Marketing Biosolids Products: Key Considerations

Transcription

1 Marketing Biosolids Products: Key Considerations WEAT Biosolids Conference; August 5-6, 2015

2 AGENDA 01 AN HISTORICAL PERSPECTIVE 02 CURRENT STATE OF AFFAIRS 03 BUILDING YOUR MARKETS 04 LESSON LEARNED 05 QUESTIONS

3 AN HISTORICAL PERSPECTIVE

4 AN HISTORICAL PERSPECTIVE -DRYING First branded biosolids-derived products came ca with Milorganite Mid-1930 s production around 50,000 tons Product sold for ~$20/ton Demand exceeded supply Mostly sold to fertilizer blending companies page 4

5 AN HISTORICAL PERSPECTIVE -DRYING Other municipal dryers* Baltimore 1920 s Houston 1920 s rotary dryers until 1950 s then flash dryers (Hou- Actinite) 1972 reported Hou-Actinite generated $21/ton, FOB Houston Chicago 1930 s flash dryers 1968 publications indicated product sold for $15/ton 1975 value minimally increased to $17/ton. By 1959 over 125 US communities had heat drying (some combined with incineration). In 1970, only about 50 communities still operated drying systems. Current estimation is ~100 dryers of all sizes in the US * Stern, G. Processing, Economics, and Sale of Heat Dried Sludge, Proceedings of the 1975 National Conference on Municipal Sludge Management and Disposal; August 18-20, 1975, Anaheim, CA. p page 5

6 Dollars per ton AN HISTORICAL PERSPECTIVE -DRYING Dollar value per dry ton FOB facility Product value relatively unchanged $45 $35 $25 $15 $5 Milorganite (1930) Milorganite (1999) Hou-Actinite (1972) Chicago (1975) Cobb County (1985) Hagerstown Hagerstown (1991) (2001) Tampa (2006) Nashville (2007) Louisville (2013) No adjustment made for inflation page 6

7 AN HISTORICAL PERSPECTIVE -COMPOSTING First reference to biosolids composting 1972 pilot work at USDA Beltsville facility. Windrow composting processing about 50 wtpd of anaerobically digested Blue Plains (DC) biosolids Windrow composting of raw sludge proved odorous. Starting in about 1975 and concluding in 1978, Beltsville aerated static pile composting method developed USEPA Publication, Manual for Composting Sewage Sludge by the Beltsville Aerated-Pile Method. Authors included: George Wilson Eliot Epstein Rufus Chaney Larry Sikora Sharon Hornick page 7

8 AN HISTORICAL PERSPECTIVE -COMPOSTING Composting increased in the 80 s and 90 s survey indicated 61 facilities composting biosolids 1985 report in Biocycle indicated: 79 facilities, including 49 ASP, 3 in-vessel composting 8 pilot projects 62 in planning/construction, including 12 in-vessel systems page 8

9 AN HISTORICAL PERSPECTIVE -COMPOSTING Composting increased in the 80 s and 90 s report in Biocycle indicated: 274 facilities, including: 121 ASP 79 windrow 54 in-vessel 2010 report in Biocycle indicated: 258 facilities, including: 108 ASP 83 windrow 46 in-vessel page 9

10 AN HISTORICAL PERSPECTIVE -COMPOSTING Dollar value per cubic yard FOB facility Product value within a fairly tight range No adjustment made for inflation page 10

11 CURRENT STATE OF AFFAIRS More and more Class A = More and more controls

12 CURRENT STATE OF AFFAIRS Regulatory drivers Phosphorous and nutrient management planning. Restrictions in markets with sensitive watersheds Maryland Florida Bulk application National - NRCS Virginia Colorado Illinois reversing course Fees Fertilizer registration/tonnage taxes Virginia page 12

13 CURRENT STATE OF AFFAIRS Pressure on Outlets Food safety - increased concern by food distributors (Whole Foods, Tropicana) Pathogens Colorado cantaloupes Chemicals Other organic-based products Food waste composts Organics certification Diminished costs of other fertilizers Synthetic organic fertilizers page 13

