Organix

Organix News


September 1, 2003

INSPIRED BY JELL-O™ The Making of a Market.

Russ Davis, Organix Inc.    
August 2003

(as printed in BioCycle, September 2003) 

It’s alright, you can admit it.  You eat hot dogs even though you know what’s in them.  Well, have you ever eaten Jell-O™?  If you’re like millions of people around the world, the answer is probably, “yes.��?   But Jell-O™ hasn’t always been the fruity, jiggly, potluck favorite it has now become.  Now here is a marketing plan from which all of us in the compost industry could learn a lesson.  You might be surprised to discover gelatin, the primary ingredient in Jell-O™, is less than glamorous (just don’t tell the kids!) According to the web site “HowStuffWorks.com,��?    

“The gelatin you eat in Jell-O™ comes from the collagen in cow or pig bones, hooves, and connective tissues. To make gelatin, manufacturers grind up these various parts and pre-treat them with either a strong acid or a strong base to break down cellular structures and release proteins like collagen. After pre-treatment, the resulting mixture is boiled. During this process, the large collagen protein ends up being partially broken down, and the resulting product is called gelatin. The gelatin is easily extracted because it forms a layer on the surface of the boiling mixture. “

But hold on.  Before you decide to give up Jell-O™ forever, consider that there are many other foods containing gelatin including gummy bears, sour cream, cream cheese, cake icing, marshmallows, soups, sauces, gravies, canned ham, canned chicken, corned beef and sausage.  Not too bad for a product that used to be a waste. 

A Waste Opportunity.  In 1897, due to poor sales, the original creator of flavored gelatin sold the rights to it to his neighbor for $450 because he didn’t see the long term potential.  If he had only known that if you add Bill Cosby, some clever packaging and a little bit of creativity, you’d have a kid’s snack powerhouse.

Manure and organic wastes are not unique.  Unless someone wants it or needs it, it’s just in the way - like cow and pig parts. Once a market is discovered, the product has a use.  When someone can use it, it has a value.  Once it has a value, it has a demand.  When demand correlates to the amount being created, the price is stabilized.  When demand increases, prices increase. Soon, there can be a shortage creating the need for more production. This all seems simple enough, but does it really work?

A Quick History.  In April of 1998, I was visiting a construction business outside of Portland, Oregon.  This business was located next door to a yard debris recycling facility.  Looking out the window and watching the activity, it struck me that the facility seemed like a sound business idea, but there was some room for improvement.  So, in July of 1998, I bought Wilsonville Waste Wood Processing, Inc. with annual revenues of around $178,000 and changed the name to Oregon Bark - creating a full service landscape supply center.  By using ‘bark’ in the name, we were able to attract landscapers and do-it-yourself homeowners. The goal was to expose customers to the benefits of compost use and build that part of the business. 

In March of 1999, annual sales climbed to nearly $1MM, most of which was compost related. Land use challenges and regulatory pressures caused us to rethink our business plan for large scale composting.

This time the plan would be different.  Composting would take place on the sites of large scale, remote waste producers – minimizing visual, vector and odor complaints.  CAFOs made the most sense to us due to their constant regulatory pressure to manage manure.  We ended up at Threemile Canyon Farms in Boardman, Oregon and formed Organix, Inc.

One Big Test. ThreeMile Canyon Farm, just outside of Boardman, Oregon, is the nation’s largest circularly irrigated farm comprised of 93,000 total acres.  ThreeMile Canyon Farm was a grand scale test attempting to prove the merits of sustainability in agriculture.  In 2001, ThreeMile had potentially a huge problem – what to do with around 1000 yards of manure generated every day from the dairy operation they were placing right in the middle of the farm.  Applying material to the fields could be done, but this would prove costly and cumbersome without some material processing prior to application.  With tens of thousands of cows, this waste could produce some liabilities or some opportunities. The Farm’s sustainable-minded management decided to retain Organix for help. Upon striking a contract in which all parties were confident, a performance based agreement was reached.

In the winter of 2001-2002, the ThreeMile operation was streamlined for composting operations & management.  Finished compost began loading onto trucks in April of 2002.  Customers in the Willamette Valley were enamored with the material and bought it by the semi-loads. The market for compost was better off the farm than on-site. In the first full year of operation, the site is expected to ship over 100,000 yards of finished dairy compost throughout the northwest.  In 2004, those numbers are expected to double. 

We dubbed our first branded compost product from Threemile Canyon Farms, “PowerPlant.��? The product has been a huge success with growers, soil blenders and landscapers.  Recently, the product has begun showing up in landscape specifications as the material of choice.  The Farm has also just recently sent out material to be used on its first Oregon Department of Transportation (ODOT) job.

The company has is in the process of rolling out several new products including a finely screened and blended compost/sandy loam product for the golf and specialized landscape markets. More products are under development with introductions expected this fall.

As compost marketers, it’s time that we realize that what we are selling is not a waste; it is a new product, a finished product.  Like all manufactured goods, it consists of raw materials managed with quality in mind, transportation requirements and consistency standards for customer satisfaction.  And it should be a lot easier because, unlike Jell-O™, we aren’t trying to get people to eat our product, just walk on it.  I wonder what Bill Cosby is up to these days.

The success of a CAFO composting operation comes down to around ten key components. 

1.  Economic sustainability.  The composting operation has to at least pay for itself by new revenues or by realized savings of offsetting other costs.

2.  Support of upper management / business owner.  If the client looks at their feedstock only as waste, they will treat it accordingly.  Fighting against that presupposition is almost futile.

3.  Transport Logistics.  If you are in the compost business, you are in the transport business.  It is best to profile hauling solutions prior to project launch.

4.  Proximity to populace.  Selling materials usually means having someone to which to sell.  You may also need added feedstocks to round out your materials.

5.  Competent site management.  Having incompetent site management will quickly undermine your operation.  Quality and customer satisfaction have to be a first priorities.

6.  Market driven product development. Define who is likely to buy your composted product before you begin, then design your end product accordingly. Consider things like fertility values, pH, water retention, etc.

7.  Consistent feedstock supply.  Simply put, the more consistent your end products are, the more value they have.  How much Jell-O™ would you buy if a piece of pig hoof showed up occasionally?

8.  Assessment of possible on site usage.  On farms compost uses include soil amending, animal bedding, mortality disposal and erosion control.

9.  Regulatory cooperation & permits.  Environmental responsibility is just a part of how the world works now, don’t fight it.  Find out first if composting is even allowed in the area and secure a qualified permit specialist.  It’s worth it in the long run.

10.  Ability to manage moisture. Water and compost go together.  You are going to have either too much or not enough.  Take the time to consider the costs of effectively dealing with water management.