2011

Michael Reynolds

M & M Project Management

The Economics of Groundswell

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Contents 1. Introduction .................................................................................................................................... 3

Background ......................................................................................................................................... 3

Council/community collection & community composting - Lachlan Shire Council (Condobolin) ...... 5

Council collection & council composting – Goulburn Mulwaree ....................................................... 5

Council collection & landholder composting facility - Palerang Council ............................................ 6

Council collection & landholder composting facility - Queanbeyan Council (delivered to the same

site as Palerang) .................................................................................................................................. 6

Purpose and Objectives ...................................................................................................................... 7

2. Project Method ............................................................................................................................... 7

Baseline analysis of current costs ....................................................................................................... 7

Determining the cost to councils of adopting a City to Soil collection & Groundwell compost

processing facility ................................................................................................................................ 7

Net Present Value Method (NPV) to determine long term benefits and costs .................................. 8

Benefit and cost to agriculture ........................................................................................................... 8

3. Results ........................................................................................................................................... 10

Current Costs .................................................................................................................................... 10

Groundswell Collection and processing costs ................................................................................... 10

Council costs to establish a Groundswell collection per household (Year 1) ................................... 11

Council Costs to maintain Groundswell Processes (Annually) .......................................................... 11

Council Collection costs, Plant & Salaries ......................................................................................... 11

Valuing Groundswell diversions ........................................................................................................ 12

Value calculation ............................................................................................................................... 13

Net Present Value (NPV) per household of investment in Groundswell .......................................... 13

Potential Social & Environmental Cost Calculations ......................................................................... 14

4. Agricultural Compost Trial result .............................................................................................. 15

Pasture Research Breakeven Analysis .............................................................................................. 16

Narramulla Results – Perennial Rye pasture .................................................................................... 16

Income assessment – Table 5 ........................................................................................................... 17

Strathmere Results – Phalaris, sub-clover pasture ........................................................................... 18

Crop Yield Breakeven Analysis .......................................................................................................... 20

Landtasia – Spelt wheat .................................................................................................................... 20

Forest Lodge – Blackbutt oats ........................................................................................................... 22

Condobolin – Hard wheat ................................................................................................................. 23

5. Economic Conclusions ............................................................................................................... 25

6. References ................................................................................................................................ 28

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1. Introduction

Background

Councils across Australia spend millions of dollars every year collecting and disposing of

both residual and organic waste streams (potential resources). The normal approach

adopted by councils is to dispose to landfill sites. A report undertaken in 2010 by the

Australian Government indicates that in 2006-7, 48% of Australia’s waste went to landfill,

and approximately 65% of this was organic waste (14 million tonnes). (DEWHA, National

Waste Report 2010) This report also indicates that “although Australia has sufficient landfill

capacity for the immediate future in most of the larger urban centres, future capacity may

be constrained by social factors such as community concerns about locating landfills near

residential areas and environmental factors such as siting requirements. In addition to

mounting constraints on the construction of new landfills, pressure also increases through

the rising costs of maintaining existing landfills”. Therefore the diversion process not only

assists councils with avoiding increasing costs of disposal to landfill but also provides a

potential revenue stream from the compost itself.

The Groundswell project (funded by the NSW Environmental Trust) provides a method to

source separate household organics at the household end of this resource chain through the

introduction of a combined food scrap and garden waste kerbside collection called “City to

Soil”. City to Soil is a “process” or methodology that enables councils and farmers to work

together to pull urban organics out of the waste stream and put them back into agricultural

soils as high-quality compost. The idea is to engage the whole community in the separation

and collection of their organic waste so that it can be processed and returned to local farms

as a valuable agricultural input. City to Soil enables communities to close the loop and

complete the nutrient cycle in a way that creates opportunities for strengthening local food

production while at the same time reducing waste to landfill. City to Soil describes the

branding, tools and philosophical approach used by councils involved in the Groundswell

project to introduce a combined food scrap and garden waste collection.

Material collected through City to Soil collections was put through a biologically inoculated,

no-shred composting process, hence diverting this material from landfill. Central to the

introduction of the City to Soil collection was a community engagement strategy designed to

elicit high levels of participation and compliance in order to ensure a clean, source

separated product. The Groundswell project community engagement process also provides

flow on affects to other waste sources changing the way and the amounts of garden

organics and other recyclables that are collected. Additional information about the

Groundswell project can be found here: www.groundswellproject.blogspot.com

The economics of composted products is a significant barrier to overcome if compost is to

be supplied to agricultural markets. For larger operations, collection and processing costs

are a critical component of economic viability. Society has a mixed value system in relation

to the use of recycled organic materials for food production. However, expectations of

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responsible environmental management are driving significant changes in the areas of

waste management and agriculture. It is critical that the recycled organics meets the quality

demands of end products to ensure the levels of food safety demanded by markets as well

as provide the agronomic properties to compete with inorganic products. Groundswell

project research shows that this compost can be returned to agricultural lands in a viable

manner as indicated in the results section.

This report assesses the costs associated with councils adopting a Groundswell type process

on a per household basis and provides discussion on other benefits and costs of adopting

this type of system. Figures in the report have been generated from actual costs incurred by

local councils involved in the Groundswell project. These councils are Goulburn Mulwaree,

Lachlan, Queanbeyan City and Palerang. Each introduced a City to Soil food scrap and

garden waste collection to householders already receiving a council waste service. Figure 1

provides a visual example of the flow of all waste streams experience by these councils. As

previously indicated the Groundswell process aims to bypass landfill with household

organics and greenwaste and return to the product market.

