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Publications
June 2003,
Environment Australia
Unfortunately, the scale of the composting activities during the trial was too small to provide meaningful information about operating costs and economic outcomes for on-farm composting.
Nevertheless, investment and processing costs were determined for three hypothetical on-farm composting operations that processed 1,000 tonnes (Scenario A), 5,000 tonnes (Scenario B) or 10,000 tonnes (Scenario C) of municipal / commercial organics per year. Each of these imaginary composting operations is briefly outlined below. Turning of windrows with a tractor mounted front-end loader (similar to trial operation, Scenario A-1) or a dedicated tractor driven windrow turner (Scenario A-2) was compared for the smallest operation.
| Scenario A: Composting of 1,000 t/year | |||
| Material processed: | 1,000 t/year municipal / commercial organics | ||
| 200 t/year farm manures | |||
| Machinery used: | A-1: | Tractor front-end loader with retrofitted bucket (0.75 m3) | |
| A-2: | Tractor driven windrow turner (400 m3/h) | ||
| Spatial requirements: | A-1: | 2,730 m2 hardstand for composting and storage | |
| A-2: | 2,150 m2 hardstand for composting and storage | ||
| Composting: | Open windrow composting | ||
| A-1: | 26-week composting cycle | ||
| Turning interval once every two weeks | |||
| A-2: | 12 week composting cycle | ||
| Turning interval: | once per week during week 1-6 | ||
| once per fortnight during week 7-12 | |||
| Loss of volume during composting: 60.5% | |||
| Loss of weight during composting: 55.7% | |||
| Screening: | Finished compost is not screened | ||
| Finished compost: | Volume: 1,063 m3/year | ||
| Tonnage: 531 t/year | |||
| Scenario B: Composting of 5,000 t/year | |||
| Material processed: | 5,000 t/year municipal / commercial organics | ||
| 500 t/year farm manures | |||
| Machinery used: | Tractor driven windrow turner (400 m3/h) and tractor with retrofitted front-end loader (0.75 m3 bucket) to move material | ||
| Spatial requirements: | 6,230 m2 hardstand for composting and storage | ||
| Composting: | Open windrow composting | ||
| 12 week composting cycle | |||
| Turning interval: | once per week during week 1-6 | ||
| once per fortnight during week 7-12 | |||
| Loss of volume during composting: 60.5% | |||
| Loss of weight during composting: 55.7% | |||
| Screening: | Finished compost is not screened | ||
| Finished compost: | Volume: 4,734 m3/year | ||
| Tonnage: 2,367 t/year | |||
| Scenario C: Composting of 10,000 t/year | |||
| Material processed: | 10,000 t/year municipal/ commercial organics | ||
| 1,000 t/year farm manures | |||
| Machinery used: | Tractor driven windrow turner (400 m3/h) and second-hand front-end loader to move material | ||
| Spatial requirements: | 11,500 m2 hardstand for composting and storage | ||
| Composting: | Open windrow composting | ||
| 12 week composting cycle | |||
| Turning interval: | once per week during week 1-6 once per fortnight during week 7-12 |
||
| Loss of volume during composting: 60.5% | |||
| Loss of weight during composting: 55.7% | |||
| Screening: | Finished compost is not screened | ||
| Finished compost: | Volume: 9,468 m3/year | ||
| Tonnage: 4,734 t/year | |||
Establishing a composting operation incurs up-front investment costs for civil construction, including planning and design, and purchase of machinery for processing and handling. Purchase or leasing costs for land are not considered here. An overview of investment costs for the considered composting operations is provided in Table 9.
| Item / Service | Scenario / Design capacity |
|||
A-1 1,200 t/yr |
A-2 1,200 t/yr |
B 5,500 t/yr |
C 11,000 t/yr |
|
| Civil construction * | 21,617 |
17,232 |
48,375 |
88,464 |
| Windrow turner | - |
35,000 |
35,000 |
35,000 |
| Retrofitted bucket + misc. | 3,500 |
3,500 |
4,000 |
2,000 |
| Loader (second-hand) | - |
- |
- |
50,000 |
| Total investment | 25,117 |
55,732 |
87,375 |
175,464 |
| Investment / t capacity | 20.93 |
46.44 |
15.80 |
15.95 |
| * Mainly hardstand for composting and storage, incl. planning and design | ||||
Naturally, investment costs increase with increasing plant capacity. The small plant with a design capacity of 1,200 tonnes per year requires an investment of approximately $25,000 or more than $55,000 if a windrow turner is part of the operation. The larger plants require about $87,000 (5,500 t/yr) or more than $175,000 (11,000 t/yr) to establish. However, investment costs per tonne design capacity are lowest for the large plants at less than $16 per tonne.
