Creating Wealth From Waste

Economy stimulus is not just about aggressive money spending to keep the economy moving. One of the important aspects of economy stimulus is fiscal prudence, which is easily and conveniently ignored in the overzealous move to fasten economy recovery. Least you forget the current financial crisis is due to economy mismanagement. The need to return to fiscal prudence is more urgent than ever, yet our leaders chose to resort to pump pimping without given due consideration to the need of fiscal prudence when talk about economy stimulus.

We need to create wealth from waste, not waste from wealth. This is the reason why I look into vermi-culture as the first initiative for stimulus spending. Vermi-culture provides a possible way to create wealth from waste.

Even without the impending recession, the landfills in Penang are running out of space. The need to look for
alternative solid waste management is getting more and more urgent as day passed by. More over the pollution caused by the leakage of leachate from the Pulau Burung Sanitary Landfill is getting worse.

Penang state government under the leadership of Lim Guan Eng is not different from that of Koh Tsu Koon when come to dealing with solid waste management; it still prefers to look for new landfill sites as a convenient method of getting rid of unwanted waste materials.

According to the previous state government of Gerakan, the average Penangnite throws away about 1.1 – 1.3 kg of waste per person per day and the increment is a cause for concern.

A new policy approach should be adopted to instil a sense of common responsibility towards waste, and to create overall strategies for waste management that do more than pay mere lip service to the concept of sustainability.

Therefore it is imperative for us to look into vermi-culture, to see how much revenues we can generate from it and how it can solve our solid waste problem.

One of the places to learn about vermi-culture is no other than Australia, where compost facilities as shown below are the primary means of getting rid of bio degradable solid waste.

This compost facility is a Vermicrobe system consisting of elevated and covered pits with liquid tanks

The Vermicrobe twin tank recirculation system for creating liquid cast is part of the final system

The detail of the compost facility is as follows:

A 16 modular Vermicrobe International modular earthworm pits stocked with a minimum of 250,000 earthworms (plus cocoons)

B Each modular pit is fitted with pit stands, moisture sprays, two liquid tanks, two sump tanks, three pumps, liquid collectors, control valves, filters and Vermitent frame system

C One pH / moisture meter

D One thermometer

E One Conductivity meter to measure liquid cast concentrate

F One 200 L Compost tea brewer, microscope, one dissolved oxygen meter

G One VI2000 Worm Separator/Harvester

Table 1: Compose Facility

Let look into the initial cost of investment in this facility and the return of investment.

Initial Investment Cost

Capital Investment
Vital Earth Modular Pits	16
Earthworms Kgs Per Pit	75
Cost Per Earthworm Pits	$3,250
Earthworm Modular Pits -Complete Package consist of 6 pits	$66,999
Additional 10 Pits	$32,500
Total Equipment Cost	$99,499

Table 2: Capital Investment

Capital Requirements
Earthworm Modular Pits -Complete Package with 16 pits	$99,499
		$99,499
Mobile Office, Store & Fencing	$25,000
Box Trailer	$600
Phone/Fax	$700
Pager	$200
Mobile Phone	$200
Computer/Printer	$2,000
		$28,700

Table 3: Capital Requirement

Finance Requirements
Capital Equipment & Training		$128,199
Working Capital		$41,801
Initial Investment		$170,000

Table 4: Finance Requirement

The initial cost of investment for this facility is US$170,000 or RM 680,000

Worm Breeding Program

Worms are prolific breeders - and double in number every two months. Let see how fast the worms will grow.

Worm Reproduction Rate
Days	120	to double worm weight
Reproduction Rate	1.1920727	per month

Table 5: Worm Reproduction Rate

Month	Opening Stock	Purchase	Natural Increase	Sales	Closing Stock
Jun		1200	230		1430
Jul	1430		275		1750
Aug	1750		328		2033
Sept	2033		390		2423
Oct	2423		465		2889
Nov	2889		555		3443
Dec	3443		661		4105
Jan	4105		788		4893
Feb	4893		940		5833
March	5833		1120		6954
April	6954		1336		8289
May	8289		1592		9881

Table 6: Worms on Hand (kg) for Year 1

Month	Pit Required	Vermicast (kg)	Liquid Cast (liter)
Jun	19	3433	9411
Jul	23	4092	11255
Aug	27	4879	13416
Sept	32	5816	15993
Oct	39	6933	19065
Nov	46	8264	22727
Dec	55	9852	27092
Jan	65	11744	32296
Feb	78	14000	38499
March	93	16688	45893
April	111	19894	54709
May	132	23715	65217

Table 7: The Projected Pit required and By Products of Vermi-culture in Year 1

With the reproduction rate shown on Table 5, if the initial worms stock is 1200kg, by year end it can grow to 9881 kg. That means by year end you will have sufficient stock to open additional 7 compost facilities. The
total vermicast produced will be 129310 kg with market value of US$64,655. The total liquid cast produced will be 355603 liters with market value of US$889,008. That means total revenue of US$953,663 can be expected within the first years of production, which means by first year the state government can almost recoup the cost of investment.