Figure 1

There are currently four models put forward for this project of which two are being assessed

for this report. The two being assessed are Condobolin and Goulburn Mulwaree, whilst

Palerang and Queanbeyan were delayed in implementation.

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Council/community collection & community composting - Lachlan

Shire Council (Condobolin) The Lachlan Shire Council operates eight (8) landfill sites within the main villages in the area,

with four contract garbage collection services, these being at Condobolin, Lake Cargelligo,

Tottenham and Tullibigeal. Condobolin is the only collection service which offers a 240L

Mobile Garbage Bin Service, with the remaining towns having a twice weekly 55L collection

service (in process of change)

With the exception of Condobolin, the landfills are unmanned and remain unsecured and

open throughout the year. For the purpose of Groundswell the costs and benefits associated

with the Condobolin collection and landfill operations are assessed, however expansion of

this is currently occurring in the shire.

The Groundswell collection and composting process is undertaken by the Wiradjuri

Condobolin Corporation Ltd (WCC) in partnership with the Lachlan Shire council. Financial

data collected is based around a fortnightly 240 litre City to Soil collection and the labour

and processing costs directly payable by the WCC. All collections are processed onsite at the

local landfill by the WCC who have made substantial investments in the project. The success

of the project has been indicated by the council’s recent commitment to continuing the

partnership created into the future and post Groundswell support. The WCC has also

entered into the market of selling the composted product in 25 litre bags at the cost of $11

each to the public, a great example of reconnecting food resources back to the lands in

which it began.

Council collection & council composting – Goulburn Mulwaree The Goulburn Mulwaree Council has an overall population size of approximately 26,086

people with approximately 11,907 dwellings in the area. There are approximately 9200

dwellings in the city of Goulburn itself where the pilot program has operated. The

Groundswell pilot project has operated for just over 2 years with the replacement of a

monthly curb side greenwaste collection with a City to Soil collection to 9000 households.

The pilot project has enabled the analysis of information and data regarding the City to Soil

collection process and the composting process undertaken on the council landfill site by the

council. The success of this project is indicated by the decision by the council to continue

this process beyond the pilot funding period and extend it to the 9000 residences. The

council has also undertaken a feasibility study into the costs associated with a fortnightly

City to Soil collection process and alternatives to the timing of their residual collection e.g.

extending to fortnightly collection due to the diversion experienced by City to Soil.

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Council collection & landholder composting facility - Palerang Council The Palerang Council has undergone rapid change in its management of waste streams and

resource recovery. The Council has developed a waste management strategy 2005-25 which

has seen the reduction from 8 landfill sites to 7 recently with the plan to close more over

time and replace these with 3 transfer stations.

The Groundswell project will concentrate on the towns of Braidwood, Bungendore and

Captains Flat. The project model is a combination of council collection and landholder

composting allowing a connection between households and the soil. Due to delays with the

establishment of the on farm composing facility, only current costs of diversion were used

for this analysis e.g. cost of council to send organics + residual mixed waste to Woodlawn

Landfill site.

Council collection & landholder composting facility - Queanbeyan

Council (delivered to the same site as Palerang) The Queanbeyan Council currently disposes all domestic and commercial waste through the

ACT landfill site (Mugga Road) at a current cost of $130/tonne. This cost will be the

benchmark for diverting any further waste streams from landfill as this is the current full

cost recovery amount estimated by ACT to manage its landfill site. The following graph

shows the increasing costs of disposal from $30 tonne in 2000-01 to $130 tonne in 2010-11.

Figure 2

The Council also provides a kerbside recycling and greenwaste collection service for

households, and is commitment to recycling green waste through the Waste Minimisation

Centre (WAMI) to create a reusable product of raw or compost mulch for Council purposes,

residential use and others. Only diversion figures were used in analysis due to delays with

project.

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Purpose and Objectives

The purpose of this report is to:

Analyse the benefits and costs to council of the adoption, collection, and

composting processes undertaken in the Groundswell project

Analyse the benefits and costs to agriculture of compost produced.

2. Project Method

Baseline analysis of current costs

To assist with the analysis of the benefits and costs to councils of adopting a Groundswell

type system it was important to develop baseline data on current costs (pre Groundswell)

for each council. This data enabled the identification of the potential cost savings of

diverting organic material from landfill through the Groundswell project. It also assisted

with the development, and ultimate availability, of processed organic materials in

agriculture. Annual Current Cost to Councils of Waste to Landfill = Annual collection

(Kerbside & Community drop off) + Annual administration

Costs include:

Salaries – site supervision, administration, labourers, and machinery operators and

collections team

Operational Costs - site services/maintenance, administration, plant maintenance,

fuels & oils, equipment hire, disposal levies, cover materials, licence fees, site

insurances, materials, contractor payments

Determining the cost to councils of adopting a City to Soil collection &

Groundwell compost processing facility

Long term data collected from the councils involved in the Groundswell project indicated

the costs per household to adopt a collection and no-shred

composting process.

Data collected includes the initial set up costs associated

with the purchase of max air composting bins for kitchens,

240 litre organics bin for collection, kitchen bio-bags for

storage, tarps for the composting process, inoculants

applied to compost, testing for certification of compost and

the communication of the process to households.

Also discussed are the annual on-going costs of operating

this system per household. This data is then applied in the

Net Present Value (NPV) framework to assess the value of

the Groundswell process.

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Net Present Value Method (NPV) to determine long term benefits and costs

The method used to undertake this analysis is an NPV calculation. Why use this method?

NPV provides important organising principles: what does society as a whole gain and lose by adopting a new technology such as “No-shred” composting?

