BioCycle January 2008, Vol. 49, No. 1, p. 30
Green trimmings and woody materials are combined with food residuals at the A1 Organics Nevada site – bringing compost to the market for buyers who now understand its value.
Molly Farrell Tucker
AFTER 33 years in Colorado, A1 Organics is gambling on duplicating its composting success in the largely untapped market of Las Vegas, Nevada. A1 Organics, based in Eaton, Colorado, operates seven organics collection and composting facilities and/or recycling centers along Colorado’s Front Range.
A1 grew out of Lambland, Inc., a commercial lamb feeding operation on Duane Wilson’s 160-acre farm in Eaton in the late 1960s. Lambland began composting sheep manure to manage its feedlot waste. A1 Organics was founded in 1974. In 1987, the family began phasing out the feedlot operation to focus on composting manure and other materials. (See “Maximizing Revenue Streams At Composting Facilities,” April 2003 for a company history and profile.)
Today, A1 Organics is the largest manufacturer of compost and related products in the Rocky Mountain region, producing and marketing more than 350,000 cubic yards of compost and soil amendments annually. According to its website, the company has diverted more than 8 million cubic yards of waste from Colorado landfills in its first 30 years and is currently diverting nearly 500,000 cubic yards/year. The company processes biosolids, animal manures, brewery wastes, green waste, wood waste (including clean nonpainted or treated construction debris and limbs), food waste and other organic materials.
Chuck Wilson, the company’s President, started looking for new sites outside of Colorado in 2003 because markets there were tightening. “We were seeing increased competition in Colorado,” he says. “We receive tip fees to offset our processing costs and the tip fees were eroding because of the high demand for green waste and wood waste. Other facilities were taking the materials for free or offering to pick them up.”
A1 Colorado’s sales were beginning to plateau for the first time in years. “We had always promoted quality products and inferior products were now going into the marketplace based on price alone,” explains Wilson. “There was frustration because A1 had sold all of its finished products since its inception, but that changed with the drop in Colorado’s retail housing market and the increased pressure from low quality, noncompost products being dumped on the market.”
PROSPECTING IN LAS VEGAS
The search outside of Colorado quickly focused on Las Vegas. Wilson had visited there a few times for conferences and pleasure trips. “The market in Las Vegas seemed very underdeveloped, much like Colorado was 20 years ago,” he says. Wilson and Bob Yost, A1’s Vice-President of New Business Development, spent the next two years exploring the Vegas market. “We had to do our market research and due diligence,” explains Wilson.
They found little competition there in terms of composting operations. “One other company has a type of compost operation in Las Vegas, but it is more of a wood processor and wood recycler instead of a full-scale composting facility,” says Yost, who is responsible for permitting, contracts, new business development and marketing. Prices for finished compost appeared higher because most of what was being marketed as compost was being imported from other states including California, Utah and Arizona.
Construction was booming in Las Vegas, with golf courses and schools that would require landscaping. Las Vegas is located in Clark County, the most populated of Nevada’s 17 counties with two million residents and 70 percent of the state’s population. Clark County is one of the fastest growing school districts in the country. In 2006, it was building new schools at the rate of one per month.
Wilson predicted that Las Vegas would be an ideal location to sell compost because of its arid climate, severe water shortage and poor soils. “It didn’t seem like there was any water conservation going on in Las Vegas and it seemed like the city was heading for a train wreck,” he notes. “Las Vegas has some of the worst soils in the country and the soil was not being improved with organics. The water savings could be huge if they used compost.”
He was particularly interested in collecting and composting the food waste generated in the city. “It was my main motivator and is still our target material,” he says. “Almost 39 million tourists visited Las Vegas in 2006 and it has the largest concentration of hotels in a single area in the world. It was the best opportunity for food waste recycling in the country and an untapped market.”
FORMING PARTNERSHIPS
A1 spent 18 months looking for a site in Las Vegas for a composting facility. Finding one that was affordable was the greatest challenge, says Wilson. “We have 50- to 60-acre sites in Colorado, but we couldn’t replicate a similar operation in Las Vegas because land is at such a premium,” he explains. “Land was selling for $500,000 to $1,000,000 per acre.”
Ultimately, A1 decided to partner with a local company, Impact Sand and Gravel. The two companies formed A1 Organics Nevada LLC, in which A1 is the majority partner. “Impact had 10 years of experience in the market, a solid reputation and an infrastructure in place for a quick startup – including possible access to a small six-acre facility in the southwest quadrant of Las Vegas – and a potential larger quarry site for composting,” says Wilson. “A1 has had operations at two quarries in Colorado, so past experience has proven that the two industries are compatible. Both businesses use similar types of heavy equipment. We do a lot of the same processing and moving of materials.”
