Everything you need to know to start food waste management business in India
What if I told you that you can start a business from raw material pool worth $14 billion made available free of cost every year in every city’s neighborhood, convert into a useful product that has a huge unmet demand, sell through a distribution network that are required by law to take your product, and while doing so heal mother earth and improve well being of humans and all other living beings.
That sounds too good to be true, isn’t it? Yes it is to some extent. There are several challenges also to be thrown in the mix but everything that I said earlier is still true.
So what is the business that we are talking about? It is converting food and other organic waste streams into useful products such as compost.
This was the topic of conversation with Vaman Acharya, an entrepreneur who has been running a successful compost business near Bengaluru for more than 20 years now.
You can hear the complete interview in two parts on the podcast channel — Talk Sustainability with Sandeep. The podcast is available in most of your favorite apps.
He highlights both the opportunity and challenges of operating in this space in India. Here is a quick rundown of all the major items that you need to get started with your research and business plan.
Finding hot spots of raw material
Not all waste are created equal
To run at an industrial scale, any company needs a steady and near consistent supply of raw materials. While there is a lot of organic municipal waste being generated, not all waste are equally attractive financially to process.
Below are some examples of the kind of organic waste that is attractive.
- Food Industry Waste: The most valuable resource for your organic waste raw material is food industries such as fruits processors, grain processors and the likes. And the good news is that these industries are willing to pay you to take their waste!
- Sludge: Besides these, a very good sources is the sludge that comes out of food processing industries, butcheries, fish storage and wherever wash is being done, and the sludge is being treated.
- Carbon: Finally get hold of good sources of carbon waste such as coco pith — which is extracted from the coconut shell — which is a very good source of organic carbon.
It is important to know that along with the fibrous waste, you need some real garbage that has live bacteria and fungi. The vegetable and garden waste are rich in these organisms. These bacteria and fungi are essential for the conversion process of fibrous material to organic manure. Otherwise you need to add culture to the waste, which will add to your cost.
What products can you make?
There is significant potential to extract valuable nutrients and nutraceuticals from the food waste. Many food waste, such as Citrus food waste, have very high nutraceuticals content, minerals and vitamins — all of which have very high nutritional value. There is possibility to extract oils, essence, colors, carbon and many other high value products.
Animal feed is a large market in India and animal bodies have much better ability to process a wider range of food compared to humans and the fibrous food waste can be used as an input to prepare animal feed.
Fermenting and making bio-gas out of waste results in much better quality of organic manure because since the carbon part is taken out, it is richer in Nitrogen making its C-N ratio very good and very good for the soil.
Finally, when all other higher value items are extracted, the remaining nitrogen and other residual minerals can be composted and converted back into rich soil to be returned back to mother earth.
It is important to think of multiple product streams because converting the organic waste into compost is not a very attractive business, if viable, on standalone basis. From ten tons of organic matter, the recovery of organic manure is one ton and price realization is also modest.
What about quality?
Basic requirements of manure composition quality are specified for nitrogen, carbon, zinc, potash, phosphates, magnesium etc. The material needs to be tested by manufacturers, buyers and even farmers can do that. There can be penalties imposed if the quality standards are not being met.
How to sell?
As per government regulations, the chemical fertilizer manufacturers are required to sell organic manure along with chemical fertilizers. The reason behind is that there is a need in the soil to have organic carbon also along with nitrogen, phosphates and potash otherwise it will turn saline — which is a issue that is causing serious land degradation in India.
The government supports this by distribution system with subsidies. But these subsidies are available to the distributors and not the manufacturers. These distributors regularly enter into contracts with compost manufacturers with requirements and control over quality and quantity. Today almost 70–80% of the organic manure produced from urban waste gets picked up by these chemical fertilizer distribution companies.
This helps the compost manufacturers because not only their sale process turns B2B, the payment collection also becomes easier compared to a situation where they may have to manage sales and collections from small farmers.
Other sales channels
There are several tenders that comes from forest department, horticulture department, land development agencies and others.
Mass retail channel
If one can add more nitrogenous material and make it more humus, make it fine, good smelling and water holding, then one can fetch premium prices. These can be sold through department stores, supermarkets in small packs.
So far so good, now time for challenges
Tone down expectations from municipality
Most municipalities in India are either financially or psychologically unprepared to pay for the garbage. So the business plan has to be made without expecting any support or benefits coming from municipality.
Some municipalities are doing a better job than others in collection and segregation.
Be prepared to deal with logistics of collection
The waste collection and disposal infrastructure of India remains poorly managed. While waste collection is becoming more and more organised, be prepared to find innovative solutions to avoid daily frustrations with drivers, lorry owners, waste handling contractors etc. At every step, there is some cost involved to get the material from source to the processing facilities.
Have multiple product mix
Unless you are extracting high value products and bringing down the cost of input for compost, the business as it stands today is a borderline margin business. Without having support of tipping fee, it may struggle to make positive margins.
Call to action
Food waste is a serious problem and 1.3 billion tonnes of food is wasted per year globally. In India, it is estimated that around 40% of food is wasted. Managing waste is not just about getting rid of our backyard problem. It is important to realize that only 5–7% of a plant is consumed and rest has to go back to soil for the next year crop to come. This one way movement of hundreds of trucks and containers to the city and nothing going back to the sources is cause of serious challenges including water tables, land degradation, increased use of chemicals and pesticides and also loss of biodiversity because of more land being used for agriculture.
If you are have a problem solving bent of mind or you are an innovator and wish to contribute to solve this issue while making a good business out of it, then this is something you may want to explore more.
If you are someone who has useful information on this subject or have success stories that you would like to share, please reach out to me. We need to build a community from all walks of life across the value chain to do our little bit in solving this problem.
There are many things that divide but planet Earth unites us.
