Interview: Achieving the SDGs through composting systems with zero capital investment

2019 / 4 / 26 | Author: enw_editor

“Within and outside Japan we want to create local circulation loops,
avoid the disposal of food waste, and help reduce costs for our customers.
That is our mission.”

Interviewee: Yasushi Matsuo
President and CEO, Merry Corporation
Interviewer: Nao Okayama


According to fiscal 2015 estimates, Japan produces about 28 million tons of food waste annually, of which about 6.4 million tons consist of food loss, thrown out although it is still edible.

In that context, one company is making a serious effort to realize Goal 12.3 of the Sustainable Development Goals (SDGs), which states, “By 2030, halve per capita global food waste at the retail and consumer levels and reduce food losses along production and supply chains, including post-harvest losses.”

Merry Corporation based in Kitakyushu, Fukuoka, Japan is taking on the challenge of reducing food waste, aiming to create a food recycling loop through broad cooperation with governments, businesses, universities, farmers and consumers.


Q. Can you tell us what’s special about Merry Corporation?

Merry Corporation was founded in 2001 with the aim of recycling resources and making effective use of food waste and leftovers. It was about the time Japan’s Food Recycling Act was enacted, and that year many companies entered this industry. But it was more difficult to be viable than people imagined, so companies pulled out one by one, and I can now easily count how many remain from what was originally about 200 to 300 companies.
When we started out, it was just me working alone to selling equipment priced at 3.5 million yen to turn food waste into compost for the company. But that was too expensive, so no one tried to buy from us.

So, we thought carefully about the bottlenecks from the customer’s perspective and decided to try a system of “leasing” rather than “selling” equipment. If it was done on a lease, the cost of introducing the equipment would be zero. And it would be less expensive than the status quo, including running costs and all other costs, so it would actually mean a cost savings for the customer.

The idea was to lower the hurdles by leasing rather than buying.
What we did was shift from buying to leasing, from owning to using, from selling to providing a service. This is the so-called “green servicizing” approach.

With that, our users increased dramatically. The lesson was that even though it was clearly better for the environment to recycle instead of incinerating food waste, to gain market acceptance we had to offer solutions that made sense economically.

Q. What were the key points for you to expand your system?

Well, the main point was that we were not only providing equipment but also connecting many players.

In our facilities we make compost from the organic (food) waste coming from local government facilities, food services (e.g., restaurants), and other food-related industries, and then farmers use that compost to grow safe and healthy vegetables. The leftovers from those vegetables are then processed back into compost. We created this flow and made it so that everything circulates within the region. Using our Merry System reduces organic waste volumes and processing costs. And based on certain rules and roles, all the actors in a region including the local government, organizations, farmers, citizens can enjoy the merits that apply to their part of the cycle.

So far, about 25 local governments and about 500 companies in Japan have introduced this system of combining local circulation with a leasing service.

The Merry’s System (copyright: Merry Corporation) 

To expand our leasing service we introduced an owner program that works like this:

1. Merry Corporation attracts and enters a contract with customers who will rent commercial organic waste processing equipment from us.
2. We solicit entities to be the owners of our organic waste processing equipment, have them purchase the equipment, and then lease it to the customers in Step 1 (all managed by Merry Corporation).
3. The owners provide financial assistance to the local governments and companies that want to tackle food waste recycling, and they receive equipment rental revenues for the six-year contract term.

In other words, on the financial dimension as well, by connecting the interested actors together, we created a system that makes everyone happy.

Originally individual persons supported this program as owners, but in recent years even large corporations are participating, and we have been working toward strengthening the collaboration among a diverse range of actors involved in technology development and provision, sales and marketing, after-sales service, information management, and so on.

Q. How are things going with local governments?

What gave us a big boost with local governments all over Japan was a decision in fiscal 2017 by the Ministry of the Environment commissioning the main farmers market in Kitakyushu City to do a demonstration project for the processing of food waste from fruit and vegetable produce.

The key point was that this was not just for Kitakyushu City, but a concept that could easily be applied in direct public markets all over Japan. These kinds of markets produce a huge variety of food waste, depending on the regulations and processes in each municipality. For example, there can be many different combinations of onsite and offsite processing. In this case, we partnered with universities and businesses to come up with a versatile setup.

Once we launched this system in Kitakyushu in fiscal 2018, one after another, local governments came to observe how it works. For one local government, we came up with a system connecting the actors that could reduce the per-kilogram processing costs by more than half. A growing number of local governments are now considering how to use food waste processing in their school lunch programs. In many cases, one success makes it easier to convince others, which leads to more and more systems being introduced.

Q. I hear that inquiries are coming from overseas too. Have you found any challenges dealing outside Japan?

Currently, a demonstration project is underway in Malaysia as a JICA official development assistance project. In the Cameron Highlands there, we are working to introduce a system on about the same scale as in Kitakyushu. Food waste has a high level of water content, which made it difficult to incinerate, so was being transported to a remote landfill, and that was costing money. So we are working on the design of a system that can process vegetable food waste that is high in water content.

Overseas, the government typically bears the costs of waste incineration. So the challenge is to think of ways to reduce the government’s burden. W e would like to also communicate the importance of recycling to businesses.

It is also important to envision what systems will be like at the commercialization stage. Projects will not get there unless the cost structure makes sense economically. That point is the same whether you’re in Japan or overseas.

Q. What actions are you considering for achieving the SDGs?

The SDGs goal of halving food waste by 2030 will not be achieved if we just take small and incremental steps. Many actors have been moving in an uncoordinated fashion, but we need to cooperate toward a grand goal of resource recycling.

At the current pace, Merry Corporation will be processing about 300,000 tons annually by 2030. That is only about 1.5% of the 19 million tons of waste annually generated in Japan. But if we start to cooperate with large companies we estimate we could process 500,000 to a million tons annually. If we can do that, our numbers will start to be more significant.

If we can expand overseas, the impact will be even greater. The entire Earth is our domain. Within and outside Japan and overseas we want to create local circulation loops, avoid the disposal of food waste, and help reduce costs for our customers. That is our mission.

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Corporate profile

Company name: Merry Corporation
Address: Koyo-cho 10-1, Wakamatsu-ku, Kitakyushu, Fukuoka, Japan
Employees: 19
Established in 2001, the company offers food waste composting technology and food waste recycling services to create a closed loop in the region based on the Kitakyushu Eco Town Recycling Center, to form a regional circulation zone.
It is actively promoting business also overseas while collaborating with Kitakyushu City, the Kitakyushu International Techno-cooperative Association (KITA) , Kitakyushu Asian Center for Low Carbon Economy , Kitakyushu Interdependent Business Consortium for Sustainable Development (KICS) , and JICA Kyushu. President Yasushi Matsuo also holds the position of Representative Secretary and President of the International Business Department of KICS.
The company also offers services such as the composting of school lunch residue and providing food education activities for elementary schools, mainly in Kitakyushu City.