Florida study finds potential hurdles are product quality, pricing, shipping, distance and how to gain confidence in using finished materials for best results.
MARKETS with continuous demand need to be developed in order for Recycled Organic Products (ROP) to be moved out of recovery facilities and beneficially used. To promote use of ROP, these products must bring additional values when used as soil amendments. Addressing factors that can enhance development of markets may help organics recycling facilities enhance output of their products. Market surveys indicate that major factors affecting ROP markets in Florida are quality, information and availability.
Expanding results of recent studies, this paper explores the existing and potential market for ROP in Florida, a real issue and challenge that the organics recycling industry is faced with. This paper utilizes data and information collected from two previous surveys on various aspects of demand and supply of ROP in Florida. On the demand side, data were collected on issues such as problems experienced by compost users, sources of information about compost, barriers to using compost, and incentives for potential compost users. The surveys also explored the issues of concern and the attitudes of those who already use compost as well as noncompost users in Florida. Issues relevant to supply include capacity and actual volume and type of ROP, customers, percent of products shipped out and shipping distance. Marketing efforts by producers as well as how to improve demand and address customers' concerns also were covered in the survey.
Issues Relevant to Supply
There are about 90 facilities actively involved in some type of organics waste processing in Florida. The first inference from this study is that compost is typically not the number one product of organics recycling facilities in Florida. Survey data show that compost production is less than half of mulch production. The survey also found that these facilities operate at considerably less than full capacity. It is estimated that only 70 percent of the industry capacity is used. There are several reasons expressed by producers, including quality, market oversupply, distance from potential users and lack of information by potential users. While only 20 percent of producers ship out all their products, 30 percent keep more than half of what they produce in their facilities. Those producers with unsold products had to reduce production, resort to free giveaway, or expand their lot.
Additional details culled from the Florida facilities survey include:
Volume and Type of Products: There are three major types of products produced from organics recycling facilities: mulch, compost and soil amendments. Across all firms, mulch comprises 66 percent, compost 27 percent and soil amendments seven percent of total respondents' products. Some facilities produce more than one type of product.
Type of Feedstocks: Yard trimmings, wood residues, municipal solid wastes and animal related wastes are the major types of feedstock used by responding organics recycling facilities (Figure 1). Other types processed include landscaping and construction debris, food wastes, and biosolids. Most important feedstocks include yard debris, used by 84 percent, and wood wastes, used by 48 percent of respondents.
Capacity Utilization: Only 29 percent of respondents use their full capacity for converting wastes to other products, and the total products represented about 70 percent of the total industry capacity. Feedstock shortages, labor shortage, permitting problems, lack of capital, space limitations and overstocked finished products, are among reasons for not operating at full capacity.
Customers: Customers play a major role in establishing a market for products of organics recycling facilities. Responses to our survey show that landscapers (mentioned by 74 percent respondents) and residential households (mentioned by 74 percent of respondents) constitute major customers for products of organics recycling facilities. Ornamental growers constitute 16 percent, and crop growers are 10 percent of the customers. Mulch for landscaping is the major product with 66 percent of all facilities, which explains why residential customers and landscapers are the major users. Volume of compost, which is mostly used by crop and ornamental growers, is less than half of mulch volume. Counties, municipalities and governments using products for roadsides are also named by a few respondents. One customer uses the product as a fuel source.
Products Shipped Out: Only 20 percent of respondents sell all of what they produce. Thirty percent sold less than half of what they produce. To prevent overstocking, some facilities give away part of their production for free. About 41 percent of respondents give away more than half of their products. More than 70 percent of respondents accumulate unsold products at their sites indefinitely, and 13 percent take it to other sites at their own expense.
Shipping Distance: Average distance that products are shipped is less than 50 miles. Forty-eight percent of respondents products are shipped within 20 miles of their facilities, and 41 percent mention that their products are hauled between 20 to 50 miles. This information supports the thought that from an economic point of view compost cannot be delivered to locations more than 50 miles from production facilities. However, one respondent mentions that his product is shipped as far as 100 miles from the facility. Table 1 gives product shipping distance reported by organics recycling facilities in Florida.
Marketing Efforts: Only one respondent uses a marketing firm to promote products. Public media such as local newspapers and TV advertisements are used by 42 percent, and sending out brochures is used by 39 percent of respondents. Thirty-two percent use their personal representatives visiting potential users to promote their products. Ten percent cited word of mouth.
