — but mostly it involved a lot of leg work. “It's a long, tedious process,” Kelley says. “We identified every segment of the market and demonstrated the value we could provide to each one, like added nutrients and water retention.”

Public Helps and Hurts

While private companies are beginning to make inroads with brand names, most composting operations rely heavily on assistance from the public sector, either in the form of landfill diversion mandates for organics, or contracts with state agencies or municipalities.

Working with city and state governments can be a double-edged sword, Noble says. “The only people with investment opportunities are in the sanitation sector,” he says. “But solid waste agencies can't be trusted to build markets for healthy soil. By using compost for things like land application and basing the price below market value, they manage to destroy their own markets.”

It is most frustrating, Antler says, to see municipalities giving away quality compost in the name of landfill diversion. “They ought to change the word ‘give-away’ to ‘product sample’ and leave open the option of purchasing the compost if they like it,” she suggests.

“Municipalities are still not looking at the composting market as a valuable product,” Tyler says. “If they looked at it as if they were lumber producers, creating materials that were made into chairs, they'd see the value in what they have.”

The composting industry also shares some blame for this lack of awareness on the part of governments, Alexander says. “We have not done a great job of selling the federal government on the benefits of compost use,” he says. “If we could get the government to require the use of topsoil with a minimum of 2 to 3 percent organic matter, it would create a huge market for compost.”

Erosion control and landscaping products have terrific market potential in municipal projects, Alexander says, due to their ability to retain moisture, grow vegetation quickly and eliminate the need to reseed slopes or reapply topsoil every year. “For municipalities fighting for dollars, it's important to let them know that while it might cost more in construction to use compost, it will save money on maintenance,” he says.

Kelley, who is co-chair of USCC's Market Development Committee, says that enforced state requirements to use STA-certified compost have the greatest potential to reduce the supply of material and thus raise the price of compost, which would then lead to greater competition in the industry. “We're conducting a program to write letters to all the cities in [Orange County, Calif.] telling them about the 20 to 30 percent water savings they can achieve with compost.”

State transportation departments (DOTs) are also major players in the compost marketing arena, McNelly says. Up to 50 percent of compost in most states ends up being used in DOT projects, he says. The Texas DOT, for example, is the biggest public consumer of composted organics in the country and uses the material mainly as a topsoil amendment to speed up grass growth on roadsides, filter runoff and control erosion along the state's roadsides.

Getting the Word Out

None of the above marketing plans will work, however, if compost producers don't know where to find potential users. With high transportation costs limiting most operations to very localized uses, the industry remains heavily balkanized. McNelly estimates that 90 percent of the composting in the United States is still conducted on small, unmanaged sites, producing poor quality soil amendment that “just sits and rots” in stockpiles because no markets can be found.

“This is still a stealth industry,” says Matt Cotton, owner of Integrated Waste Management Consulting, Nevada City, Calif. “A lot of producers don't talk to each other. There are conferences out there, but people don't seem to avail themselves to the information.”

According to USCC's Executive Director Stuart Buckner, the council is beginning to increase its efforts to reach certain end-users. This month, USCC is scheduled to partner with the Environmental Institute for Golf at the Golf Show in Orlando, Fla., to educate attendees golf course owners, builders and superintendents about the environmental, economic and agronomic benefits of compost use.

“There is still more work to do with specific generators — those places that don't realize how much food waste they have, like prisons and other large institutions,” Cotton says. On the other end of the spectrum are many producers who think they have a plethora of organic feedstocks, only to realize that they don't have enough to be economical, he says.

Antler says the industry needs to support new composting operations. “Before a facility starts, the [owners] should know how to set up a marketing plan up front and know who the end-users are first,” she says. “They need to be able to learn from other jurisdictions, but most composting facilities are too geographically distant from each other.”

Go for Broker

Jean Bonhotal, a compost specialist with the Cornell Waste Management Institute, Ithaca, N.Y., says that composters eventually may have to rely on a brokerage system to help match up producers and end-users. “There's a lack of understanding about the business,” she says. “Producers in the Northeast need to get materials to the right markets, so there's a need for a redistribution system across the U.S.”

