Since 2015, I have owned and operated a fully-permitted Tier 2 composting facility in Johnson City, Tennessee. We have grown every year and our future looks bright. If you have an entrepreneurial spirit and want to build a greener America, I encourage you to consider starting your own compost business.
This article will give you an overview of why you should consider this industry, how to get started, and what a compost business looks like.
This business will be good for your world and your life! Let’s take a look at the many benefits of a compost business.
Climate and Economic Benefits of Diversion
As a Tier 2 composting facility, we are able to compost food scraps in addition to leaves, woodchips, and the like. Food scraps are an especially important material to keep out of our communities’ waste streams. They not only take up valuable space but also generate methane in the anaerobic environment of a landfill. Moreover, food scraps represent a potent soil amendment and plant nutrient resource that we should not squander. The amount of food scraps that we throw away every year is huge. Get this from the EPA:
EPA estimates that 63.1 million tons of food waste were generated in the commercial, institutional, and residential sectors in 2018, which is 21.6% of total municipal solid waste generation.
[Food: Material-Specific Data | Facts and Figures About Materials, Waste and Recycling | US EPA]
Diverting food scraps and other organics from landfills to beneficial use also confers economic benefits on the community. Our local landfill charges $44.13 per ton as a tipping fee. With surcharges and fees, that comes to $50.54. At my composting facility, I don’t charge a dime for leaves or woodchips, and people who drop off relatively small amounts of food scraps don’t have to pay. Large shipments are charged a flat $20 per ton tipping fee. So our operation gives the residences, businesses, and local governments an economical option for their organic waste disposal needs, and the finished product supports local farmers, landscapers, and garden centers.
Soil Health Benefits
The most important things my agronomy training taught me were the complexity and the impact of soils. I was amazed to learn that healthy, biologically-rich soils with plenty of organic matter promote water quality. You see, the greater number of chemical binding sites and microbial diversity in a healthy soil enable it to hold nutrient compounds in the root zone where plants can get them and prevent those same compounds from becoming pollutants in our groundwater. Moreover, soils with compost have been shown to improve surface water quality and lessen flooding by slowing down runoff, eliminating runoff, and even filtering.
The Natural Resources Defense Council states that “increasing soil organic matter by 1% allows soil to hold an additional 20,000 gallons of water per acre.”
In the last decade, scientists and the general public have realized that increasing a soil’s organic matter content with compost will re-establish the soil’s capacity to act as a carbon sink. That’s right! Compost has been shown to help a soil pull carbon out of the air.
Compost Processing Infrastructure Is Needed to Enable Organics Landfill Bans
Knowing the benefits of compost and the need to keep organics out of landfills, some states and municipalities have enacted organics landfill bans. Many more are studying this option. Years ago, a grocery store chain executive confided to me that he had no problem with such a ban. He said that as long as his competitors also had to separate their organics for composting, he’d be glad to do the same.
But what chance does such a ban have of succeeding if there is no composting facility nearby? That’s where YOU come in! We desperately need to increase our compost processing infrastructure in this country to enable widespread adoption of the practice for food scraps recycling.
Benefits to You, as an Entrepreneur
I’ll be blunt. Another reason you should consider this business is that it will be good for you. Let’s see how.
Compost businesses can be highly profitable. Don’t think it is a charity or just a labor of love. Yes, there will be a significant startup investment and ongoing expenses. And there is always great risk in starting a business. Our own journey to profitability has been a long slog, but we’ve made it and are continuing to grow. You can get this business started for a lot less than many other types, and you can scale up as revenue increases.
You will be tired and dirty. You will feel the stress of being an entrepreneur, and some of your days and weeks will be very long — but what you’ll be doing is extremely important. That sense of mission is sustaining, and the accompanying sense of meaningful accomplishment will be gratifying. Besides, being dirty and smelly is fun!