NPV provides a framework to account for all financial and external costs and benefits that are generated at each stage

Financial costs = expenditures by public and private entities to operate the solid waste

disposal system (e.g., collection costs).

External costs = broader costs borne by members of society other than those who operate

the waste disposal system.

Benefits are accounted for (e.g., value of products or amendments produced from

compost).

External costs associated with solid landfill and collections include:

Disamenity effects of landfills and incineration and recycling facilities. Greenhouse gas emissions. Emissions of conventional air pollutants. Damages associated with leachate. Pollution and accidents associated with transportation of materials. Others: traffic congestion, noise, etc.

Benefit and cost to agriculture

The Groundswell project aims to reconnect food consumed by households back to the

medium that produced that food, soil. Important to the success of this project is the value

gained by society of the application of high quality compost developed and applied to farm

land. To assist with this analysis, two pasture/grazing trials and two cropping trials were

undertaken by Chris Houghton Agricultural to provide supporting evidence of both the

agronomic and financial viability of applying compost in comparison to conventional

agricultural processes.

The pasture/grazing trials were undertaken at “Narrambulla” 20km to the east of Goulburn and “Strathmere”, 10 km to the west of Goulburn. The results from both were very similar. Results discussed relate the dry matter production from pasture to the production of sheep meat to assess the value of this research. Cropping trials were undertaken at “Landtasia” approximately 20 km east of Bungendore, Forest Lodge north of Goulburn and the Condobolin Agricultural Research

Station to provide seed yield per hectare as a means of assessing the compost value. All

output is discussed in the agricultural research report in this document. The full agronomic

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report for the Groundswell project is available on the Groundswell project website at

www.groundswellproject.blogspot.com

The agronomy trial results enable the following questions to be answered by either

qualitative or quantitative analysis, these being;

What is the financial value to farmers of increased yield?

What is the financial value to farmers of improved crop quality?

What is the financial value to farmers of reduced water use?

What is the financial value to farmers of improved soil structure?

What is the financial value to farmers of increased microbial activity?

What is the financial value to farmers of reduced nutrient leakage?

What is the financial value to farmers of reduced fertilizer costs?

What is the financial value to farmers of Carbon Sequestration?

To assist with understanding the benefits compost adds to agricultural yields a “willingness

to pay” analysis is undertaken (section 4) based around actual yields from the trials and

current market prices for the outputs (grain and meat) Willingness to pay provides farmers

with a value for compost that they would be willing to pay at the expense of another good

that provides similar yield benefits (inorganic fertiliser) The value of this product would be

determined by the level that the farmer would “breakeven” from any more application of

one fertiliser compared to the next.

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3. Results

Current Costs

Initial investigation indicated that the current costs associated with the collection,

management and disposal of organics to landfill by the four councils in the study ranged

from $80 per tonne to over $130 tonne annually.

Groundswell Collection and processing costs

The following data is provided by the participating councils as a guide to the collection and

processing of organics from the residual waste stream into high value compost.

Two councils in the Groundswell project had an existing kerbside green waste collection

(Goulburn Mulwaree and Queanbeyan)and two did not (Palerang and Lachlan) Adding the

food fraction to an existing green waste collection does not incur the cost of additional

kerbside collections.

The costs assessed below provide an indication of the costs of adopting and maintaining a

City to Soil Collection and Groundswell composting process with both the need to add an

additional kerbside collection and purchase new 240 litre bins to capture the total

establishment costs that would be required. This provides the ceiling of costs from which

councils can make plans if adopting such a system.

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Table 1

Council costs to establish a Groundswell collection per household (Year 1)

Equipment & processes Cost per Household

Max Air Bins: $3.00 240 Litre City to Soil Bin $40.00 Bio-bags $10.00 Compost Tarps $3.50 VRM Inoculants $2.00 Compost Testing for Certification $5.00 Communications $5.00

Total (A) $68.50

Council Costs to maintain Groundswell Processes (Annually)

Equipment & Processes Cost per Household

Max Air Bins: replacements $0.20 240 Litre City to Soil Bin: replacements $1.20 Bio-bags $10.00 Compost Tarps $0.40 VRM Inoculants $2.00 Compost Testing for Certification $1.00 Communications $0.80 Compost screening $0.60

Total (B) $16.20

Council Collection costs, Plant & Salaries

Plant & Salaries Cost per Household

Curb Collection @ $1.60 lift 12 (monthly)* $19.20 Plant & Equipment (composting)** $2.20 Salaries (composting)*** $8.30

Total (C) $29.70

Total First Year (A+B+C) $114.40 Total Annual Ongoing (B+C) $45.90

* based on average annual cost per lift between Lachlan council (contractor rates) & Goulburn Mulwaree

council (Trucks purchased and depreciated, 20% residual value)

** Plant and equipment includes average price of purchase of both small and medium front end loaders, spray

plant and associated equipment

*** Salaries based on averages between the two councils and compared to composting rates. All rates are

averages and based on 25% diversions. As diversion rates increase constant economies of scale occur, hence

figures listed will decrease with increased production leading to decreasing total costs.

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Valuing Groundswell diversions

Domestic waste stream audits undertaken

for the Groundswell project in both

Condobolin (Lachlan Council) and Goulburn

by EC Sustainable Environment consultants in

2008 & 2009 provide further evidence of the

amounts of organics being diverted from

these landfills. Table 2 shows that before

Groundswell (stage 1) and after Groundswell

(stage2) there has been a large change in the

amounts of organics being collected and sent

to the composting process.

Table 2

Ongoing data collection has confirmed that approximately 10kg of both food waste and

garden organics are delivered for composting per household per week or approximately

500kg per year (0.5 tonnes) Current costs to councils delivering to other council landfills or

private landfills indicate a per tonne cost of approximately $130, with Internal Disposal

Costs (IDC) currently charged in the Goulburn Mulwaree council close to this amount.