Challenges in Selling the Products: Sixty percent of those having problems with selling their products attribute them to lack of proper quality, the primary issue that challenges organics recycling facilities products (Figure 2). For 24 percent of respondents, distance from potential users is cited, and 12 percent think lack of information about their products is hindering sales. A few respondents mention flooded markets as a reason. Price of the products is not considered a major selling problem. Some of the facilities (19 percent of the respondents) do not have problems selling their product.
Issues Relevant To Demand
A randomly selected telephone survey of user groups, including 248 citrus growers, golf courses, landscaping firms, and nurseries, from a total of 2,350 firms, was performed to document factors affecting demand for ROP. The survey included various operation sizes as well as users and nonusers of compost. Results are based on percent of respondents on each issues, some with multiple response options.
Recent Changes in Demand: To collect information on recent change in demand for compost and other ROP, demand change from the producers' points of view was one of the inquiries. Overall, 45 percent of respondents believe there is no change in demand. However, 23 percent of respondents report demand improvement within the past couple of years resulting mainly from quality improvement as well as providing more information about their products.
What Can Improve Demand?: Producers' opinions were sought on this issue. Thirty-nine percent do not think any action is needed to improve the demand. However, most of the respondents consider product quality improvement (46 percent), providing transportation for delivering the products (26 percent), and providing more information (22 percent) as the major marketing efforts for demand improvement. Nineteen percent of respondents mention marketing efforts as a factor for demand improvement. Only 9 percent thought lowering the price would be helpful.
Quantity of Compost Used: Total quantity of compost used is less than 10 tons annually for 38 percent of all respondents. Those who use 11 to 100 tons of compost account for 40 percent and those using more than 100 tons account for only 8 percent of respondents. While data for each group shows a little different percentage for quantity of compost usage, overall this information indicates that compost is not widely applied. No respondent in the landscaping group mentioned using more than 10 tons of compost per year. Data on an application rate per acre indicates that compost application is not yet a common practice for agricultural crops. Half of the respondents used only one ton per acre of compost annually. Among compost users the responses to this question are very low: only 26 percent of compost users responded to this question which could indicate some uncertainty about its use.
Distance of Principal Supplier: Except for the particular types of compost used by nurseries or golf courses which come from longer distances, 64 percent of compost used is hauled less than 30 miles. Only 25 percent of respondents report getting compost from 50 miles or more away. Transportation cost of compost, which is very much dependent upon distance, is one of the major issues of compost acceptance. Fairly consistent availability of compost within a distance economically feasible is important for development of compost markets.
Issues of Concern to Compost Users: Quality inconsistencies such as immature compost, weed seeds, and odor are the most important problems respondents experience (55 percent). Some respondents also mention price (13 percent), and consistent availability of compost (10 percent) as problems they have experienced. Only a few (8 percent) indicate they do not have any problem using compost. Data for each group separately also indicate quality inconsistency as the most important problem they experience. Citrus growers experience more problems with compost availability and application issues than other businesses. Landscaping services respondents experience only quality inconsistency, however, only a few responded to this question. Problems such as immature compost, weed seed in compost, and odors may affect widespread application of compost by agricultural producers. Interestingly, 39 percent of organics recycling facilities that responded to our survey believe quality is the customers' first concern followed by issues of transportation and lack of information.
Sources of Information About Compost: Both compost users and compost producers believe that information is a major element for improving compost usage. One survey objective was to identify sources that provide information about compost. Industry cooperatives or associations or other operations in the area account for 22 percent and the Cooperative Extension Service accounts for 20 percent of respondents' sources of information. Various trade magazines and publications play an important part in providing information about compost (18 percent). University research centers are mentioned as sources of information about compost more often by compost users (17 percent) than by noncompost users (5 percent). Compost marketing representatives also seem to have a role in introducing compost to farmers and growers. Apparently, noncompost users obtain information from sources other than those available to compost users.
Data for each business group show that they all select the first four options illustrated in Figure 3 as the most important source of information. Differences are noticed in ranking the importance of these four sources. Citrus growers and nurseries mention compost marketing representatives as the most important, golf courses give industry cooperatives or association as number one, and the Cooperative Extension Service is the top source of information for landscaping respondents.
