Reducing Nutrients through Farm-Based Composting

Reducing Nutrients through Farm-Based Composting Context, steps, and insights that will help other communities replicate the successful project in Manheim Township, Lancaster County, Pennsylvania

Published by the Chesapeake Bay Funders Network, Spring 2011 Photos by Environmental Defense Fund, Terra-Gro, Lara Lutz Writing and editing services by Lara Lutz The Chesapeake Bay Funders Network (CBFN) is a funding collaborative of private nonprofit foundations helping communities to initiate and sustain the necessary changes to promote and protect the health of the Chesapeake Bay. CBFN allows grantmakers to network, exchange information, and pool resources to advance shared interests in the Chesapeake Bay watershed. The CBFN Agricultural Initiative Strong Communities, Healthy Waters strengthens the economic sustainability of farms while promoting conservation practices that improve the health of the Bay. Grantmakers in the Agricultural Initiative have pioneered an innovative approach to identify and support strategic projects in key farming communities. Each project includes strong evaluation and communication components, providing a transferable model that can be applied to other locations. This publication is one of a series featuring agricultural projects funded by the CBFN. For more information and additional publications, visit www.chesbayfunders.org or call (410) 974-2941. CBFN grantmakers guiding and supporting the Agricultural Initiative include: The Abell Foundation, Agua Fund, The Biophilia Foundation, Blue Moon Fund, Keith Campbell Foundation for the Environment, Chesapeake Bay Trust, Degenstein Foundation, Foundation for Pennsylvania Watersheds, MARPAT Foundation, The Curtis and Edith Munson Foundation, National Fish and Wildlife Foundation, The Oak Hill Fund, Prince Charitable Trusts, Town Creek Foundation, Virginia Environmental Endowment, The Wallace Genetic Foundation, William Penn Foundation, with the support of the W.K. Kellogg Foundation. Project management by the University of Maryland Center for Environmental Science.

Nutrient Management Shared Solutions through Composting Animal agriculture is at the heart of many rural communities in the Chesapeake ake Bay region. The far-reaching fields anchor the landscape, local economy, and generations of families with a deep sense of place and seasonal rhythms. The managers of these livestock operations are not only challenged to sustain a profitable farm, but to act as stewards of local water quality and also the Chesapeake Bay. Managing nutrients from animal manure is one of the greatest challenges to achievageing water quality goals in the Chesapeake region. Farmers have historically managed animal manure by using it to fertilize their fields, but many rural areas produce more animal manure than can be applied to cropland at appropriate times and rates for crop uptake. Excess manure becomes excess nutrients, which can rob the water of oxygen, threaten aquatic life, and impair drinking water. Manheim Township, in Lancaster County, Pennsylvania, has many farms that face this stewardship challenge. Farmers there have worked on a number of practices to reduce nutrient pollution, but the sheer quantity of manure produced on their farms outstretches their ability to address it. They also face financial impacts: farmers who want to increase their herds likely will be limited by their capacity to handle the manure properly without risking runoff to local water. Oregon Dairy Organics, a composting business launched in 2010, is bringing some relief to these constraints. Oregon Dairy Organics is a unique project created by a partnership between Oregon Dairy, a large local farm, and Terra-Gro, a private composting business, in collaboration with the Environmental Defense Fund and a local agricultural consulting firm called TeamAg. Together, they planned, built, and opened a compost facility that accepts animal manure from area farms and combines it with yard and leaf debris from local townships and food waste from nearby schools and restaurants. This mixture produces high quality compost sold in bulk for use in landscaping, sports fields, golf courses, and land reclamation projects, as well as in some retail locations. By creating an alternate use for animal manure, the composting facility reduces nutrient pollution to local streams. Most importantly, it is a self-sustaining ng solution that will be economically beneficial for Oregon Dairy and Terra-Gro, help other farmers reduce their costs for manure management, and provide the community with an outlet for excess leaves and food waste. Securing support, funding, and permits for the composting facility took time. The entire team was challenged to demonstrate that this project would not fall prey to either the real or perceived pitfalls of other farm-based composting operations. They continued to refine the composting process while grappling with permitting hurdles and construction delays. The project won enthusiastic support from conservation organizations, state and local governments, private grantmakers, and the local community. The creation of this innovative approach to manure management is detailed in the following pages, including lessons learned along the way. 1