Operating costs cover fixed and variable processing costs that are recurring. Operating costs for composting operations usually account for labour costs, machinery operating costs (including fuel and energy), maintenance, administration as well as depreciation and finance costs.
Operating costs for the hypothetical on-farm composting operations are presented on the following pages (Table 10 to Table 13). It should be noted that neither size reduction (shredding) of the feedstock nor screening of the composted material are part of operational procedures. Feedstock quality determines whether these two processing steps can be omitted from the composting operation. Shredding and screening is not necessary if the feedstock contains only few or no large wooden components and few impurities. Processing costs will increase considerably if either or both of these processing steps become necessary. Costs for shredding of garden organics in South-East Queensland vary between approximately $6.50 and $7.50 per m3 processed material.
| Costs | Item | Specifications | Operating costs |
|---|---|---|---|
| Investment | |||
| Civil construction | 18,216.00 | 2530 m2 compost hardstand x $7.2 | |
| 1,440.00 | 200 m2 storage hardstand x $7.2 | ||
| 1,000.00 | Miscellaneous | ||
| Planning/design costs | 960.80 | 5 % of civil construction | |
| Equipment | 2,500.00 | Retrofitted 0.75 m3 tractor bucket | |
| 1,000.00 | Various small items | ||
| Maintenance | Civil construction | 1 % of investments | 216.17 |
| Equipment | 10 % of investment | 250.00 | |
| Lubricants etc | Lump sum | 100.00 | |
| Insurance | 0.1 % of total investments | 25.12 | |
| Subtotal, maintenance | 591.28 | ||
| Personnel | Farm labour: 9 h/wk | $18.75 / h | 8,775.00 |
| Site manager: 0.5 h/wk | $30.00 / h | 780.00 | |
| Subtotal, personnel | 9,555.00 | ||
| Operation | Tractor | 7 h/week (364h @ $15/h) | 5,460.00 |
| Subtotal, tractor operation | 5,460.00 | ||
| Other costs | Disposal of impurities | 500.00 | |
| Administration | 1,000.00 | ||
| Subtotal, other costs | 1,500.00 | ||
| Depreciation/Finance | Civil construction | 20 yr, 6% interest | 1,885.00 |
| Tractor (pro rata 31%) | 12 yr, 6 % interest | 2,588.00 | |
| Subtotal, depreciation & finance | 4,473.00 | ||
| Total annual operating costs | 21,579.28 | ||
| Costs per tonne | Total input (1,200 t) | 17.98 | |
| Municipal organics (1,000 t) | 21.58 | ||
| Costs per cubic meter of generated compost (1,063 m3) | 20.30 | ||
| Note: Labour costs include 25% on-costs Assumed value of new tractor = $70,000 |
|||
| Costs | Item | Specifications | Operating costs |
|---|---|---|---|
| Investment | |||
| Civil construction | 14,040.00 | 1950 m2 compost hardstand x $7.2 | |
| 1,440.00 | 200 m2 storage hardstand x $7.2 | ||
| 1,000.00 | Miscellaneous | ||
| Planning/design costs | 752.00 | 5 % of civil construction | |
| Equipment | 35,000.00 | Tractor driven windrow turner | |
| 2,500.00 | Retrofitted 0.75 m3 loader bucket | ||
| 1,000.00 | Various small items | ||
| Maintenance | Civil construction | 1 % of investments | 172.32 |
| Equipment | 10 % of investment | 3,750.00 | |
| Lubricants etc | Lump sum | 100.00 | |
| Insurance | 0.1 % of total investments | 53.23 | |
| Subtotal, maintenance | 4,075.55 | ||
| Personnel | Farm labour: 4.1 h/wk | $18.75 / h | 3,997.50 |
| Site manager: 0.5 h/wk | $30.00 / h | 780.00 | |
| Subtotal, personnel | 4,777.50 | ||
| Operation | Tractor | 3 h/week (156h @ $15/h) | 2,340.00 |
| Subtotal, tractor operation | 2,340.00 | ||
| Other costs | Disposal of impurities | 500.00 | |
| Administration | 1,000.00 | ||
| Subtotal, other costs | 1,500.00 | ||
| Depreciation/Finance | Civil construction | 20 yr, 6% interest | 1,437.00 |
| Windrow turner | 7 yr, 6 % interest | 6,270.00 | |
| Tractor (pro rata 10%) | 12 yr, 6 % interest | 834.90 | |
