2011

The Economics of Groundswell

Michael Reynolds
M & M Project Management
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.

5
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

8
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.

11
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

Stage 1 Stage 2
Ave weekly household 10.41kg 8.84kg
waste bin weight
Ave annual waste per 543kg 461kg
household
Ave weekly household food 3.19kg 2.35kg
waste in residual
Ave weekly household 0.92kg 0.65kg
garden organics in residual
Ave weekly household food N/A 0.44kg
waste in city to soil
Ave weekly household N/A 9.33kg
garden organics in city to
soil
Ave contamination rate N/A 0.2%

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).

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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

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

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

13
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

14
 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
Condobolin - Soil Water Holding Capacity
into groundwater, streams and 11.8
rivers which may result in
11.6
downstream costs through
11.4
pollution to these water sources.
11.2
Compost’s water holding ability
11.0

%
means more moisture is retained 11.6 11.5
10.8 11.4
near plants roots resulting in less
10.6 11.0
water needed for plant growth.
10.7
10.4
Results from the Groundswell trials
indicate that compost has enabled 10.2
T-ment 1 T-ment 2 T-ment 3 T-ment 4 T-ment 5
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

16
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 9116 10524 13206 9498 10773 9980 7626 8365
(Kg/ha)

Average pasture 5470 6314 7924 5699 6464 5988 4576 5019
digestibility @ 60%

Converting to Dry sheep 9.11 10.50 13.15 9.48 10.74 9.95 7.63 8.36
Equivalents** 600kg/DSE

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

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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

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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 @ 4650 5059 5966 4658 5803 4541 3945 4769
60%

Converting to
Dry sheep
Equivalents* 8 8 10 8 10 8 7 8

dse change -0.20 0.48 1.99 -0.19 1.72 -0.38 -1.37

from control

Increased
Income from
control $/ha -$11.89 $28.98 $119.68 -$11.12 $103.36 -$22.79 -$82.36

Willingness to
pay for
treatment -$2.38 $2.90 $5.98 -$0.09 $0.41 -$0.18 -$0.33
(breakeven) $/m3 $/m3 $/m3 $/kg $/kg $/kg $/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 0.76 28.79 9.85 -1.52 3.03 -4.55 0.00

Control

Change from control 0.005 0.176 0.060 -0.009 0.019 -0.028 0.000
(tonnes/ha)

Increase value @ $3.94 $149.54 $51.16 -$7.87 $15.74 -$23.61 $-

$850/tonne

Willingness to pay for $0.20 $11.96 $10.23 -$0.07 $0.06 -$0.06

treatment (breakeven)
$/m3 $/m3 $/m3 $/kg $/kg $/kg

Based on one year’s data there appears to be a response at lower rates of compost 12.5m 3
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.

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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 $7.04 $0.14 $1.87 -$2.89 $0.37 $ 0.11 $ -
(breakeven)
3 3 3
$/m $/m $/m $/kg $/kg $/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.

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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.

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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.

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 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.

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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.

26
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.

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 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

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