Project Overview Farm-Based Composting in Lancaster County 2 Problem-Solving In Manheim Township and Lancaster County in general, farmers and technical experts are actively collaborating on ways to use nutrients more efficiently in their local watersheds. As part of this effort, the Environmental Defense Fund (EDF) and a consulting firm called TeamAg evaluated different options for managing and using excess manure. While most options lacked the financial drivers to become self-sustaining solutions, the production and sale of compost held promise. To date, large composting operations have not played a significant role in nutrient management. Few farmers have the composting expertise or management resources to construct and operate such facilities effectively and profitably. Quality control, consistency, and marketing have proven especially challenging for busy farmers. Manure composting projects often meet with resistance because inadequate resources and expertise at some sites have led to problems with logistics, odors, insects, and finances. These experiences generate negative reactions both from the public and from farmers themselves. However, EDF and TeamAg believed that, done right, composting could play an important role. In 2006, they learned about Terra-Gro, which operates a farm-based composting facility in another part of the county. Terra- Gro produces such high quality compost that it struggled to meet demand for its product. EDF and TeamAg talked with Terra-Gro about creating a community-based, multi-farm facility in Lancaster County. EDF, TeamAg, and Terra-Gro then sought a farmer to help form this new business. A strong partner stepped forward: the Hurst family, owners and operators of a large and well-established farm called Oregon Dairy. The Hursts, already conservation leaders in the local community, wanted to create an outlet for some of their manure and to help other farmers with manure management. They had land available for the facility, along with extensive experience in value-added businesses. They named the new enterprise Oregon Dairy Organics. The Chesapeake Bay Funders Network, supported by the W.K. Kellogg Foundation, was searching for a market-based manure management project that could benefit both farmers and the Chesapeake Bay. The network provided $436,000 for team organization, project design, business planning, and outreach. Additional state and federal funding created a total grants package of more than $1.6 million. Getting It Right Outreach about the goals and benefits of the composting facility was critical to the success of the project. Well before applying for permits, the team began meeting with farmers, community groups, and officials. Benefitting the wider community was a priority from the outset; the fact that the project would take in excess leaves and yard waste from the townships, as well as food waste from local schools, was of significant interest to Manheim and its neighboring townships. Gaining interest from state officials helped secure grants that supported equipment and installation. The team carefully planned the size and capacity of the facility large enough to serve the community and make a profit, but small enough to be manageable, accessible, and acceptable to the community. The facility

occupies five acres, with a 500-foot setback from the main road. Six long, narrow hoop buildings with open ends shelter and process at least 20,000 tons of manure, leaves, and food waste each year. An equipment company designed a special compost turner to maximize efficiency within the footprint of the facility. To successfully market the finished compost, the team developed a comprehensive marketing plan, including research of bulk and retail markets. Terra-Gro already had an existing client base interested in more compost for landscaping, erosion control, golf courses, and sports fields. Oregon Dairy s garden center provided a retail market. To extend those markets and open new ones, the team surveyed existing and potential customers and developed appropriate products and outreach materials. The team also contacted the Chesapeake Bay Foundation, which was marketing compost for abandoned mine land reclamation and transportation corridors. The Bay Foundation became an active part of the project team, contributing both expertise and funding. Breaking Ground... and Rocks The team hoped that Manheim Township would approve the project as an agricultural activity, with a relatively short permitting process. Instead, the zoning board decided the project did not fit the traditional definitions of either agricultural or commerical activities. Local officials continually supported the project, however, and worked to develop and approve the necessary zoning amendments. The process took two years. Construction was then delayed for several months by an unexpected amount of bedrock at the construction site. Both of these processes took more time and therefore more money than anticipated. However, community support grew steadily during this time. When the facility broke ground in April of 2010, more than sixty people attended an event headlined by the Pennsylvania Secretary of Agriculture. As composting began in the fall, an open house drew local farmers, conservationists, and reporters who enjoyed a close look at composting in action. The composting facility at Oregon Dairy Organics consists of six hoop buildings on five acres. Helping the Bay at Oregon Dairy Organics Composting at Oregon Dairy Organics reduces pollution by preventing the overapplication of manure to farm fields; it also makes the composted nutrients more stable and available for plant up-take. The local use of this compost displaces the purchase of commercial fertilizer, which would otherwise add yet another nutrient load to the watershed. Oregon Dairy Organics is now: Collecting and processing at least 14,000 tons of manure each year Reducing nutrient loads to local waterways by an estimated 149,600 pounds of nitrogen and 141,600 pounds of phosphorus per year Cutting the costs for farmers to haul manure to outlying locations Creating a self-sustaining business model to reduce pollution without depending on grants and cost-share programs for on-going operations 3

