Producing Manure to Capture the Market

Mark W. Jenner, Ph.D.
Economist and Commodity Policy Specialist
American Farm Bureau Federation

There are tremendous opportunities emerging to market manure products today. They have always been here, but current circumstances enhance these economic possibilities. Environmental fears have created hostilities toward agriculture. The current image of manure creates real problems for livestock producers. Reuse of nutrients removes them from the environment. Markets for manure products create an incentive to move these nutrients into uses that do not harm the environment. Markets already exist for organic residuals. The agricultural industry has the most to gain by capitalizing on emerging manure markets, utilizing manure resources and removing environmental risk from livestock production. This paper reviews the negative and positive motivating factors (challenges and opportunities) and the steps necessary to capitalize on the rewards.

Agriculture is under attack judicially, legislatively and administratively. Edward Dowd, U.S. Attorney, Eastern District Missouri, said on September 3, 1997, "We want to send a message to those who pollute our rivers...we will send you to jail" (BNA, 1997). Senator Tom Harkin (1997) proposed fines of up to $50,000 per day of violation to protect the environment and public health from nutrient overloading of soils.

The Environmental Protection Agency (EPA) has launched numerous strategies to manage manure in water, land and air. The water initiatives include, Concentrated Animal Feeding Operations (CAFO's), Animal Feeding Operations (AFO's), Total Maximum Daily Loads (TMDL's), hypoxia, pfeisteria, non-point source pollution and the seemingly unrelated legislative initiative from Senator Harkin (IA). Air quality concerns include ammonia, methane, carbon dioxide and particulates. Biosolids, treated sewage sludge, are a non-agricultural organic product regulated by EPA.

Emotion-driven, government regulations cost taxpayers and industry without necessarily solving problems. Unless consumers, lawmakers and the agricultural industry take rapid, constructive action to shift the political debate, we will lose the industry to foreign competitors, and with it, lose control over the safety of our food and the quality of the environment in the nations which will produce our food. We are exporting our economy, food safety and our environmental responsibilities.

Manure is a management problem to be solved, not a four-letter word to be feared. It is a nutrient and energy resource. The development of manure markets enhance the way manure is produced, collected, treated and reused in this country.

Marketing manure products will provide both economic and environmental benefits. Manure currently has an image problem in this country and has not traditionally been managed as a resource. Agriculture has learned about the environment along with everyone else. The organic residual industry, including manure, biosolids, food waste, and municipal solid waste, is erupting with exciting new technologies which transform residual organic compounds into valued commodities and eliminate the threat of environmental liability.

A fundamental flaw in the current structure is that the economic and environmental considerations are not completely aligned. Crop producers spend a significant portion of their variable production costs on fertilizer nutrients. Livestock producers also spend a significant portion of their variable production costs on feed nutrients. However, neither crop or livestock producers put significant value on the manure nutrients. Underutilized feed nutrients are more or less discarded when manure is not intensively managed.

A number of other organic residuals have established markets and provide evidence to the feasibility of manure markets. Meat byproduct markets, such as hot dogs, lunch meat, ethnic markets and hides, make the difference between profits and loss for the meat industry. Byproduct feed ingredients command high dollar values for residuals that once had little or no value. Blood meal, feather meal and fish meal command values of $300-$500 per ton. In recent years, distinct markets for solid waste recyclables have emerged. Over the last 20 years, municipal solid waste streams have moved from being a mixture of garbage, to the identification as commodities of glass, paper and aluminum, traded on the Chicago Board of Trade. Food and yard waste is being generated into marketable compost products. The solid waste stream has not been eliminated, but the amount of trash entering landfills today is a much smaller percentage of what was once considered trash.

In considering the scope of markets for manure products, they are limited only by imagination. The most obvious market for manure products is in land applications. Stable, processed manure products will not suffer the variability and changes to the extent that raw manure suffers. Strangely enough, the nitrogen (N), phosphorus (P) and potassium (K) are not the components of highest value. The greatest benefit is probably in the microbiology and the organic matter of composted manure. Composted manure applied to soil will increase biological activity of the soil, increase water holding capacity, reduce pests and slow the release of nutrients, to name a few benefits.

Potential markets for high quality, composted manure products are relatively undeveloped. In addition to agricultural markets, these include horticulture (gardening, landscaping, nurseries, topsoil production), silviculture (Christmas trees, ornamentals), reclamation (landfill covers, mine reclamation), and other environmental uses (biofilters, erosion control and wetlands restoration, Blosser, 1996).

Land application of compost is the most traditional use of manure products, but other markets do exist. There is a long tradition of feeding broiler litter to beef cattle. The feed ingredient market can be expanded. Energy production from manure through direct combustion, refining or anaerobic digestion are all possible. The economics of manure-based energy production will improve with deregulation of electric utilities. A number of new technologies are emerging which strip-off various carbon compounds or reconstitute organic waste materials into new, value-added compounds. These products tend to be more industrial in nature. An important source of revenue in marketing manure products is through tipping fees. Organic materials such as food or yard waste typically is charged a disposal fee. Finally, there are novelty markets emerging for jewelry and figurines made out of manure. These are truly niche markets, but serve as an indicator that revenues, well above agronomic values, are possible.