| Subtotal, depreciation & finance | 8,541.90 | ||
| Total annual operating costs | 21,234.95 | ||
| Costs per tonne | Total input (1,200 t) | 17.70 | |
| Municipal organics (1,000 t) | 21.23 | ||
| Costs per cubic meter of generated compost (1,063 m3) | 19.98 | ||
| Note: Labour costs include 25% on-costs Assumed value of new tractor = $70,000 |
|||
| Costs | Item | Specifications | Operating costs |
|---|---|---|---|
| Investment | |||
| Civil construction | 38,880.00 | 5400 m2 compost hardstand x $7.2 | |
| 5,976.00 | 830 m2 storage hardstand x $7.2 | ||
| 1,500.00 | Miscellaneous | ||
| Planning/design costs | 2,019.00 | 5 % of civil construction | |
| Equipment | 35,000.00 | Tractor driven windrow turner | |
| 2,500.00 | Retrofitted 0.75 m3 loader bucket | ||
| 1,500.00 | Various small items | ||
| Maintenance | Civil construction | 1 % of investments | 483.75 |
| Equipment | 10 % of investment | 3,750.00 | |
| Lubricants etc | Lump sum | 150.00 | |
| Insurance | 0.1 % of total investments | 84.88 | |
| Subtotal, maintenance | 4,468.63 | ||
| Personnel | Farm labour: 18 h/wk | $18.75 / h | 17,550.00 |
| Site manager: 1.5 h/wk | $30.00 / h | 2,340.00 | |
| Subtotal, personnel | 19,890.00 | ||
| Operation | Tractor | 11 h/week (572h @ $15/h) | 8,580.00 |
| Subtotal, tractor operation | 8,580.00 | ||
| Other costs | Disposal of impurities | 750.00 | |
| Administration | 1,300.00 | ||
| Subtotal, other costs | 2,050.00 | ||
| Depreciation/Finance | Civil construction | 20 yr, 6% interest | 4,218.00 |
| Windrow turner | 7 yr, 6 % interest | 6,270.00 | |
| Tractor (pro rata 31%) | 12 yr, 6 % interest | 2,558.00 | |
| Subtotal, depreciation & finance | 13,046.00 | ||
| Total annual operating costs | 48,034.63 | ||
| Costs per tonne | Total input (5,500 t) | 8.73 | |
| Municipal organics (5,000 t) | 9.61 | ||
| Costs per cubic meter of generated compost (4,700 m3) | 10.22 | ||
| Note: Labour costs include 25% on-costs Assumed value of new tractor = $70,000 |
|||
| Costs | Item | Specifications | Operating costs |
|---|---|---|---|
| Investment | |||
| Civil construction | 71,280.00 | 9900 m2 compost hardstand x $7.2 | |
| 11,520.00 | 1600 m2 storage hardstand x $7.2 | ||
| 2,000.00 | Miscellaneous | ||
| Planning/design costs | 3,664.00 | 5 % of civil construction | |
| Equipment | 35,000.00 | Tractor driven windrow turner | |
| 50,000.00 | Second hand loader | ||
| 2,000.00 | Various small items | ||
| Maintenance | Civil construction | 1 % of investments | 884.64 |
| Equipment | 10 % of investment | 8,500.00 | |
| Lubricants etc | Lump sum | 300.00 | |
| Insurance | 0.1 % of total investments | 125.46 | |
| Subtotal, maintenance | 9,810.10 | ||
| Personnel | Farm labour: 29.5 h/wk | $18.75 / h | 28,762.50 |
| Site manager: 2.5 h/wk | $30.00 / h | 3,900.00 | |
| Subtotal, personnel | 32,662.50 | ||
| Operation | Tractor | 10 h/week (520h @ $15/h) | 7,800.00 |
| Loader | 5 h/week (260h @ $35/h) | 9,100.00 | |
| Subtotal, tractor operation | 16,900.00 | ||
| Other costs | Disposal of impurities | 1,000.00 | |
| Administration | 3,000.00 | ||
| Subtotal, other costs | 4,000.00 | ||
| Depreciation/Finance | Civil construction | 20 yr, 6% interest | 7,713.00 |
| Windrow turner | 7 yr, 6 % interest | 6,270.00 | |
| Tractor (pro rata 52%) | 12 yr, 6 % interest | 4,341.00 | |
| Loader (pro rata 50%) | 10 yr, 6 % interest | 3,397.00 | |
| Subtotal, depreciation & finance | 21,721.00 | ||
| Total annual operating costs | 85,093.60 | ||
| Costs per tonne | Total input (11,000 t) | 7.74 | |
| Municipal organics (10,000 t) | 8.51 | ||
| Costs per cubic meter of generated compost (9,400 m3) | 9.05 | ||
| Note: Labour costs include 25% on-costs Assumed value of new tractor = $70,000 |
|||
Processing costs for the hypothetical composting operations are summarised in Table 14.