Planning Notes Important Project Steps 4 Identify core partners and ensure trust 1 and commitment between them. The project team should include farmers, as well as people with expertise in environmental issues, business management, marketing, composting, and community relations. This team handled overall project management and conducted outreach to the farm community, conservation groups, townships, and state government, providing information about the project and exploring relationships with potential contributors and purchasers of compost. The Environmental Defense Fund, TeamAg, and Terra-Gro communicated at least every week or two at the outset. Oregon Dairy joined many of these conversations, with frequent in-person meetings. Monthly calls took place with the Chesapeake Bay Foundation after they joined the team. 2Conduct background research. Investigate logistics, feedstock availability, market potential, and the process and partnerships with local governments. This project team carved out tasks among its members, sharing existing knowledge and conducting interviews. Most of the research was complete within months, though some tasks were on-going. 3Explore options for the business partnership. This project led to a formal business agreement between a large, successful farm operation and an existing composting business. This model worked because the farm owners had experience with value-added businesses and the management capacity to take on this role; they also had land available for the facility. However, a similar project could succeed without a direct farm partnership if the location was well sited and business plans were well crafted. In either case, at least one entity must assume full responsibility for business operations after the composting facility opens. 4Select a site. The location, as well as the reputation of the site owner, can impact success. In Manheim Township, the site is accessible to the farming community, and the good reputation of Oregon Dairy was critical for building local relationships. 5Secure venture capital and/or grant funding. This type of project is unique: a private enterprise with appeal to conservation funders. Emphasize that start-up investments will create a self-sustaining operation with multiple benefits for farmers, communities, and water quality. Budget adequately for unexpected delays and construction costs; include contingency funds if possible. Be aware that grantmaking cycles and deadlines may affect the project timeline. 6Develop a work plan for a two- to three-year period. The plan should lay out each of the project objectives, tasks to achieve them, deadlines and responsibilities, and budgets. Plan for flexibility in the project timeline. Create your communication strategy 7 and decide who is in charge of messaging. This is critical for an effective, consistent message about the scope, management, and benefits of the composting facility. Categorize your key audiences and develop messages that are most important to each of them. Select spokespeople for specified topics. Carefully coordinate all public activities and announcements with the local government. 8 Conduct face-to-face outreach with state and local officials, conservation districts, community leaders, farm lead-

ers, grantmakers, and potential investors. Explain your goals, secure support, and gather input. Begin this work as early as possible even before the permitting process to avoid surprises later. Continue to touch base as the project develops. 9Ensure that the business plan includes thorough documentation to demonstrate success and/or adjust the process, as well as comprehensive tracking of environmental benefits. Record volume, type, and nutrient content of feedstock; conduct lab analyses of the finished compost; monitor and document all elements of the composting process, including adherence to federal standards. Seek feedback from participating farmers. Decide on an approach to 10handling feedstocks. At Oregon Dairy Organics, farmers do not pay tipping fees. Other contributors do pay tipping fees, because this helps to ensure the viability of the composting facility. Fees vary according to the source and type of feedstock and the amount of processing it will require. Categories include agricultural material, post-consumer waste, and commercial bulk material. Secure necessary permits. Prepare 11 for a realistic time frame, as well as the potential need for an attorney and funds to support his or her services. Construct the compost facility. Assign clear roles to team members. 12 In this case, TeamAg designed the facility and worked with Terra-Gro to manage the construction. Implement marketing plans 13both to potential customers and to those who will supply the feedstock. Include trade shows, open houses, and targeted outreach to potential clients and partners. Partnership Roles It is important to have the full team assembled for early input on the entire project and to collaborate on a work plan. The commitment and stability of the team is critical to success. For Oregon Dairy Organics, the roles of the partner organizations were as follows: Oregon Dairy: Served as business partner, site host, and marketing expert; the Hursts were also key spokespeople. Terra-Gro: Served as business partner, manager of the composting facility, and technical and marketing expert. TeamAg: Led interactions with the farm community and managed the design and permitting process. Environmental Defense Fund: Acted as overall project manager; led fundraising, partner development, and communications activities. Chesapeake Bay Foundation: Shared communications and environmental expertise; helped with marketing; provided funding through a federal grant. Producing high-quality compost is important in making the operation a financial success. 5

