Compost/Organics Market Trends and Update

1. Compost/Organics Market Trends and Update STAR Summit September 1st 2009 Mark Rose, Living Earth

2. Compost & Mulch are Not Commodities • There is not an everyday market for compost and mulch products. Like a paper mill • Compost and Mulch products are purchased on an as needed basis • Compost and Mulch producers must market their products

3. Living Earth TNLA Show

4. What Drives the Sales Trends and the Price of Compost and Mulch Products? • The Economy • Private Companies • Municipal and Other Governmental Operations • Illegal/Noncompliant Operations

5. The Economy • The “Staycation” has kept homeowner and the existing home landscaping demand strong • New landscaping both commercial and residential are off by approximately 50% • TXDOT projects are not effected

6. Private Companies • Private companies that: • Operate within compliance regulations • Pay their taxes • Have insurance including workers compensation Are good competition for each other and good for the industry

7. Municipal and Other Governmental Operations • Have been known to produce more material than they can sell • At times sell their materials way below private competitors (AKA Dumping)

9. City’s mulch disposed of in Landfill

10. Illegal/Noncompliant Operations • Known to be poorly financed • Known to Dump material on the market to get quickly needed cash • Known to cheat on the USCC Seal of Testing Assurance Program to get sales

11. Industry Issues • Noncompliant/Illegal Operations • Fires • Odors • New Regulations

12. Illegal/Noncompliant Operations • Continue to cause problems for good operators. Example: Undue facility inspections • Politicians and Governmental agencies are under pressure to do something and illegal compost and mulch operations. What will they do? Impose more regulation on good operations

13. Illegal Site-Harris County

14. Illegal Site-East Houston

15. Illegal Site-Galveston County

16. Fires Damages the Industry! • Most fires at Compost/Mulch facilities are at illegal non compliant sites • Fires Damage the image/ perception of the entire industry • People only remember the FIRE at the illegal site and remember nothing about all the good things the properly operated site has done over the years.

20. Mulchie

21. Mulchie

22. Odors Make the Industry Stink • Sites that have odor problems are either managed improperly or are composting a feed stock that should not be processed on their site or not used at all. • Most facilities that that have odor problems are poorly located. • All people remember is if that compost place stinks they all stink! NOT IN MY BACK YARD!

25. New Regulation • After the huge fire in Helotes Texas (San Antonio Area) area legislators proposed HB 2541 in the 2007 legislative session. • This legislation was proposed to regulate pile sizes, storage capacity, turn over, etc at compost/mulch facilities statewide • A group of private operators met several times with legislators about the concerns of the proposed bill being to restrictive • After the legislators realized that none of the operators from the San Antonio area were involved the bill was “bracketed” to only to apply to Bexar County

26. HB 2541 Passed requiring the TCEQ to adopt rules to put restriction on compost/mulch operations in Bexar County. • The same group of private operators (once again none from San Antonio) met with the TCEQ Waste Permits Division and the TCEQ Executive Director several times to get the rules written that would not destroy the industry in Bexar County. • The TCEQ welcomed to group’s input and the rules that were adopted are very reasonable compared to the TCEQ’s first version.

27. These rules go in effect TODAY September 1st • Lesson to be learned: Be involved in the legislative and rule making process!

29. CONCLUSIONS • THERE IS PLENTY OF COMPOST/MULCH ON THE MARKET • PRICING IS EXTREMELY COMPETETIVE • THE INDUSTRY REMAINS CHALLENGED BY FIRE ODOR AND OTHER NON COMPLIANCE ISSUES

30. THANK YOU • PLEASE FEEL FREE TO ASK ANY QUESTIONS THAT YOU MAY HAVE