Impact and A1 each had something the other company wanted. Impact had been importing compost from California to upgrade its cyclone or clean washed sand and was considering doing its own composting to reduce that expense. In the process of mining sand and gravel, Impact also was generating and stockpiling significant amounts of overburden material. “We could upgrade the overburden by mixing it with compost to make good topsoil for that area and then market it,” says Wilson.
A1 also purchased the assets of RB Soils, a small Las Vegas company that had been composting horse bedding and some green waste on its four- to six-acre site. The initial composting operation was located there.
START-UP CHALLENGES
Las Vegas proved to be a tough market for A1 to break into. “It was an unfriendly atmosphere,” says Wilson. “There is a monopolistic franchise agreement for collection and landfilling solid waste in Clark County. Republic Services of Southern Nevada has the exclusive contract to provide solid waste collection/disposal services in Clark County until 2035.” Republic Services also owns the APEX Regional Landfill, the largest landfill in Nevada and possibly the U.S. The 1,202-acre landfill opened in 1993 with a refuse capacity of approximately 784 million cubic yards and, under its current permit, a service life of more than 40 years. Republic owns additional acreage at the landfill site that could be used for further expansion. “While the ability to offer source separated recycling services exists outside of the franchise agreement for solid waste, establishing competitive options is challenging,” he adds.
A1 Organics Nevada initially focused on finding various organic materials, and working with local haulers to bring them to its facility. “We prefer to contract with local haulers instead of doing the collection and hauling ourselves,” says Yost. “We’re trying to focus on what we do well. A real danger in trying to expand a business is trying to do everything yourself and losing focus on your core business.”
A1 found that local haulers were collecting fairly large volumes of wood construction debris that was being recycled, but no real volume of green waste. “I was told that Las Vegas wasn’t like Colorado, that there was no green waste in Las Vegas because it is a desert with just palm trees and no grass,” says Wilson. “I opened up the phone book one day and there were 90 landscape maintenance companies listed. We found out that there is a lot of green waste but that collecting it had never been attempted.”
The company also learned that customers in the Las Vegas area were buying wood mulch and or aged construction debris and using it as a soil amendment versus a mulch. “The market was practically unaware of what real compost was or the benefits of using it,” says Yost. “Homeowners, landscapers and practically all users were tilling mostly raw wood based mulches into the ground, instead of using compost. The results were visible everywhere. There had been little education on what constitutes true, quality compost or its benefits to the desert landscape. Purchasers were only looking at buying a ‘cubic yard’ and were not concerned or evaluating what was in it … or what it was. We are attempting to educate purchasers and or users to buy ‘what it is and what’s in it.'”
WORKING WITH LOCAL HAULERS
A1 Nevada began receiving organic materials at its facility in May 2006, including green waste, clean, source separated wood and food waste. A1 formed a strategic alliance with Evergreen Recycling, one of the largest recyclers and haulers in Las Vegas. Evergreen is hauling a significant amount of source separated wood waste to A1’s Las Vegas facility from the $8 billion MGM Mirage CityCenter project on the Las Vegas Strip. The CityCenter project will include 2,700 private residences, a luxury hotel, a 4,000-room resort casino and a 470,000-square-foot retail and entertainment area. It is the largest construction project to date seeking LEED (Leadership in Energy and Environmental Design) certification. Evergreen has contracted to recover all recyclable materials from the CityCenter project as part of the LEED certification process.
“Evergreen was one of the first companies that we pitched to,” notes Wilson. “It is involved with many LEED building projects.” Evergreen takes debris from the construction projects back to its new 50,000 square foot automated MRF (Material Recycling Facility), sorts out wood from the stream and brings the clean wood to A1.
Other local haulers are bringing food waste from one or two casinos to A1’s facility on a pilot basis so that A1 can refine processes and logistics and determine volumetric flows associated with the casino operations (separate from the food waste being recycled by RC Farms, a local swine feeding operation). A1 also has been working with local haulers to collect and bring food waste from manufacturers, retail grocery outlets such as Whole Foods Markets, and possibly other sources such as institutional cafeterias. It contracts directly with the generator when possible and assists in acting as a the liaison between the hauler and the generator to facilitate the collection process.
“We are receiving some very clean streams, while some need to keep being improved on,” says Yost. “The challenge is separation of contaminants at the source and collection.” He notes the casinos, which feed thousands of people each day, are the greatest opportunity for food waste but also the greatest challenge. “They have so much cash flow from their core business that they often don’t want to take the time to focus on recycling their solid waste. However, that culture is changing and we are seeing more and more interest in recycling, even if there is an additional cost involved.”
Wilson adds that many businesses in Las Vegas had never separated much of their organics stream from their waste stream. “What we are doing has never been attempted for the volumes we are targeting in Las Vegas, except with construction debris for the most part,” he notes. “Everything else had gone to the landfill.”