Planning Notes Foundations of Success Context Staffing Partnerships & Process Funding A local farm community challenged by excess manure and willing to participate in the composting facility; experienced composting managers with strong marketing and sales expertise; a strongly committed team; supportive local officials; a site that is accessible and agreeable to the broader community. A farmer as the site host/business partner is helpful but not necessary. Resources to support the significant amount of time that must be invested by each of the core team members Clearly defined roles, supported by strong collaboration and willingness to pitch in wherever needed to make the project work A trusting and professional relationship among project team members, especially those who will become the official business partners Close coordination with local officials before and throughout the permitting process A designated grants manager Involvement of all partners at the earliest planning stage Regular in-person team meetings for the duration of the project A written work plan that the team creates, revisits, and revises as necessary Both grants and private investments can be used to develop a farm-based composting business. Significant grant funds may be available because of its benefits to water quality. There is growing recognition that nutrient management solutions cannot depend on a continual infusion of funds, so grantmakers are willing to partner with the private sector on conservation practices that are economically sustainable. However, both Terra-Gro and Oregon Dairy made sizable private business investments to this project. The flexibility of private funds and, more importantly, the willingness of partners like Terra-Gro to put up additional money of their own made it possible to cover cost over-runs during the permitting and construction process. 6 Workers construct one of the first hoop buildings at Oregon Dairy Organics.

Planning Notes Funding and Budget Start-up funds for Oregon Dairy Organics came from a mix of public and private sources, with a total cost of approximately $2.5 million. Grants included $436,000 from the Chesapeake Bay Funders Network; $400,000 in federal grant money through the Chesapeake Bay Foundation; $650,000 in federal grant money through the National Fish & Wildlife Foundation; and $520,000 from the Commonwealth of Pennsylvania. Terra- Gro contributed more than $150,000 in cash and $110,000 worth of labor. Oregon Dairy contributed land valued at $375,000. Year 1 Year 2 Year 3 Personnel and Travel Contractual Site Preparation & Construction Equipment & Structures Value of Land Labor $33,000 $32,000 $32,000 $117,500 $146,500 $100,000 $120,000 $100,000 $1,325,000 $375,000 $110,000 $150,500 $1,998,500 $342,000 Community outreach clarifies the goals and benefits of the facility and recruits project partners. 7

Planning Notes Lessons, Insights, and Timesavers The project team should have expertise in key areas and also a high level of trust 1 between members. Trust was critical during this long process and its challenges: trust between Terra-Gro and Oregon Dairy in creating a joint business venture, trust in TeamAg to achieve the needed permits and engineering, trust in the Environmental Defense Fund to obtain grants and interact with partners, and trust in the Chesapeake Bay Foundation to help support and advance the project goals. The work plan should outline the entire project timeline. It should also be realistic. 2 Expect the unexpected. Obtaining permits, even for a project with broad support from key decision makers, can take a very long time. Delays shifted the timeframe for this project by eighteen months, but the main elements of the work plan provided valuable guidance with solid results. Clearly identify the business leadership that will carry the operations forward once 3 the grant period is over. In this case, Oregon Dairy and Terra-Gro created a formal business agreement with legal input. Producing high quality compost is a priority, as the economic sustainability of the 4 project depends on reaching markets that will deliver higher prices for the final product, make it economically viable to transport the compost longer distances, and offer significant opportunities for expanding the customer base. 5Business and composting expertise are key. Include people with this knowledge on your project team. Don t attempt to learn about these topics on the fly. Communicate with funders about project uncertainties and the importance of 6 contingency funds. This is a difficult sell to some funders, but very important. This type of project will likely be unique to the local jurisdiction in which it is proposed, so the amount of staff time needed to nurture the design and permitting processes are difficult to judge. Construction can also lead to surprises, like the unexpected amount of bedrock beneath the Oregon Dairy site. Be courteous and patient in government relations. Respect the needs and concerns 7 of the administrative processes; respond promptly and fully to their requests. Remember that a lengthy or detailed process does not mean lack of support. Don t create unnecessary pressure by involving forceful advocates or inviting media coverage too early in the process. 8

Questions? For more information about composting at Oregon Dairy Organics, please contact: Suzy Friedman, Deputy Director Working Lands Environmental Defense Fund 1875 Connecticut Ave. NW, #600 Washington, DC 20009 Phone: (202) 572-3344 Email: sfriedman@edf.org