Cost Accounting Principles of Composting and Food Scrap ...
Post on 10-Feb-2017
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AgRecycle was founded in 1991 and operates multiple composting sites in western Pennsylvania
Providing services and products to:
Governmental entities, landscapers, organic farmers, industrial and retail generators of food wastes, institutions, golf courses, universities, green roof medium suppliers, brownfield remediation contractors, and a wide variety of commercial enterprises.
• The details of this presentation are based on the premise that every compost facility has the purpose of making a marketable product -whether the level of product is of a coarse nature to fill an erosion deterrent sleeve, a lesser grade for brownfield reclamation use, quality grades for growing, or a premium grade for golf course use.
• Grinding leaves and letting them sit in a pile to decompose is not making compost.
Cost Accounting
• The imprecisions and deviations among feedstocks that are an inherent part of composting operations impact traditional cost accounting principles.
AgRecycle’s Feedstock and Permitting Progression
1996-1998• Yard debris
• Clean wood waste• Manures (and bedding)
• Paper
AgRecycle’s Feedstock and Permitting Progression
1998-2006• Yard debris
• Clean wood waste• Manures (and bedding)
• Paper• Preconsumer vegetative food residuals
AgRecycle’s Feedstock and Permitting Progression
2006-today• Yard debris
• Clean wood waste• Manures (and bedding)
• Paper• All food residuals
• Non-biosolid liquids• Green building materials
• Corrugated/Wax corrugated
AgRecycle has been accepting food waste since 1998 Began to do our own food waste collection and
hauling in 2007
What are the three major factors that will make food waste diversion a sustainable reality?
1. Determining the sources where food waste is generated consistently.
Food Waste Generators• Based on a nine state audit on food waste generators, each determined that the
following six sectors were the generators of consequence.– Commercial
• Hotels and Restaurants• Restaurants (employing over 10 people)
– Food/Grocery Stores• Only stores employing over 10 people were included.• No convenience stores were included.
– Hospitals– Industrial
• This was defined as, “Any material that is generated either as a byproduct from the manufacturing of materials or any material that is discarded because of quality concerns.”
– Institutions• Schools- kindergarten through 12th grade (waste from cafeteria service only, no brown bag
residuals)• Colleges and Universities (waste from dining hall services only, no independent vendor waste,
and no brown bag residuals)– Prisons
• No juvenile facilities were included.
Generator Percentages based on a nine State Average
*Volume was determined from what the stores considered to be waste. Percentage does not include what was donated to food banks and other community organizations.
Institutions16.7%
Prisons2.2%
Food/Grocery Stores*9.9%
Commercial5.9%
Hospitals8.7%
Industrial56.6%
CommercialFood/Grocery Stores*HospitalsIndustrialInstitutionsPrisons
Common Unacceptable Items from Food Waste Generators
• Plastic (film or solid)– Including:
• Individual creamers• Individual butter containers• Beverage lids• Straws
• Styrofoam• Foil (condiment packets)• Glass• Metal
• Foam products• Treated paper (unless pre-
approved)• Labeling tags • Some paper beverage
cartons• GLOVES
Unfortunately with the exception of the industrial sector, no pure separated streams exist so these are the most common items the composter needs to warn against.
What are the three major factors that will make food waste diversion a sustainable reality?
1. Determining the sources where food waste is generated consistently.
2. Realistic economic evaluation of the labor and equipment needed to handle food waste.
What are the three major factors that will make food waste diversion a sustainable reality?
1. Determining the sources where food waste is generated consistently.2. Realistic economic evaluation of the labor and equipment needed to
handle food waste.• How will the materials be collected?
What are the three major factors that will make food waste diversion a sustainable reality?
1. Determining the sources where food waste is generated consistently.2. Realistic economic evaluation of the labor and equipment needed to
handle food waste.• How will the materials be collected?
• How will food waste be transported to the composting site?
What are the three major factors that will make food waste diversion a sustainable reality?
1. Determining the sources where food waste is generated consistently.
2. Realistic economic evaluation of the labor and equipment needed to handle food waste.• How will the materials be collected?
• How will food waste be transported to the composting site?
• What type of pre-processing at the site may food streams need?
What are the three major factors that will make food waste diversion a sustainable reality?
1. Determining the sources where food waste is generated consistently.
2. Realistic economic evaluation of the labor and equipment needed to handle food waste.• How will the materials be collected?• How will food waste be transported to the composting site?• What type of pre-processing at the site may food streams need?
• Reduction rate calculations as they impart operating costs
What are the three major factors that will make food waste diversion a sustainable reality?
1. Determining the sources where food waste is generated consistently.
2. Realistic economic evaluation of the labor and equipment needed to handle food waste.• How will the materials be collected?• How will food waste be transported to the composting site?• What type of pre-processing at the site may food streams need?• Reduction rate calculations as they impart operating costs
3. Evaluating to what degree food wastes are compatible with your current operations?
Importance of Carbon• Food wastes cannot be composted alone. • Carbon to nitrogen ratios need to be in the
range of 30/1. • To make the process of food waste
composting cost effective, facilities accepting food need to have access to easy and readily available sources of carbon: LEAVES AND YARD DEBRIS.