Therefore this value is used in the Net Present Calculations of the investment in this type of

collection and composting process (Groundswell).

Stage 1 Stage 2

Ave weekly household

waste bin weight

10.41kg 8.84kg

Ave annual waste per

household

543kg 461kg

Ave weekly household food

waste in residual

3.19kg 2.35kg

Ave weekly household

garden organics in residual

0.92kg 0.65kg

Ave weekly household food

waste in city to soil

N/A 0.44kg

Ave weekly household

garden organics in city to

soil

N/A 9.33kg

Ave contamination rate N/A 0.2%

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Value calculation

$130 tonne = $0.13 per kilogram (kg)

Each household diverts 10kg per week = 520kg per year

$0.13 x 520kg = $67.60 of diversion values per household per year to councils

Conversion rates recorded at the composting sites indicate a 50% reduction of waste

to compost ratio = 260 kg of compost developed per household per year (0.25

tonnes)

Bulk densities measured from composting piles also indicates that approximately

600kg is similar to approximately 1 cubic metre of compost.

Current market value of 1m3 of compost is approximately $45 which is closely related

to the total annual amount produced per household, therefore value per household

= $45

The total annual value per household from diversions and compost development =

$67.60 + $45.00 = $112.60

Research below shows that at current yield rates a farmer will be willing to pay

approximately 15m3 for this compost at a base rate before other biological benefits are

added. This price will be assessed as well to look at the impact to councils on payback if this

was the maximum gained per cubic metre of sales

Net Present Value (NPV) per household of investment in Groundswell

NPV is the difference between the present value of all benefits and the present value of all

costs associated with the Groundswell project. The process uses a discount rate of 15% as a

means of adjusting the value of a benefit or cost received in the future to their equivalent

value in the present time. If the NPV of the project is positive then the investment is

deemed to be worth exploring, the higher the NPV the greater the expected returns or

success of the investment. (Table 3)

Table 3

Table 3 indicates that the initial investment of $114.40 per household plus the annual

ongoing cost of $45.90 per household with the potential income (or decrease in diversion

costs) of $112.60 will provide councils with a payback on investment in approximately 3

years. The NPV of this investment after 5 years at a 15 % discount rate will be $109.19 which

indicates that if the council needed to borrow all of the funds to invest in this project at an

interest rate of 15% (high rate to take into account risk), they could pay back all the

End of Yr Capital Income Expenditures Net Cashflow Discount Factor Discounted Cashflow Payback

Yr 0 -$114.40 -$114.40 -$114.40

Yr 1 $112.60 $45.90 $67 0.8696 $58.00 -$56.40

Yr 2 $112.60 $45.90 $67 0.7561 $50.43 -$5.97

Yr 3 $112.60 $45.90 $67 0.6575 $43.86 $37.89

Yr 4 $112.60 $45.90 $67 0.5718 $38.14 $76.03

Yr 5 $112.60 $45.90 $67 0.4972 $33.16 $109.19

Net Present Value $109.19 $218.38

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borrowings and be better off by approximately $109.19 per household in five years. This

indicates the enormous potential for investing in this type of project. Councils facing

increasing landfill costs and diversion costs will recognise the benefits immediately from this

investment. Councils who currently have no restrictions on landfills are also provided with a

guideline to the potential impact of charges to landfill and the potential taxes that may be

imposed to work out the potential benefits of adopting the Groundswell process.

When the value of compost decreases to 15m3 as indicated by research results the payback

time for councils will increase from 3 years to 5 years, and the NPV at year 5 being $8.63.

Although the payback timeframe has increased and NPV is not as high as previously

reported, these results indicate the overall net worth to councils to undertake such

investments is still very positive. It also indicates the although the sale price of compost

impacts on the value to councils of adopting a Groundswell system, low prices still make the

investment worthwhile.

Potential Social & Environmental Cost Calculations

Additional to the potential tangible benefits delivered from the project are the social and

environmental costs of increasing tonnes delivered to landfill. An assessment of the social

costs and benefits of waste disposal, (Powell. J 2004) in Great Britain provides an insight into

these costs.

Cost of Greenhouse gas emissions from landfill

o CO2 = $0.62/tonne

o CH4 = $4.40/tonne

o Total gas emission costs = $5.02

Leachate damage $0.88/tonne

Transport pollution &accidents = $0.37/tonne

Total = $6.27/tonne

Based on diversions of approximately 0.52 tonnes per household per year, the potential

social and environmental benefits of these diversions from landfill using figures supplied

($6.27/tonne) = 0.52 x $6.27 = $3.26 of benefits per household per year

Other potential benefits not calculated in this study but with the potential to provide great

value to diversions could be:

Disamenity impacts e.g. the impact on housing prices in respect to distance from

landfills

The impact on birth rates and birth defects in relation to distance from landfills

Traffic congestion & noise associated with landfill and waste collection processes

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11.6 11.5

10.7

11.4

11.0

10.2

10.4

10.6

10.8

11.0

11.2

11.4

11.6

11.8

T-ment 1 T-ment 2 T-ment 3 T-ment 4 T-ment 5

%

Condobolin - Soil Water Holding Capacity

4. Agricultural Compost Trial result Large scale adoption of compost on farms has significant benefits for both farmers (internal

benefits) and the community (external benefits) Compost has the ability to retain nutrients

which means less nutrients flow

into groundwater, streams and

rivers which may result in

downstream costs through

pollution to these water sources.