A lot of us are looking for ways to make our own corner of the world a better place. And we crave a deeper connection with the people around us. I didn’t realize it when I started this business, but being a compost business owner has done exactly that for me. I have so many interesting and involved conversations with people who drop off food scraps, participate in our residential or commercial food scraps collection service, or come to buy compost. Of course, we talk about the environment, waste issues, gardening, and soils … but the conversations inevitably move to the personal. I’m so grateful for them.
Get to Work Outside
Before I started my compost business, I didn’t realize how much I didn’t like working inside all the time. It’s always something I mention when people ask if I’m happy I started (I am). I tell them that working outside — even on blisteringly hot or bitterly cold days — is really good for me. And I love getting dirty every day. A friend of mine once kidded that he didn’t recognize me when I wasn’t dirty from the chest down.
The Business of Compost Business
As fun as this business is, never forget it is a business. You absolutely must treat it as such and develop your abilities as a business owner. This means, among other things, learning about financial statements and bookkeeping. A few words on revenue streams and material streams as they relate specifically to compost businesses follow.
This business has two revenue streams: inbound and outbound. Inbound revenue includes money you make for collecting or accepting material. For my facility, inbound revenue sources are the tipping fees I charge to large deliveries of food scraps, and the collection fees I charge to residents and businesses that have us come to their location for pickups. Outbound revenue includes the money you make when people buy your finished product. For my facility, it includes compost sales and delivery charges.
Our experience during the pandemic revealed something important. In times of uncertainty, your inbound revenue will suffer and your outbound revenue will hold or strengthen. Some residential disposal customers decide to quit because of financial worry. Some commercial disposal customers close or suffer a drop in business. On the flip side, many people will start or expand gardening to establish greater control over their food supply, particularly higher-priced items like bell peppers and tomatoes.
Another concept that you will need to understand for your compost business is material streams. Your compost facility will always have some material that can be stockpiled as it comes in such as wood chips and leaves. It will also have material that must be mixed and covered upon reception like food scraps. You will also have material that is in different stages of processing and curing. Your site layout, workflow, and overall throughput all depend on material streams. Make sure you have dependable and timely sources for all the materials you need.
For a point of reference, I keep several hundred cubic yards of wood chips and leaves stockpiled on a couple of acres. Mixing and initial processing takes place on a half-acre. Curing takes up a couple of acres.
How to Get Started
Getting a compost business started is a process. Here is a brief rundown of the steps you’ll need to perform.
Assess Local and Regional Situation, Markets, and Regulations
Before you embark on getting and preparing a site, you must find answers to a series of questions
Are There Composters in the Region?
If so, what feedstocks do they use? What prices do they charge for disposal and finished product(s)?
Where Do People Currently Get Compost or Topsoil and What Prices Do They Pay?
Are they gardeners, landscapers, farmers … all three? Do they require that it be bagged or will they come by in a truck or with a trailer?
What Are the Characteristics of the Compost That Is Currently Available?
Color, texture, contamination with plastic, coarse material like stones and twigs, and lab analysis.
What Are the Local and State Regulations I Must Comply With?
These regulations will mostly deal with buffer zones and prevention of liquid release. The regulations and the process to become permitted are intimidating for many people, but you can do it! Here are the regulations that I must comply with (pages 132 to 142): 0400-11-01.20210308.pdf (tnsosfiles.com).
Related Post: Sustainability 101: Building A Compost Pile
Determine Startup and Operating Costs
Using the answers to these questions and some knowledge of available real estate options, it’s time to come up with some numbers. Estimate the startup costs for getting your facility ready (especially land purchase, site preparation, and equipment costs) and what you’ll be spending each week (especially loan payments, fuel, labor, and maintenance).
Now estimate your revenue. This is the time to be realistic. What production you can expect to achieve each month? How much can you sell? Up to 80% of your sales will be in March, April, and May so budget for many lean months. Make a pro-forma profit and loss statement. Now you can decide whether it makes economic sense to proceed.