• Currently, in Pennsylvania the majority of these carbon sources go to the public sector who receive subsidies to handle them.
Compost Site Considerations
• Composting only and if so, what feedstocks will be accepted?• Composting with customers using the site as the drop off point
for feedstocks.• Will you sell the finished compost directly from the site? If so,
will the site need to have ample space for trucks and personal vehicles to acquire your products?
• Does the site need to accommodate an office building?• Where will the garage/ building be to repair or house your
equipment?• What about fuel tanks for off road equipment and/or on the
road vehicles?
Site Selection Criteria
1. Site size2. Zoning3. Transportation considerations vs. cost of land4. Pre-existing land conditions5. Neighbors6. Technology compatible
Each of the above impacts the cost of composting.
Costs associated with Feedstocks
• Characteristics• Handling• Volume• Impact on site• Individualized tipping rates• End product markets
Feedstock Volume
• Three main cost features– How much can be composted at a site – the bigger
the throughput the less site and equipment costs associated with each batch.
– Reduction Factors – unique to the compost industry and it is crucial to get the tipping structure correct to account for it.
– How many times and in how many different ways does the compost operator have to touch it?
Costs associated with
Feedstocks
End product markets
• The diversity of the end-uses reflects the diversity of compost products that can be
marketed.
AgRecycle Sales Markets• Landscape businesses• Professional growers• Golf courses• Garden centers• Lawn care companies• Universities and schools• Developers• Florists
• Public entities• Sod producers• Landscape architects• Agriculture• Brownfields• Abandoned mines• Rooftop gardens/ green roofs• Silviculture
Costs associated with
Equipment & Labor
• Costs beyond the purchase price• Use• Impact on end product quality• Safety features• Other procedures
Windrow Turner (medium size, self powered)Data extracted from On-Farm Composting Handbook NRAES-54
1,000 cubic yards
5,000 cubic yards
15,000 cubic yards
Assumptions
Total Cost $17,360Hours 1Cost per cubic yard $17.36
Total Cost $17,491Hours 3Cost per cubic yard $3.50
Total Cost $17,797Hours 9Cost per cubic yard $1.19
Capital Costs $115,000Hourly operating costs $32Processing capacity 4,000
Why so much time?1. Most end users do not know what compostable really
means.2. Most food service product distributors are confused about
what compostable really means.3. Most food service product distributors confuse the terms,
all natural, biodegradable, compostable, and made from 100% recycled materials.
4. Most food service product distributors often mistake the fact that if a brand makes compostable products then all of their products are compostable.
5. Most food service product distributors want to sell you what is already stocked in their warehouses.
Why so much time?
6. The greater Pittsburgh area is in the bottom 20% of U.S. tipping fee rates therefore, AGRECYCLE MAKES ITS PROFIT FROM THE SALE OF OUR FINISHED COMPOST PRODUCTS. As such, we are fanatical about the quality of the feedstocks we accept.
• The next step is to work with the end user regarding the compostable product selection. We require all customers to send us an itemized list by product name and product number, for us to verify prior to agreeing to accept the products.
• The product verification can take anywhere from 10 minutes, to several hours, to weeks.
• We now keep a data base dedicated to compostable products.
• We have the ability to help customers find specific products. This is done most frequently for customers planning singular events. Food service companies and distributers are getting more involved in helping ongoing food operations locate compostable products.
• AgRecycle serviced 36 events last year that included the Pittsburgh Marathon, compostable weddings, etc.
Fact:
• For ongoing accounts, (not events) we know that if they are willing to pay extra for the compostable products that they are serious about making diversion a long term commitment.
Reminder: important language in our Pennsylvania permit is, “… organic wastes that have been source separated.”
Unless the generator of the compostable products, that have been used at their facility, has dedicated staff to sort, we have the ……
• The all or nothing rule is essential to well managed composting site operations. If not, the time burden on site personnel is overwhelming and becomes cost prohibitive.
• Corporate cafeterias can be particularly complicated.
The FOUR biggest operational concerns, at the composting site, when dealing with
compostable products are:
• Operator inspection of materials.• How to process the materials prior to putting
them into a windrow• Litter• Do their degradation rates impact traditional
windrow management timelines? In Pennsylvania, with dramatic seasonal weather changes, hitting market timing cycles is crucial.
Impact of all feedstocks on
finished compost products
AgRecycle sells our products into very diverse markets.
AgRecycle cannot afford contaminants in our finished
products. Our survival economics depend upon it.
Compostable Product Conclusion
We approach our efforts regarding the acceptance of compostable products in the same manner we approach our equipment-rather than just another feedstock.. Upfront detailed selection standards coupled with ongoing maintenance and monitoring to achieve the highest quality finished compost, pay back time investments fourfold.
• Approximately 90% of all composting operations in the U.S., that do not receive government subsidies fail after 5 years.
Fundamental Challenges to Successful Diversion of Organics
• Enormous clout of major waste companies• Regulatory challenges• Subsidies/ perception that composting operations do not need
tipping fees• Lack of understanding regarding composting economics• The devaluation of compost products due to failure to produce
quality finished products.• Food waste composting operations are being deprived of necessary
feedstocks that can be handled cost efficiently.• Collection issues for source separated material• Generator misconceptions and needed behavioral changes• The absence of private sector development
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