Magazine article Teaching Business & Economics

Laverstoke Park Farm - A Business Proposal: Are There Profits to Be Made from Composting?

Magazine article Teaching Business & Economics

Laverstoke Park Farm - A Business Proposal: Are There Profits to Be Made from Composting?

Article excerpt

In 1996, Jody and Clare Scheckter set up Laverstoke Park Farm. It is a large farm, covering 2,500 acres, which concentrates on producing a wide range of quality organic meats and vegetables. It relies on home-produced compost, manure and animal feed. Compost is made by allowing waste vegetable matter to rot, turning it into a valuable organic fertiliser.

Composting is viewed as one of Laverstoke's core business activities. Jody Scheckter says: "Healthy soil makes for healthy grass which makes for healthy animals, which in turn makes for healthy meat and milk, and therefore healthy people who eat that meat and drink that milk."

Having developed a composting facility for their own green waste and farm waste (farmyard manure), the Scheckters began to think about a bigger business opportunity. They thought they could supply a cost-effective, sustainable alternative to landfill, while simultaneously creating a sustainable natural fertiliser for use on the farm. They could charge a gate fee for a given quantity of waste (in tonnes), giving local authorities a cheaper method of disposal than landfill for their green waste,

The local authorities' green waste would become a new product for the farm, one which would be an input into its production process. It would help the farm meet its need for more compost to further enhance the quality of its soil, increase its crop yields and improve its grass.

It would require investment to set up and run the expanded composting facility. This would be needed to cover the costs of:

* land to accommodate the green waste while it turned into compost

* heavy machinery, which could be leased, to process the green waste (by shredding, piling, layering, etc.), move the compost around and deliver it to the fields

* skilled labour to operate the machinery (some training would be required)

* fuel for the machinery.

This would be recouped in part from the potential revenue from the gate fees. This could be estimated: the Scheckters expected to charge up to £45 per tonne for green waste and £60 per tonne for large tree stumps and roots. (The price paid varies with the transport costs.)

The farm could also expect additional sales revenue from the increased output of meat and vegetables, Spreading the extra natural fertiliser four times a year would facilitate the growth and quality of the farm's crops and animals, which in turn could increase profits generated from organic food sales. This would be very difficult to estimate, as so many different factors are involved.

There would be other costs and legal restrictions. The composting facility would require a change of land use and therefore be subject to planning permission. Compliance with the Town and Country Planning Act would mean that the compost site could only be operated between 8 am and 5 pm, Monday to Saturday.

The farm would require a waste management licence. The application fee for the licence, for a 40,000 tonne waste disposal facility, would cost £6,000. It would have to comply with regulations designed to prevent pollution and meet health and safety requirements. …

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