Site Selection, Purchase, and Preparation
Your site will largely be determined by the limitations imposed by regulations. A property may seem great, but if a neighbor’s residence is close or there’s a stream running through it, your potential processing area may be too small. Use Google Earth to eliminate unusable properties before you waste a lot of time walking them all. Of course, you want a property that is as close to your customers as possible, but not so close to highly populated areas that it will be prohibitively expensive or have neighbor complaints.
Once you pick a property and buy or lease it, money will be flying out the door. You need to get it prepared and permitted as soon as possible so you can start to get some revenue. Line up as many contractor commitments and go through as much of the permitting process as possible before your purchase. Then, the race to opening day is on!
The biggest site preparation chores are grading, on-site roads, and surfaces. The food scraps reception area and initial processing area will need an impermeable surface such as concrete (expensive) or asphalt (also expensive, but less so). Stockpiling of chips and leaves and curing of compost can probably be done on somewhat level bare ground, but be sure to check your regulations.
If there is a composting facility nearby, you’ll have to determine the feasibility of an additional one in the assessment phase of pre-launch. If you can access enough feedstocks and differentiate your operation via price or some characteristic of the disposal service or finished product, you can compete. It’ll be more difficult, however. There are many areas that have no facility at all. That’s the key purpose of my website and this article — to increase the geographic range of composting services and products to new areas.
Acquire any necessary equipment while the site is being prepared. The regulations will probably require you to have all equipment onsite before you accept any material. So again, be ready to start as soon as possible. I was able to get up and running with a truck and a skid steer. That’s about as lean as you can expect.
Here are the general operations that you’ll be performing on a daily and weekly basis.
Keep plenty of bulking agent (woodchips) and carbon (leaves) onsite at all times. Be careful not to pile them too high because doing so will run the risk of fire. Keep your piles under 14 feet and have plenty of 15 feet wide spaces between piles. This will prevent the piles from overheating and in the event of a fire, will allow the fire department to get in there and save the day. We have never had a fire at our facility and plan to keep it that way!
Reception of putrescible waste (food scraps) will need to be on an impermeable surface such as asphalt or concrete. Within an hour of reception, mix that material with at least twice as much bulking agent, and carbon and cover with a layer of leaves a few inches thick.
Mixing and Forming
Mix the material every day until you have enough to form an aerated windrow. To do this, assemble a perforated 4-inch diameter pipe on the processing surface. Connect this to a blower on a timer. Cover that with 8 inches of coarse wood chips, and cover that with 6 feet of mixed material. Then, cover the windrow with 6 inches of leaves to insulate it.
Have the blower kick on for about a minute every 25 minutes or so. Adjust this over the course of a month to aim for an internal temperature that holds over 131 degrees Fahrenheit for three days, and then stays between 110- and 120-degrees for the rest of the month. It won’t always be so precise, but that’s the range you want. Every week, re-wet the material with about 100 gallons of collected rainwater to 25 feet of windrow.
After a month of processing, move the material to a curing area. It does not need as much oxygen anymore, but you should turn it weekly. Let it cure for about four months. When mature, its internal temperature should match ambient temperature or be slightly (about 5 degrees Fahrenheit) elevated.
Screening and Sale
Your material is now compost and ready for screening and sale. Screening is a very satisfying step. If you are operating on a limited budget like we are, it is also time consuming. Note that screening may spark a short-lived temperature spike so you should wait a week or so after screening before you sell the compost.
About the Writer
Joe Hoffman is the owner and operator of Hoffman Composting, a Tier 2 composting facility in Johnson City, Tennessee. He has a BS in Agronomy from the University of Wisconsin. In March 2020, Joe launched the website CompostBusiness.com with the mission of supporting current and aspiring compost entrepreneurs. The topics in this article are more thoroughly examined there. Feel free to contact him with any compost or business questions or comments at email@example.com.
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