14 CURRENT STATE OF AFFAIRS Product quality Must be something you d bring home to mom Low odor Easy to handle/use Consistency is critical Particle size, moisture content, nutrients, C:N ratio Requirements change over time Adapt or die page 14

15 BUILDING YOUR MARKETS

16 BUILDING YOUR MARKETS Product drives process do a market assessment! Before committing to produce a biosolids-derived product make sure you identify and understand the market(s) for that product. Get samples of the type of products you may produce Go into the marketplace and speak with potential users, find out: Will they use the product What would your product replace or must they create a market What product characteristics will they want What is their demand cycle What do they see as the value of the product page 16

17 BUILDING YOUR MARKETS From the market assessment Specify systems that will meet market quality demands You may eliminate some markets by choosing your preferred technology Identify the progression into the markets. Early markets may be higher volume, lower revenue outlets How does market seasonality impact storage requirements Is there a business case for inventorying Who is going to market your product. Do you have or will you hire the staff who can be dedicated to product marketing Do you want to shift responsibility to a third-party page 17

18 BUILDING YOUR MARKETS Implementing the market assessment Make the commitment! Even good products don t sell themselves Proactive selling effort required 3-5 years before revenue from product sales offsets marketing costs Follow your progression; don t try to sell into all markets on day one Develop a brand and stick with it. Add to your web site or create a new one Make it easy for customers to understand value and to place orders Always look to improve What feedback am I getting from my customers Can I add services page 18

19 BUILDING YOUR MARKETS AN EXAMPLE Ocean County Utilities Authority, NJ OCUA drying facility started producing biosolids-derived product in March, 1997 Short-term goal was to beneficially utilize the entire OCUA product Long-term goal was to realize the highest revenue the market would bring for OCEANGRO TM Their market progression Initial program was a 3-year profit-sharing agreement with Synagro to distribute 85 percent of the annual production, mostly out-of-state while OCUA developed in-state markets. By end of third year, OCUA was distributing nearly 85 percent of its product in state page 19

20 BUILDING YOUR MARKETS AN EXAMPLE Ocean County Utilities Authority, NJ How did OCUA develop the in-state markets? Created a Fertilizer Manufacturing Division, a brand and dedicated staff responsible for building markets Considerable investment to promote the use of product Started a comprehensive communications program including participating in turf trade shows, and working with master gardeners. Designed artwork and literature to support brand, built web site Purchased equipment/facilities to place product in 50-pound bags Acquired two tractor-trailers, a tender truck and five spreaders for accurate application and just-in-time delivery Developed forms for sales, shipping, pricing, and credit applications and implemented accounting and billing procedures Demonstration projects with turf /golf course management firms Worked with homeowners to show safety/value page 20

21 BUILDING YOUR MARKETS AN EXAMPLE Ocean County Utilities Authority, NJ How did OCUA develop the in-state markets? Manage seasonal demand issues (Spring and Fall peaks) Authority has storage for 2.5 to 3 months of product Maintain high-volume product outlets that yield little or no revenues Continue out-of-state revenue sharing relationship Attention to product quality feedback from the markets Limit dust, maintain pellet sizing. In 2014, OCUA budget reported $305,000 in fertilizer sales or ~$34/ton gross revenue page 21

22 LESSONS LEARNED

23 LESSONS LEARNED There won t be a line of customers waiting to pay you for product on day one Don t expect to make money on product sales Give nothing away page 23

24 LESSONS LEARNED Do work Customer service is paramount page 24

25 LESSONS LEARNED Class A does not a product make! Just because you have EQ doesn t mean there is a market. page 25

26 LESSONS LEARNED Production is daily, markets are seasonal. If feasible, create a method for inventorying product page 26

27 LESSONS LEARNED Focus locally. Maximize return by reducing transportation distance. page 27

28 QUESTIONS?