Compost’s water holding ability

means more moisture is retained

near plants roots resulting in less

water needed for plant growth.

Results from the Groundswell trials

indicate that compost has enabled

the plants to “survive” in hard years

(trial years, low water availability) and continue to provide yield similar to conventional

farming practices. Therefore by recycling organics into compost, and using this on farms, we

are not only solving landfill issues, but reducing a major pollutant to our water ways and

addressing water shortage problems.

Figure 3 indicates that at low rates of compost (treatment 3) the soil surface exposed to

sunlight transpires much of the moisture from around the plant whilst the higher rates of

compost (treatments 1 & 2)have the ability to act as a soil buffer and decrease the rate of

evapotranspiration and maintain water available to the plant. Whilst percentages of

moisture retained are only small in comparison to conventional fertiliser applications (0.5-

0.6%) there appears to be additional benefits in yields to these crops (documented below).

Therefore due to minimal changes in yield, the impact of higher yields using more water is

not an issue with these results.

The issue of the cost of compost compared to their benefits has often been discussed. With

the cost per cubic metre of approximately $45 to buy and spread at high rates the costs

continually appear to outweigh the benefits of its use. At recommended commercial rates of

application to agricultural lands the average per hectare cost of using compost ranges from

$200-250 for grain crops and $400-$1200 for intensive crop production (e.g. horticulture)

Figure 3

Treatment 1 Compost - high rate

Treatment 2 Compost medium rate

Treatment 3 Compost low rate

Treatment 4 DAP @ 30kg/ha + medium compost

Treatment 5 Control A (DAP @ 50/kg/ha)

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Pasture Research Breakeven Analysis

The pasture/grazing trials were undertaken over two years (2009-10) at “Narrambulla”

20km to the east of Goulburn and “Strathmere”, 10 km to the west of Goulburn NSW. The 8

plots were set up on a 2 metre x 4 metre grid with a 1 metre buffer zone between each plot

and replicated 3 times.

Replicated trial treatments: 1 Compost at 5 m3/ha 2 Compost at 10 m3/ha 3 Compost at 20 m3/ha 4 Superphosphate at 125 kg/ha 5 Superphosphate at 250 kg/ha 6 Bio-phos at 125 kg/ha 7 Bio-phos at 250 kg/ha 8 Control (existing pasture-no treatment)

The “Narrambulla” site consists of a perennial ryegrass soil sown into sandy loam soils

overlaying rocky subsoils whilst the “Strathmere” site consists of phalaris and sub clover on

alluvial soils. To assist with assessing the economic benefits to both sites, dry matter was

mechanically harvested from the site, assessed and reported in kilograms of dry matter per

hectare (kg/DM/ha) the dry matter amounts indicate the potential feed source available for

animal production on the sites. For ease of assessment it is assumed that this dry matter can

contribute to the growing of meat and wool through sheep production and reported in a

dollar value per hectare.

Narramulla Results – Perennial Rye pasture

Four pasture cuts were undertaken at these sites throughout the 2009-10 seasons and the

average dry matter per hectare recorded, these are reported in table 4.

Table 4

Treatment 1 2 3 4 5 6 7 8*

Nov 2009 average cut 1742 2778 3561 2239 2876 3098 2164 2179

Mar 2010 cut 4734 4334 4833 3995 4285 4689 3325 4191

Aug 2010 cut 171 326 882 257 317 123 108 134

Nov 2010 cut 2459 3058 3870 2989 3261 2046 2031 1853

Total (average) 9106 10496 13146 9480 10739 9955 7628 8357

% variation from Control 8.97 25.60 57.31 13.45 28.51 19.12 -8.72 0.00

*Control

Each cut is an average of 3 replications at each point in time

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Any increase in growth above 20% variation from the control shows a significant impact

created by the treatment. The most significant is with treatment 3 which was the spreading

of compost at 20m3 hectare showing a 57% change. Whilst the spreading of superphosphate

at 250kg/ha in treatment 5 shows an increase in production of approximately 29%. To

understand if these results provide a positive economic benefit to farmers the costs of each

treatment must be reviewed and the value of the output assessed.

Income assessment – Table 5

Treatment 1 2 3 4 5 6 7 8

Average total dry matter

(Kg/ha)

9116 10524 13206 9498 10773 9980 7626 8365

Average pasture

digestibility @ 60%

5470 6314 7924 5699 6464 5988 4576 5019

Converting to Dry sheep

Equivalents** 600kg/DSE

9.11 10.50 13.15 9.48 10.74 9.95 7.63 8.36

DSE change from control 0.75 2.14 4.79 1.12 2.38 1.60 -0.73

**Dry Sheep Equivalent (DSE) assumed to be a 45kg dry sheep

Table 6: Assuming the gross margin per DSE for enterprises in this region is $60 then;

Treatment 1 2 3 4 5 6 7 8

Increased Income

from control

($/ha) $44.98 $128.36 $287.35 $67.42 $142.94 $95.88 -$43.73 $ -

Willingness to pay

(breakeven)

$9.00

$12.84

$14.37

$0.54

$0.57

$0.77

-$0.17

Units $/m3 $/m3 $/m3 $/kg $/kg $/kg $/kg

To calculate the value of pasture, the additional growth associated with each treatment is

calculated and change to a DSE value. To gain this value it is assumed that a 45kg sheep

through grazing habits and pasture sequence of growth will only utilise approximately 60%

of the total dry matter. In addition to this, the conversion on the amount of intake to

maintain the current condition of this livestock will be approximately 600kg per year.