Main Barriers to Using Compost: Respondents were given the following options to indicate main barriers to using compost: No barrier; Compost quality; Transportation cost; Adverse reaction, toxic; Quantity available; Labor cost; and Price. Quality concerns that are seen as the most important problem for compost users are also considered as the main barrier to expanding the market for compost. Qualities of compost together with adverse reaction due to weed seed, also a quality matter, are mentioned as the main barriers by 45 percent of the respondents. Only 7 percent believe there are no barriers to using compost. There are some interesting points noticed when responses of compost users are compared with noncompost users. Price of compost is mentioned as the second most important barrier by compost users, whereas noncompost users ranked this option as the least important one (18 percent versus 10 percent). Adverse reaction to herbicide or pesticide residues is the least important barrier from the compost users' point of view, whereas noncompost users ranked this option as the second most important barrier. Other options are ranked the same by both users and nonuser groups. Among business groups, citrus growers indicate "quantity of compost needed is not available" as the most important barrier
What Would Encourage Potential Users to Use Compost?: This question was only for noncompost users, and there is no comparison to compost users. Information is the key to developing compost usage. Interestingly, three times more respondents indicate that more information would be an enticement (69 percent) than those who mention delivery of free compost (21 percent). More than one quarter of the respondents believe they need to be convinced that the benefit of compost exceeds the cost of its application. Fifteen percent of respondents cited having transportation costs paid would be an incentive to using compost. Only 7 percent of the respondents do not have any interest in using compost. There are no differences of opinion among various business groups in ranking issues of incentives.
Acknowledgements
The cooperation of Recycle Florida Today, particularly the efforts by Jeff Rogers, the chairman, and Chris Snow of the Organics Committee are sincerely appreciated. Our appreciation also extends to citrus growers, managers of golf courses, landscaping services, and nurseries as well as organics recycling facilities authorities in Florida for responding to our surveys. Constructive comments given by reviewers, Dr. Robert Degner and Dr. Aziz Shiralipour, are greatly appreciated.
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Both compost users and compost producers believe that information is a major element for improving compost usage.
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Building Demand From A Diverse Market
BY IMPROVING markets and demand, organic recycling facilities can increase use of their products. The first inference from collected data is that in terms of quantity, compost is not the number one product of organics recycling facilities in Florida. Survey data show that compost production is less than half of mulch production. Presently, these facilities produce far below their capacities, only 70 percent. There are several reasons expressed by producers, including quality, flooded market, distance from potential users and lack of information by potential users. While only 20 percent of producers sell all their products, 30 percent have to keep more than half of what they produce in their own facilities or pay to dispose of it.
Results from the demand issues study indicate that quality, information, and consistent availability are the key to demand improvement and eventually market improvement. Interestingly, looking at responses to the present survey regarding difficulty selling the products, view on demand improvement, and customers' concerns, all point to quality, transportation and delivery (actually availability), and information. Information provided by responding organics recycling facilities calls for more marketing efforts for product promotion, quality improvements, and facilitating delivery to increase potential customers.
Presently, there is a market for mulch. Mulch can be produced more easily and at less cost than compost. It can be sold to customers located close to conversion facilities. Compost as a more costly and longer processed product has had a limited market so far. Potential compost users are usually located not close to conversion facilities which translate to higher transportation costs. In addition, compost users want to know how much it is going to cost to apply, how and where they can get it, how it can benefit them, and eventually if the quality of the compost is what they expect, remains consistent, and does not cause any problem such as weeds, odor or toxicity. Price, transportation distance, costs and benefits, are all part of the information that potential compost users need to have to make a rational decision. More information needs to be disseminated and the quality of compost needs to be improved and kept consistent in order for compost to become a more widely used input in agriculture. To promote using compost, compost should be considered as a commodity that has some net benefit for the users. Marketing tools would have an important impact on encouraging greater compost usage and eventually development of a market for compost.
Since the whole organics recycling business exists to solve communities waste disposal problems, it is logical for municipalities, counties and state government to support the efforts of the organics recycling industry, particularly when it comes to dissemination of information to the public.
[Author Affiliation]
Mohammad Rahmani, Alan W. Hodges, and Clyde F. Kiker are in the Food and Resource Economics Department of IFAS, University of Florida at Gainesville.