Reaping the Rewards

Developing manure product markets which generate revenue is a bit like turning the sow's ear into the silk purse. When taken a step at a time, it can be a fairly straight-forward process. These steps are 1) understand the basics, 2) identify and focus on the potential markets, 3) take inventory of your resources, 4) get good technical support and 5) assess the risks involved.

The first challenge in developing a manure product market is to examine a few fundamentals. First, manure is a necessary byproduct of feeding livestock. Second it is the treatment process — not the number of animals—which determines whether manure will become a valuable resource or a costly liability. Manure is fresh animal feces. Manure products are the result of a manure treatment system. Examples of manure products are compost, methane gas, anaerobic lagoon effluent and manure mixed with bedding. Odors and water quality problems are also manure products.

Technological factors involved in manure treatment systems have a significant influence in the value of manure use. Management is everything. Moisture and nutrient contents have economic effects. Product quality also determines value.

The impact of management on the potential for manure product utilization can be illustrated by examining several types of manure products. Anaerobic lagoon effluent by design has had the nutrients diluted and carbon burned off. It is a dilute nutrient soup with limited reuse potential except irrigated onto a nearby forage crop. Pit effluent is nearly as difficult to reuse, primarily because the high moisture content limits its transportability. Broiler and turkey litters are basically dry and can be transported economically several hundred miles. These manure products, however are diluted with the 'inert' litter that has been added. Caged-layer manure from certain types of houses, leaves the house dry and unadulterated. This manure product has a high potential for reuse. It can be mixed with virtually anything to enter a higher value market. One other manure product with a very high reuse potential is that produced by cattle under intensively rotational grazing systems. Essentially all of the unused feed nutrients return to be used by the forage crop.

Moisture content of manure and manure products have a significant influence on market value. A ton of manure with 80% moisture has 400 lbs of solids and 1,600 lbs of water. The same 400 lbs of solids at 20% moisture will only have 100 lbs of water (Bell, 1997). This is a tremendous difference when transporting the product any difference.

Product quality adds value. Jim Wimberly (1997) describes three factors that define a quality compost, consistency, no pathogens and finely ground. Existing market values also indicate that higher value markets exist for higher quality manure products and this allows them to be transported further from the production site. Fertilizer grade broiler litter ranges from zero value to $20 per ton. Feed grade broiler litter can bring as much as $40 per ton. Bagged litter at urban retail outlets can retail for $50 per ton.

The potential for marketing manure products is even greater for manure entrepreneurs and input suppliers in close proximity to urban centers. Urban centers increase the potential of selling manure products to gardeners and developers and also provide the opportunity for the use of restaurant waste, yard waste and recycled paper as carbon sources for blending manure composts. This opportunity will not exist for every input supplier, but will present opportunities for those near population centers.

It is critical to take inventory of existing feedstocks. The type of feedstock available will influence the kinds of manure product markets that can be met. Examples of various organic feedstocks are: anaerobic lagoon effluent, pit effluent, manure plus bedding (litter), restaurant food wastes, leaves and grass clippings, recycled paper and cardboard and mortalities.

There are new technologies for processing manure emerging all the time. Manure spreading equipment companies are developing global positioning/geographic information system (GPS/GIS)-based manure spreaders. Umbilical cord spreading systems are emerging to reduce the cost of transporting liquid manures. Designer composts can be developed for any need. There are new anaerobic digester systems emerging, requiring varying levels of management. There are extruders and dehydrators, which transform the physical properties of manure products. And there are physical and chemical reactors, which refine or reconstitute organic residues into reusable products.

Agricultural input suppliers and manure entrepreneurs have distinct advantages over the distributors of non-agricultural organic products. These advantages include the existing "client-network" of crop and livestock nutrient users, existing organizational structure and physical plant, strategic location between rural and urban feedstocks and retail markets. The advent of new technologies will open even more manure product markets for those who already have experience in the business.

There are real risks involved in marketing manure products, but they are manageable. The manure products must be free of pathogens and there must be strong confidence in the demand for the targeted manure product markets. Every treatment process and type of manure product market has a different set of risks which must be evaluated independently.

Opportunity is knocking for farm-input suppliers and manure entrepreneurs to enter manure product markets. It is up to the livestock and input supply industry to seize this opportunity. It is a proactive environmentally responsible solution. It is a chance to respond to the demands of both crop and livestock nutrient users. Non-agricultural industries are entering the manure product markets, and will eventually undercut the above advantages held currently by farm input suppliers. Now is the time to capitalize on these opportunities for marketing manure products and reap the economic and environmental rewards from marketing manure products. Revenue-generating opportunities will promote best management practices more rapidly and effectively than mandated legislation or regulation.

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