“We have already started to see some activity with brokers,” Cotton says. “But you have to get someone who knows the area. All markets really are local, so you have to look down the road before you go to a regional broker.”

Tyler says that it's also time for other links in the composting chain to pull their own weight in the form of advertising and other financial support. “We've been paying our own way up to now. When you look at the whole industry, you have to ask: ‘Who else makes a living from this?’ A whole lot of people — screeners, truckers, farmers, equipment manufacturers. We have to make a living in this industry, and we need their help to do it.”

“Compost generators are the real investors and they need to be the investors,” Noble agrees. “Usually, they say, ‘We have to pay to get rid of this, and now you want us to develop markets for it, too?’ But they need to understand that part of what they pay in the tip fee is for the creation of healthy soils.”

Because hauling is the biggest hard cost in many composting projects, Noble says it's time for marketers to work more with hauling companies to promote the products they ship, too. “Coke trucks have the Coca-Cola name on them,” he says. “Why hasn't this been done in the compost industry?”

McNelly, whose consulting firm is involved in the use of intermodal shipping containers, predicts that rail or truck hauling will be the solution to the prohibitively high cost of compost transportation. “Rail transport using the current infrastructure of 20- and 40-foot shipping containers will be more common for organics in the next 10 years than it will be for coal,” he predicts.

“It's an exciting time for the industry,” Antler says. “People who have facilities up and running now are in a privileged group. We've spent all our lifetimes developing this market, but it's really been the past 10 years where progress has been made. We're in the zone, now.”

Randy Woods is a Waste Age contributing editor based in Seattle.

COMPOST CRASH COURSE

Monica Ozores-Hampton, a research associate for the University of Florida's Southwest Florida Research and Education Center, has decided to address the lack of compost communication in Florida by setting up a traveling education project called the “Composting School.”

The program, which has been in existence for about two years, involves three classes per year for a pool of between 600 and 700 qualified participants, mostly made up of regulators, researchers, citrus growers and other people in the feedstock industry. The classes, held in a different location each time, teach basic “Compost 101” principles, share recent compost research data and evaluate real-world compost use.

The results of the classes have already been felt, Ozores-Hampton says. “Ten years ago, no one in the state was composting,” she says. “Now, 80 percent of the major producers in the state are doing it. Research consistently shows the benefits in those areas that have used compost in the past 14 years, but people just don't know about it.”

One of the fringe benefits of the classes, Ozores-Hampton says, is that they act as a meeting-house for many of those in the feedstock industry who don't know where the local markets are. “At almost every class,” she says, “there are feedstock producers and composters who are just a few miles apart, but didn't know about each other. We can help bring them together.”
— RW

THE FERTILIZER QUESTION

One of the main hindrances to compost marketing success, especially in the agriculture industry, has been the inability or unwillingness of many composters to compare their products' performance to chemical fertilizers. The fear in doing this, says composting consultant Ron Alexander, is that composters would have to register their products as “fertilizers” under state regulations. Currently, only about 30 states require composters to pay a fee to register their products for sale as soil amendments. Others do not regulate soil amendments at all.

To simplify the patchwork of regulations across the country, the U.S. Composting Council's (USCC) Market Development Committee has been working for several years with the Association of American Plant Food Control Officials (AAPFCO), an organization that oversees state fertilizer distribution, to modify existing fertilizer regulations to allow for the easier registration of compost as a fertilizer. This will allow composters to guarantee and claim the nutrient content of their product. If passed, the draft language would allow soil amending claims to be made, as well as nutrient guarantees.

USCC and AAPFCO are negotiating the language of this uniform bill, Alexander says, and plan to meet again to discuss the issue this month. Alexander is optimistic for a breakthrough on the nutrient claims issue, but he is still cautious.

“Once this happens — and that could be in a few months, or it could be in a few years — there is no guarantee that it will even be implemented,” he says. “No matter what we come up with, some composters will probably be unhappy. Some just don't want to be regulated on the distribution side of the business.”

Further conflict may also arise from the $45 billion fertilizer industry. “They see us as competitors for their market,” Alexander says.
— RW