Tightening standards to build markets for recycled organics

The drive to divert organic waste from landfill around Australia has created a supply of recycled organics that remains largely underutilised and undervalued, writes Angus Johnston, Principal Consultant at Jackson Environment and Planning.

Too much organic material is released as low-quality pasteurised products, containing too much contamination. Due to the policies and regulations of state and federal governments, a lot more supply will come on-line in the next five years. There remains an urgent need to tighten standards for compost use and build markets that will absorb this supply.

Urban markets for compost (e.g. landscape supplies) are well developed but highly competitive, because supply often exceeds demand. These markets cannot consistently use all the organic matter available for recycling. Using compost for gardens and landscaping also squanders the opportunity to return carbon and nutrients to the soils they were extracted from — the farms where our food and fibre are grown.

Fortunately, there is enormous potential demand for use of compost in agriculture. At an average annual application rate of 10 tonnes per hectare, we only need 100,000 hectares to absorb one million tonnes of compost.

There is roughly 65 million hectares of farmland in NSW alone. However, this demand can only be accessed at the right price, quality and specification. That price doesn’t have to be low, but quality and performance absolutely must be high.

The highly regulated nature of the organic recycling sector means that state and local government can strongly influence whether compost price and quality conditions are met by industry. Industry can also play a role by agreeing on and adopting higher product standards.

Organics recycling is suffering from the same issues that caused the China National Sword packaging crisis.

Local government procurement of recycling services often has a much greater focus on transfer of risk and price than on recycled product quality, beneficial use and value adding. This approach creates an incentive for contractors to do the minimum processing necessary to divert waste from landfill and comply with state government regulations. They then release these low-quality outputs into the market as ‘compost’.

Low quality products that cost less to manufacture can then be sold at a lower price point. Such products undermine the market for higher quality products that cost more to produce. If a farmer can purchase a product claiming to be ‘compost’ for $10 per tonne (delivered), why would they pay $100 per tonne?

If that low-cost compost does not deliver enough tangible result, or is clearly full of rubbish, farmers often apply their negative experience to every product claiming to be a compost. Only a few farmers take the time to understand the difference in value between the $10 and $100 product.

This scenario has played out repeatedly in agricultural and other compost end markets, and is still happening right now around the country.

Every time contaminated immature products are sold as “compost” we undermine the credibility of compost and organic recycling. There are producers that make quality fit-for-purpose composts and have built up trust for their brand in certain markets. They can command high prices for their products, however, they are the exception rather than the rule.

There needs to be tighter standards and improved quality assurance and quality control. For example:

  1. Mandatory requirement for independently audited quality assurance programs at each processing facility
  2. Regular auditing of batch test results to requirements of the relevant Resource Recovery Orders and Exemptions (in NSW) or equivalent standards in other states
  3. Physical contamination requirements reduced to 0.2 per cent (plastic, glass and metal) and 0.02 per cent (film plastic) by weight for all soil conditioners
  4. Soil conditioners to meet the AS4454 definition of compost or mature compost (not just pasteurisation)
  5. Define compost using selected test results (such as respirometry) rather than a minimum six weeks process duration

Some established commercial composters may see the tighter standards above as a threat because their current operations have been set up to meet lower standards. Many are locked into long-term contracts at set gate fees. This is where state and local governments have a role in supporting industry to make a transition to higher standards by helping to fund facility upgrades, allowing variations to contracts, and regulating free riders who don’t adopt tighter voluntary standards.

There is a cost to implementing higher standards, but there are also rewards:

  • Access to much greater demand from agricultural markets
  • Fewer complaints from the public and customers
  • Fewer fines and less negative attention from the regulators
  • Reduced product related risk
  • Higher barriers to entry for new competitors
  • A more ‘level playing field’ during tendering

The packaging recyclers did not seek to tighten their own standards and neither did the processors of mixed waste in NSW. Both groups could have agreed to produce cleaner products to a higher standard but chose not to. For these recyclers either their customers or their regulators decided to tighten their standards for them, at great financial and reputational cost to the recyclers involved. Some businesses didn’t survive the change.

Tighter standards need to be introduced in consultation with all stakeholders, and with time allowed for the industry and their customers to adapt.

The Australian Organics Recycling Association provides an ideal forum for industry led tightening and enforcement of standards.

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