Let see what happened after Year 2.

Month	Opening Stock	Purchase	Natural Increase	Sales	Closing Stock
Jun	9881		1898	77	11702
Jul	11702		2248	82	13868
Aug	13868		2664	88	16443
Sept	16443		3158	94	19508
Oct	19508		3747	100	23155
Nov	23155		4447	105	23254
Dec	23254		5281	111	27497
Jan	27497		6275	117	32668
Feb	32668		7457	122	46161
March	46161		8866	128	54899
April	54899		10545	134	65310
May	65310		12544	139	77715

Table 8: Worms on Hand (kg) for Year 2

Month	Pit Required	Vermicast (kg)	Liquid Cast (liter)
Jun	156	28085	77236
Jul	185	33282	91526
Aug	219	39463	108524
Sept	260	46818	128749
Oct	309	55571	152822
Nov	367	65993	181481
Dec	436	78402	215606
Jan	518	93181	256249
Feb	615	110785	304661
March	732	131757	362334
April	871	156744	431046
May	1036	186516	512920

Table 9: The Projected Pit required and By Products of Vermi-culture in Year 2

By end of year 2, the worm stock will grow to 77715 kg. That means you will have sufficient stock for total 64 compost facilities without the need to put in extra money.

The total vermicast produced will be 1,026,603 kg with market value of US$513,301. The total liquid cast produced will be 2,823,160 liters with market value of US$7,057,900. With the sales of 1297kg of worms at retail price of $30 per kg, this will bring in revenue of $38,895. That means total revenue of US$7,610,097 can be expected within the second years of production.

Let see what happened after Year 3.

Month	Opening Stock	Purchase	Natural Increase	Sales	Closing Stock
Jun	77,715		14,927	5,000	87,642
Jul	87,642		16,834	5,000	99,476
Aug	99,476		19,107	10,000	108,582
Sept	108,582		20,856	10,000	119,438
Oct	119,438		20,856	12,000	130,379
Nov	130,379		25,042	15,000	140,421
Dec	170,470		26,971	16,000	151,392
Jan	151,392		29,078	10,000	170,470
Feb	170,470		36,727	12,000	191,213
March	191,213		36,727	16,000	232,648
April	232,648		40,708	20,000	211,940
May	211,940		44,685	14,000	263,333

Table 10: Worms on Hand (kg) for Year 3

Month	Pit Required	Vermicast (kg)	Liquid Cast (liter)
Jun	1169	210,341	578,437
Jul	1326	238,741	656,540
Aug	1,448	260,597	716,643
Sept	1,593	286,651	788,291
Oct	1,738	312,909	860,500
Nov	1,872	337,010	926,779
Dec	2,019	363,341	999,188
Jan	2,273	409,129	1,125,104
Feb	2,550	458,911	1,262,006
March	2,826	508,656	1,398,803
April	3,102	558,354	1,535,457
May	3,511	631,999	1,737,998

Table 11: The Projected Pit required and By Products of Vermi-culture in Year 3

By end of year 3, the worm stock will grow to 263,333 kg. That means you will have sufficient stock for total 219 compost facilities without the need to put in extra money. With this capacity, the compost facilities will be enough to handle the bio-degradable waste in the whole Penang state without the need to look for new landfill. 

Take a look at the cash flow report and balance sheet, you will realise that this is an investment with very high return.

Cash flow Report
	Year Ended
	May-10	May-11	May-12
Cash Receipts
Sales – Worms	0.00	19,500.00	6.380,000.00
Sales - Worm Buyback	12,800.00	12,800.00	12,800.00
Sales – Other	707,967.79	5,791,402.81	30,467,302.57
GST Collected	0.00	0.00	0.00
Capital Introduced	170,000.00	0.0	0.00
Bank Loan	0.00	0.00	0.00
Total Receipts	890,767.79	5,823,702.81	36,860,102.57
Cash Expenses
Accountancy	1,500.00	2,000.00	2,000.00
Advertising	84,956.13	694,968.34	4,421,676.31
Bank Charges	14,415.36	116,474.06	737,202.05
Capital Purchases	377,000.00	2,938,000.00	8,043,750.00
Feed	8,081.89	53,987.6	307,790.17
Freight	35,398.39	975.00	1,842,365.13
General Expenses	4,800.00	14,400.00	86,400.00
Insurance	800.00	1,000.00	5,000
Loan Repayments	0.00	0.00	0.00
Motor Vehicle Expenses	7,800.00	7,800.00	46,800.00
Purchases	72,076.78	582,370.28	3,686,010.26
Telephone	2,400.00	2,400.00	14,400.00
Wages	46,800.00	308,966.67	5,509,183.33
GST Paid	0.00	0.00	0.00
Total Expenses	656,028.55	4,723,341.99	24,702,577.24
Net Surplus/(Deficit)	234,739.23	1,100,360.81	12,157,525.32

