On-farm composting using two different windrow methods: a stochastic budgeting analysis
Compost Science & Utilization, October 20, 2023, https://doi.org/10.1080/1065657X.2023.2264297.
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Abstract: Chen, Q., E.K. Yiridoe, C. Okoye, R. Munroe and A. Grygorczyk. Two commercial-scale windrow composting methods were investigated for their relative costs of production and value for the horticulture industry, including: (i) aerobic (or thermophilic) composting; and (ii) fermentative (or static pile inoculated) composting. Economic costs, including opportunity costs, were estimated and analyzed using data from a case study on-site compost production for tree and shrub nursery production in British Columbia, Canada. Deterministic and stochastic budgeting models were used to determine breakeven prices and short-run shut-down prices (SRSDP), and testing for potential economies of scale. Monte Carlo simulations were used to assess the sensitivity of costs to uncertainty in key output variables. The composting methods used demonstrate that the composts produced are of satisfactory quality, with physical and chemical properties within typical recommended ranges for agricultural use. Total cost of producing a tonne of fermentative compost (CAD$23) was lower than for thermophilic compost (CAD$37). Short-term shutdown price was higher for thermophilic than for fermentative compost produced by CAD$11 tonne−1. Economies of scale were more apparent for thermophilic than the fermentative composting system. Conclusions from the stochastic analysis were consistent with results from the deterministic cost analysis. The empirical economic cost estimates are useful for a wide variety of audiences, including policy makers and decision makers interested in capital and operating costs of composting, and cost-based pricing strategy for compost produced. Breakeven prices fill an industry knowledge gap regarding profitability of compost production given prevailing market prices.