In general, says Wilson, A1’s tip fee is competitive with, but often slightly lower than, the landfill’s. “We have to give generators the incentive for separating materials. Besides the tipping fee, we also work with reducing haul distances and costs, and other intangibles that save time and cost, all of which combine to provide additional incentive to the generator.” A1 charges a surcharge if the food waste is contaminated and has to be sorted or is too contaminated and has to be taken to the landfill.
COMPOSTING SYSTEMS
The Nevada site currently receives 10,000 cubic yards of organic materials each month. “We are somewhat limited by the footprint of our facility, which is only six acres,” he notes. Most of the feedstocks come from the Las Vegas Valley, and the bulk of it is green waste and wood waste.
Less putrescible materials are composted in aerated static piles. “Due to the limitations of the size of the site, we don’t have room for long windrows,” says Yost. Food wastes and other organic materials that could create odors or leachate are composted utilizing the Poly-Flex Composting System. Each bag is 8 feet in diameter, 500 feet long and can hold 500 tons.
A1 also uses a modified static aerated pile (MSAP) system for its Las Vegas facility. “It is a system that we developed in Colorado and use on our sites there,” adds Yost. “It is a hybrid – an aerated windrow and aerated static pile process that can save space, control odors, minimize need to mechanically turn the piles and still meet all regulatory compliance requirements.”
SALES AND MARKETING
Wilson estimates that A1 Organics Nevada produced 30,000 cubic yards of finished compost in Las Vegas in 2007. Most is sold in bulk to wholesale nurseries, landscape contractors, golf courses and schools. Through its relationship with Impact Sand and Gravel, it also sells directly to the horticulture departments at casinos.
A1 also markets Soil Plus compost produced by Ponderosa Dairy, a large dairy near Amargosa Valley, Nevada, 110 miles from Las Vegas. It makes about 50,000 cubic yards of compost annually and is an STA (Seal of Testing Assurance) and OMRI (Organic Materials Research Institute) certified product. “I ran across the company that was marketing Soils Plus,” says Wilson. “It was supplying most of the material to the Clark County School District. A1 purchased the marketing rights for Soils Plus in December 2006.”
Compost marketing is done jointly by A1 and Impact. “We’re combining A1’s educational expertise with Impact’s sales expertise and presence in the Las Vegas area,” he adds. A1 Nevada holds seminars similar to those that A1 Colorado has done for several years. “We’ve been very proactive in trying to educate architects, contractors and other users in Nevada on what true soil amendments are, how to use them effectively, how to identify what they need and how to insure they get what they want,” says Yost. “We conduct these seminars and host ‘lunch and learn’ meetings with architects and contractors, to assist in achieving that goal. A big key to success is the educational piece.”
“We make visits and talk to potential customers and you can see them respond to that message when we describe what our products can do,” adds Wilson. “We bring all the knowledge that we developed in Colorado and people take it in like a sponge.” He explains that Impact’s sales division assists with sales and marketing of the finished products. “A1 Nevada has been doing marketing to landscapers who service school districts and golf courses. Impact was already marketing its rock quarry material and sand to those markets as well as others, so the synergy was obvious.” While developing additional markets for compost, A1 Nevada also has been providing biomass fuel for cogeneration plants in California.
PLANNING FOR THE FUTURE
A1’s Nevada operation currently has five full-time employees. Yost travels to Las Vegas twice a month and Wilson spends a week to 10 days there each month. Todd Loose, Vice President of Production and Operations, also goes there frequently to oversee production.
Wilson says his team has focused on building relationships with its clients. “We found that Las Vegas is a very transient city, with thousands of people moving in and out each month. As a result it took a long time to develop solid business relationships because so many were here today and gone tomorrow. A1 has been in Las Vegas long enough that people know we’re there to stay.” Adds Yost: “We’re committed to this market and we’re going to make it work.”
Yost has seen some positive changes in A1’s short time in Las Vegas. “We’ve seen a significant change in philosophy in Las Vegas in the past two years,” he says. “There are more LEED projects and green building projects in the area. There has also been some emphasis by industry and government to improve the city’s low recycling rate. While numbers vary, Nevada as a whole, and Las Vegas in particular, rank very low in terms of recycling.”
Wilson says A1 is now fully capitalizing the Las Vegas facility. “We take the conservative approach whether in Colorado or Las Vegas,” he notes. “We use outside contractors until the facility warrants certain pieces of equipment and manpower. We’ve seen competitors fully capitalize a new facility and hope that they can drive enough material in to make back the costs.”
A1 plans to open multiple facilities in the Las Vegas Valley in the next few years. “We need more room and we’re looking at other sites in Las Vegas,” says Yost. “We’re in negotiations for two or three options, and hope to have another site within a year.”
Wilson expects that the second facility will be fully permitted by the first quarter of 2008, and a third facility may be permitted there by the end of 2008. “I predict that within five years it will be as big as our Colorado operations,” he says. “There is also the potential to expand into neighboring states such as Arizona and Utah, and possibly California.”