Therefore the total annual DSE per hectare will equal the total dry matter @ 60% divided by

the amount consumed per DSE (600kg). The treatment with the largest increase in DSE is

18

treatment 3 with 20m3/ha of compost applied showing the extra growth that is available

using this technique.

However there is a cost associated with this amount of compost. Upon further investigation

of costs in table 8, it is evident that although treatment 3 gives a larger income (based on

$60/DSE profit) the return per unit of compost applied is similar to treatment 2 at a rate of

10m3/ha. By dividing the extra income received by the compost amounts, the price farmers

would be willing to pay regarding this output is calculated. This amount is approximately

$12.50m3 to $15m3 as indicated in table 6 and provides a benchmark to the minimum price

farmers would be willing to pay for compost before other social, environmental and physical

soil benefits are calculated. Table 6 also indicates that there would be more benefit from

spending on compost at higher prices as results show that inorganic fertiliser would need to

retail below $500 tonne to provide the same value. It is also evident that based on 2011

prices for sheep the investment in compost at $45m3 applied to these pastures would be

close to breakeven, before other no-quantifiable benefits are assessed.

Further analysis of the willingness to pay for high quality compost is provided below for

grazing pasture as a comparison with data also supplied on the impact on yields of Spelt

wheat (Landtasia), Blackbutt oats (Forest Lodge), and hard wheat (Condobolin). For further

clarification of agronomic benefits of compost applied in these trials refer to the agronomic

report mentioned previously in this report.

Strathmere Results – Phalaris, sub-clover pasture

Four pasture cuts were undertaken at these sites throughout the 2009-10 seasons and the

average dry matter per hectare recorded, these are reported in table 7.

Table 7

Treatment 1 2 3 4 5 6 7 8

Nov 2009 cut 3058 3576 3415 2922 3233 2692 2266 2790

Mar 2010 cut 2056 2089 2849 2054 2276 2365 1931 2126

Aug 2010 cut 509 506 638 472 671 479 433 631

Oct 2010 cut 2127 2261 3041 2315 3491 2033 1946 2402

Total (aver)DM/ha 7750 8431 9943 7763 9671 7568 6576 7948

% variation from Control -2.49 6.08 25.10 -2.33 21.67 -4.78 -17.27 0.00

Table seven shows results similar to the Narramulla results where the greatest impact on

pasture yields and when compared to the control occurs for treatments 2 & 3 for compost

applications and treatment 5 for inorganic fertiliser treatments. To further assess this

19

impact a breakeven analysis is undertaken on this trial to assess the economic outcomes of

the trial.

Table 8

Treatment 1 2 3 4 5 6 7 8

Average total

dry matter

(Kg/ha)

7750

8431

9943

7763

9671

7568

6576

7948

Average

pasture

digestibility @

60%

4650

5059

5966

4658

5803

4541

3945

4769

Converting to

Dry sheep

Equivalents*

8

8

10

8

10

8

7

8

dse change

from control

-0.20 0.48 1.99 -0.19 1.72 -0.38 -1.37

Increased

Income from

control $/ha

-$11.89

$28.98

$119.68

-$11.12

$103.36

-$22.79

-$82.36

Willingness to

pay for

treatment

(breakeven)

-$2.38

$/m3

$2.90

$/m3

$5.98

$/m3

-$0.09

$/kg

$0.41

$/kg

-$0.18

$/kg

-$0.33

$/kg

Table 8 indicates that the economic value of the compost used in this trial is approximately

30% of the yields experienced in the Narramulla trial and was greater in treatment 3,

compost applied at 20m3/ha, although these rates appear low the impact of low rainfall

during the trial period attributes to these results.

There is also an indication that the willingness to pay for additional inorganic fertiliser is

relatively low in comparison and either would be worthwhile investments.

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Crop Yield Breakeven Analysis

Three cropping trials were conducted on the Groundswell compost, these being

Landtasia – approximately 20km east of Bungendore NSW – Spelt Wheat trial (2009)

Forest Lodge – need data – Blackbutt Oats (2010)

Condobolin Agricultural Research Station – 5km East of Condobolin Hard wheat

(2009-10)

All trials measured all agronomic principles of growing these crops and the biological

changes that took place on the replicated trial plots (can be view in agronomic report). Of

interest in this analysis is the different rate of compost, inorganic fertilisers, chemicals and

crop type on the economic benefits/costs achieved from yield change.

Landtasia – Spelt wheat

This trial was conducted during the 2009 season and was impacted by drought conditions.

The following tables indicate the yield responses occurring with different rates of compost

and inorganic fertiliser.

Treatments 1 Compost – high rate (20 m3 /ha)

2 Compost medium rate (12.5 m3 /ha)

3 Compost low rate (5 m3/ha) 4 FCMP – standard rate (120 kg /ha)

5 FCMP - med rate (250 kg /ha)

6 FCMP - high rate (400 kg /ha) 7 Control A (No fert)

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Table 9

Treatment 1 2 3 4 5 6 7

Rep 1 0.60 0.89 0.89 0.61 0.67 0.54 0.86

Rep 2 0.57 0.94 0.67 0.63 0.69 0.74 0.49

Rep 3 0.68 0.53 0.46 0.57 0.53 0.47 0.49

Total (aver tonnes/ha) 0.62 0.79 0.67 0.60 0.63 0.58 0.61

% variation from

Control

0.76 28.79 9.85 -1.52 3.03 -4.55 0.00

Change from control

(tonnes/ha)

0.005 0.176 0.060 -0.009 0.019 -0.028 0.000

Increase value @

$850/tonne

$3.94 $149.54 $51.16 -$7.87 $15.74 -$23.61 $ -

Willingness to pay for

treatment (breakeven)

$0.20

$/m3

$11.96

$/m3

$10.23

$/m3

-$0.07

$/kg

$0.06

$/kg

-$0.06

$/kg

Based on one year’s data there appears to be a response at lower rates of compost 12.5m3

and 5m3 in comparison to poor results from the inorganic fertiliser at varying rates and in

some cases negative yield results.