Table 12: Projected Cash Flow Report

Balance Sheet
	As At
	May-10	May-11	May-12
Owners Equity
Opening Balance	0.00	908,178.28	6,981,554.50
Capital Introduced	170,000.00	0.00	0.00
Add Profit After Owners Salaries	738,178.28	6,073,376.22	25,769,812.69
	908,178.28	6,981,554.50	32,751,367.19
Represented By
Assets
Cash At Bank	234,739.23	1,335,100.05	13,492,625.37
Worms On Hand At Wholesale Values	296,439.04	2,331,454.45	7,899,991.82
Capital Purchases At Cost Not Depreciated	377,000.00	3,315,000.00	11,358,750.00
	908,178.28	6,981,554.50	32,751,367.19
Liabilities
Bank Loan (Including Prepaid Interest)
Opening Balance	0.00	0.00	0.00
Less Repayments	0.00	0.00	0.00
Closing Balance	0.00	0.00	0.00
Net Assets	908,178.28	6,981,554.50	32,751,367.19
Reconciliation of Profit after salaries
Cashflow report surplus	234,739.23	1,100,360.81	12,157,525.32
Increase in value of stock on hand	296,439.04	2,035,015.41	5,568,537.37
Capital introduced	(170,000.00)
Capital purchases	377,000.00	2,938,000.00	8,043,750.00
Bank loan repayments	0.00	0.00	0.00
Less loan balance	0.00		0.00
Net Profit after Salaries	738,178.28	6,073,376.22	25,769,812.69

Table 13: Projected Balance Sheet

Vermi-culture appears to be an innovative sustainable technology for waste treatment, which holds a promising future in the field of solid waste management.It is a technology that is easy to implement, has low risk with high return of investment. The core activity taken up in this initiative is based on sustainable use of biodiversity. In this activity the organic waste is converted into effective bio fertilizer or vermi compost. The only asset involved is earthworm, which get doubled as day passed by. The operator of vermi-culture earns by selling them and the compost. This initiative is very easily replicable and is financially self-sustainable in the long term.

If Penang state government is sincerely interested in real economy stimulus, it should look into the possibility of creating wealth from waste.

The final question you may want to ask is where to get the funding. The Penang state government has
boasted about its aggressive and quarrelling approach that save Penangites of more than RM10 millions for year 2008.

The state government should allocate RM 6,800,000 out of the RM10 million to build 10 compost facilities which in 3 years time will provide more than sufficient capabilities to process our bio degradable waste. Within 2 years, this initiative will create more than 2,000 jobs with minimum wages as suggested by the labor unions. The state government should also set year 2012 as the target to achieve zero waste. This initiative is totally different from the pump pimping initiative which cost Malaysians billions and billions of ringgits, without giving Malaysians a single clue about where the money go.

This initiative will bring sufficient funds for the state government to be self-sustainable in the long run, without the need to worry about the deprival of funding by the federal or the local councils in the event it
loss in the local election.

Lim Guan Eng boasted about the need of spending RM50 billions of our money for economy stimulus, but has no gut or wisdom to look into this initiative which cost from RM680, 000 to RM6, 800,000 depend on his budget. The impact of this initiative is far reaching, it will make Penang a more livable state, it will solve the pollutions caused by landfills, it will solve the financial woes of the state government, it will help to eradicate hard core poverty, it will improve the Feng Shui of Penang, it will save the Penang state government of at least RM700 million and the political embarrassment in looking for new landfill site. Best of all, it kill the businesses of BN cronies.

For your information, the factory that manufactures the compost system in this article is in Ipoh. The state government does not have to go too far to find out about this technology.

This article signal the beginning of a series of initiatives that set a very high standard for Lim Guan Eng to achieve since he can’t stop talking nonsense with our hard earn monies.

For more information, you can look for this book; Creating wealth from waste by Robin Murray.

Next change a Curitiba type of transport system that will save the government RM 4 billion and lead to the
eventual take over of Penang Bridge,if the state government has the wisdom.