| Criteria | Scenario / Design capacity |
|||
A-1 1,200 t/yr |
A-2 1,200 t/yr |
B 5,500 t/yr |
C 11,000 t/yr |
|
| Total processing costs / year | 21,579 |
21,235 |
48,035 |
85,094 |
| Costs / t municipal organics | 21.58 |
21.23 |
9.61 |
8.51 |
| Costs / t processed organics | 17.98 |
17.70 |
8.73 |
7.74 |
| Costs / m3 generated compost | 20.30 |
19.98 |
10.22 |
9.05 |
Table 14 shows that processing costs for the small operation (1,200 t/yr) differ very little regardless of whether the windrows are turned with a tractor-mounted front end loader or with a dedicated windrow turner. This is based on the assumption that the composting process takes considerably longer (26 weeks) if the unshredded material is not turned and broken up with a windrow turner. Consequently, spatial requirements are higher and the hardstand area has to be larger. Processing costs for municipal organics in both small facilities are above $21 per tonne. Processing costs decrease considerably with increasing plant capacity. Processing costs in the medium size operation (5,500 t/yr) amount to $9.61 per tonne and in the large plant (11,000 t/yr) to $8.51 per tonne, if all costs of the operation are borne by the processed municipal organic materials. These processing costs however, do not include a profit margin. If a return on investment of 10% is expected, processing costs will increase between $1.75 and $5.57 per tonne of municipal organics processed (Table 15). Consequently, gate fees for the processing of municipal / commercial organics at the hypothetical on-farm composting operations range between $10.26 and $11.36 per tonne for the large and medium size operation, respectively and between $24 and $26.80 per tonne for the small plant.
| Item / Service | Scenario / Design capacity |
|||
A-1 1,200 t/yr |
A-2 1,200 t/yr |
B 5,500 t/yr |
C 11,000 t/yr |
|
| Total investment | 25,117 |
55,732 |
87,375 |
175,464 |
| Processing costs per tonne municipal organics | 21.58 |
21.23 |
9.61 |
8.51 |
| Return on investment (10%) per tonne municipal organics | 2.51 |
5.57 |
1.75 |
1.75 |
| Required gate fee per tonne municipal organics | 24.09 |
26.80 |
11.36 |
10.26 |
Presented production costs are similar to those identified for the on-site processing of industrial by-products by means of covered windrow composting with a tractor driven turner (Biala, 2002). In that case processing costs ranged between approximately $19 per tonne if 3,950 tonnes/year were processed and about $12.50 per tonne if more than 13,000 tonnes were composted each year.
Potts and Casey (1999) also presented comparable production costs for the co-composting of feedlot manure and sawdust, even though their figures were based on different premises (purchase of feedstock, screening, no hardstand, no windrow turner). They determined the break-even prices for the sale of compost to be $24.98 per cubic meter if 100 tonnes of material were composted and $12.45 per cubic meter if 10,000 tonnes were processed. In the above-presented scenarios, production costs ranged between $9.05 and $20.30 per cubic meter.
A range of case studies of on-farm composting operations in the US demonstrated that an economic assessment and comparison was difficult due to their diversity in size, management, level of investment, input materials, end-use, etc. (Rynk, 2001). Examples of compost production costs per cubic meter were estimated to amount to AU$ 7.88, $19.85 and $31.67 for three surveyed operations. Overall, Rynk (2001) concluded that 'based on the information compiled, the economics of on-farm composting generally appear to be positive'.
On-farm composting schemes are set up in such a way that the farmer can derive additional income by providing composting services to the community. On-farm composting of municipal / commercial organics, 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). In the presented cases it is assumed that all generated compost is utilised within the farm, saving on marketing and transport costs. However, this means that all costs associated with the processing of municipal / commercial organics have to be covered by imposed gate fees.
Costs associated with field application of compost are not considered here. Data provided by Biala and Wynen (1998) suggest that application costs for compost can vary between $3.50 and $9 per tonne. However, if small quantities of compost are spread with farm machinery, application costs may exceed $10 per tonne and if compost is applied directly from the transport truck, application costs can be as low as $2 per tonne. Arkwood (2003) suggests that loading, transport and application of animal manures incur costs between $6 and $12 per tonne.