Based on an average price of spelt wheat the value increase per hectare from the 12.5m3

compost application was in the range of $150 per tonne. The breakeven price of compost in

this application (treatment 2) is $11.96 and provides supporting evidence to values obtained

from the pasture trials.

22

Forest Lodge – Blackbutt oats

This trial was conducted during the 2010 season and Blackbutt oats was the focus of the

agronomic outcomes. The oats crop is assessed on both its grazing and crop yield potential

to assess the benefits of compost compared to inorganic fertilisers. The price of oats in this

assessment is $200 to cover both the yield and grazing value. The treatments were the same

as applied in the Landtasia trial.

Table 10

Treatment 1 2 3 4 5 6 7

Rep 1 3.29 2.34 2.54 2.54 2.11 3.13 2.54

Rep 2 4.14 3.50 4.01 2.87 3.99 2.68 3.50

Rep 3 4.35 3.85 3.25 4.03 4.12 4.12 3.62

Total (aver) 3.92 3.23 3.27 3.15 3.41 3.31 3.22

% variation from Control 21.9 0.3 1.4 -2.2 5.8 2.8 0.0

Change from control (tonnes/ha) 0.704 0.009 0.047 -0.072 0.187 0.091 0.000

Increase value @ $200/tonne $ 140.89 $1.78 $9.33 -$14.44 $37.33 $ 18.22 $ -

Willingness to pay for treatment

(breakeven)

$7.04

$/m3

$0.14

$/m3

$1.87

$/m3

-$2.89

$/kg

$0.37

$/kg

$ 0.11

$/kg

$ -

Results indicate that unlike the spelt wheat trial the greatest value is from the highest rate

of compost 20m3 and returns approximately $140 per hectare and a breakeven rate on the

compost used at approximately $7m3.

23

Condobolin – Hard wheat Table 11

Treatment

Rep 1

Rep 2

Rep 3

Ave Yield

(t/ha)

1 DAP @ 30kg/ha + medium compost 0.17 0.40 0.29 0.286

2 Compost - high rate 0.26 0.23 0.29 0.262

3 Compost - medium rate 0.22 0.21 0.18 0.202

4 Compost - low rate 0.13 0.22 0.06 0.139

5 Control C (No chemical & no fertiliser) 0.06 0.23 0.18 0.156

Chem 1 Compost - high rate 0.19 0.02 0.15 0.121

Chem 2 Compost medium rate 0.10 0.06 0.10 0.088

Chem 5 Control A (DAP @ 50/kg/ha) 0.04 0.19 0.03 0.085

Chem 4 DAP @ 30kg/ha + medium compost 0.04 0.28 0.07 0.131

Chem 5 Control A (DAP @ 50/kg/ha) 0.04 0.21 0.23 0.161

The Groundswell trial at Condobolin was conducted over 2009-10 as replicated trials on

hard wheat that was indicative of a wheat variety grown in the area. Rates of compost were,

high (20m3/ha) medium (12.5m3/ha) low (5m3/ha).

Another interesting component of this research is the 2nd trial that used the same

treatments however no chemicals were used. Results indicated there may have been an

improvement in yields caused by allowing the compost to act as a weed restrictor and the

possibility that the lack of chemicals allowed the microbes in the compost to continue to

operate without being retarded by chemicals; however this theory remains to be tested in

further trials.

24

Table 12

Treatment 1 2 3 4 5

Rep 1 0.17 0.26 0.22 0.13 0.06

Rep 2 0.40 0.23 0.21 0.22 0.23

Rep 3 0.29 0.29 0.18 0.06 0.18

Total (aver) 0.29 0.26 0.20 0.14 0.16

% variation from Control 83.6 68.1 29.4 -10.9

Change from control (tonnes/ha) 0.130 0.106 0.046 -0.017

Increase value @ $200/tonne $26.08 $21.22 $9.15 -$3.40

Willingness to pay for treatment (breakeven) $0.87 $1.06 $0.73 -$0.68

The results from the wheat yield trial show small responses to compost, however the rates

of application to achieve these results far outweigh the cost of application with the required

minimum cost of compost being approximately $1.00m3

Of major interest is the overall response that indicates that the application of compost

actually has an impact on yield, which in this case due to the low in crop rainfall may be

attributed to the improvement in water holding capacity as shown previously in figure 3.

25

5. Economic Conclusions All results indicate that different rates of compost applications have varying impact on the

production of both seed and dry matter in the farming system. However, as is predictable

with all farming systems, the risk associated with the selection of varieties that will be

suitable for applications of compost and most certainly the rate of compost required is

highly variable as indicated by the results. It must be stressed that the application of

compost in nearly all trial replications provided a positive improvement in growth of all

pastures and crops in years when rainfall was low and many traditional systems failed.

Results have enabled the questions posed earlier to be assessed as follows;

What is the financial value of increased yield?

There is an indication that with yield benefits only, farmers would be willing to pay

approximately $15m3 for pastures and $7-$10m3 for crop. However the extra benefits

gained in soil biomass accumulation, soil health, and trace elements was unable to be

measured due to the low rainfall and length of the trials. It would be assumed however that

due to the yield increasing by 10-20% in most cases that the non tangible benefits would do

the same.

What is the financial value to farmers of improved crop quality?

Factors of crop quality such as pasture digestibility and energy provided to livestock and

change in seed grades were not definable by the trials; small changes in pasture quality

were detected and can be viewed in the agronomy trials as previously referenced but

provide little statistical relevance for this to be assessed.

What is the financial value to farmers of reduced water use?

As stated earlier in results, there appears to be a water use efficiency component that

compost adds to the soil to enable plants to survive in respect to plants without compost.

Previous studies show water holding capacities to improve in compost applied soils from 15-

30% which has a flow on effect to crop yields. This will directly impact financial returns from

compost as well as providing social and environmental gains to society from reduced water

use in a dry environment.

What is the financial value to farmers of improved soil structure?

Soil is the medium that allows plants to be seeded and grow. Poor soil structure can hinder

plant growth and good soil structure enables plants to reach their biological and

physiological potential. This research shows indirectly that soils are enhanced due to yield

increases in all compost applications, if these had shown negative growth then it would be

assumed that soil structure and properties may have been adversely affected by compost

applications, this was not the case. However soil structure change is a gradual (long time

run) impact and cannot be answered in the timeframe of this study.

26

What is the financial value to farmers of increased microbial activity?

The biological study completed shows evidence that there is a microbial improvement in the

soils tested; however these improvements are unable to be assessed financially due to the

minimal data provided and the timeframe required to assess these impacts.

What is the financial value to farmers of reduced nutrient leakage?

Nutrient leakage is a financial cost not only to a farmer but to society through the external

impacts to downstream water users or water ways (could be a benefit through nutrient

importation) The small improvements in soil water holding capacity as mentioned earlier

and the improved yield data indicate that plants are gaining access to more nutrients and

water which indicates these are being held by the soil in a greater capacity than before

compost application. This would indicate that the application of compost does have a direct

impact on reducing nutrient leakage and yield improvement figures should be a guide to this

impact. However societal impacts prove too difficult to measure as water movement from

site is too diffuse to collect and monitor and has not been attempted in this research.

What is the financial value to farmers of reduced fertilizer costs?

Increasing costs of inorganic fertiliser has driven many farmers to look for alternatives to

drive their production systems. At average application rates a farmer will pay between $80

and $150 per hectare for inorganic fertiliser, however in recent years this cost in some cases

has doubled (highly variable) leading to enquiries into organic replacements. Result figures

provide the benchmark for what farmers would be willing to pay for organic replacements.

This study shows that at average inorganic fertiliser rates and prices ($500 tonne) a farmer

should be willing to pay between $7-$15m3 for organic fertiliser in a broad acre application

as a replacement fertiliser or as a blend with inorganic fertiliser. As prices double for

inorganic fertiliser it would be certain that the willingness to pay for organic fertiliser would

double (economic substitution effect)

What is the financial value to farmers of Carbon Sequestration?

Research data shows that the plots with compost applied were able to build or hold onto

plant biomass longer than others without compost which should imply an improved ability

to hold carbon for longer. If this is the case and carbon trading at any given price occurs

then there should be evidence that value can be placed on composts ability to improve

carbon storages. However care must be taken when following this concept as plants above

ground can be easily removed during low rainfall years making this assessment difficult.

What is of more interest is the retention of plant roots as a carbon store which would add

value to the process. Not enough data was provided to provide any statistical link to this

process.

27

Final Comments

Therefore it appears critical that ongoing research over several more years is required if the

true impact of compost on the changing physical and chemical nature of soils is to be

assessed.

However it is evident that the removal and processing of household organics through the

Groundswell process is a cost effective way for councils to handle this waste stream. The

price of compost on the market will impact on the cost of implementing this system but

overall will have little impact on the ability of the collection and processing component to

be a positive financial investment for councils. However each council will need to assess

their current waste streams, collection techniques and timing to make this assessment. This

report is provided as a guide only to assist in this decision making process.

28

6. References

Brisson I, Pearce D, 1995 Benefits transfer for disamenity from waste disposal, The Centre for Social and Economic Research on the Global Environment, University College London and University of East Anglia

Buckerfield, JC and Webster, KA 1996 Composted green organics for water conservation and weed control. CSIRO Land and Water Compost market development project, Municipal Solid Waste Project GRW/01/03 September 2006 Department of the Environment, Water, Heritage and the Arts (DEWHA) National Waste Report 2010 Fact Sheet, www.environment.gov.au/wastepolicy/resources.html

Domestic Kerbside Waste Stream Audit for Groundswell, November 2008, Report produced for Groundswell by EC Sustainable Environment Consultants Domestic Kerbside Waste and City to Soil Audit for the Groundswell Project, July 2009, Report produced for Groundswell by EC Sustainable Environment Consultants Houghton C, 2010, Mid project Agronomy report, Chris Houghton Agriculture, Groundswell Project Powell J.C, Brisson I, 1994, The Assessment of Social Costs and Benefits of Waste Disposal, CSERGE Working Paper WM 94-06 Reevs D 1997 The role of soil organic matter in maintaining soil quality in continuous cropping systems. Soil Tillage Research (43), 131-167

Sullivan D, Bary A, Thomas D, Fransen S and Cogger G 2002 Food waste compost effects on

fertilizer nitrogen efficiency, available nitrogen and tall fescue yield. Soil Science, Society of

America Journal (66), 154-161

Xu X, Rudolph V, Greenfield P, Measuring the Environmental Cost of Landfill, Department of Chemical Engineering, the University of Queensland

www.groundswellproject.blogspot.com

Disclaimer

This report may be of assistance to you but the author M & M Project Management does not guarantee that this

publication is without flaw and therefore disclaim all liability for any error or loss that may occur from you relying on this

information