EcoScraps

A. The main facts about the activities of the company.

As we searched the World Wide Web to find a company that really inspires us, we came across the renowned online magazine Business week which selects 25 companies from reader suggestions each year to profile in its annual roundup of America’s most promising social entrepreneurs. Among these companies was the startup EcoScraps that was founded in 2010 by Dan Blake and Craig Martineau.

The two dedicated students created a business model that involves collecting leftover food from grocery stores, supermarkets, restaurants and other suppliers, producing organic compost and then selling it to gardeners throughout the United States. By developing an innovative infrastructure model for manufacturing organic compost, EcoScraps has been able to grow rapidly, expand quickly and reach a wide variety of consumers. Currently, the company is redirecting 100 tons of produced waste each day from retail stores away from landfills and turning it into nutrient-rich soil conditioner.

EcoScraps runs until now production facilities in Arizona, Utah and California. The company’s product line includes compost mix, potting soil, a plant and soil booster, and lawn and garden growth formula that are sold in Utah, Colorado, Arizona, New Mexico and California.

EcoScraps won several awards for its innovative business concept such as the 2010 Sparkseed Innovator, 2010 SOCAP Scholar, #2 Emerging Student Company, and 2nd place and audience award winner at the BYU SVC 2010 Competition. EcoScraps’ conduct has already served as a role model for a range of companies to promote the rational use of energy. It has a huge potential for future growth and development in the booming market of environmental-friendly industries.

B. The Ethical challenges this company is addressing.

Food Waste
According to a recent study done by the USDA, 30 million tons of food (over a quarter of America’s food) is thrown away every year. This number is expected to almost double by 2025. The EPA has reported that disposing of this waste costs over $1 billion a year. In addition to that, food waste contributes around 8 percent of all pollution in the United States, right behind the 12 percent that automobiles produce. Dealing with food waste has been a lose-lose concept – businesses pay money to dispose their garbage, which then rot in a landfill, producing the potent methane gas.

Second-time pollution
As huge amounts of food waste are collected by EcoScraps, it will still remain a great threat to the environment, as soon as it starts rotting, thus producing methane gas. To avoid the second-time pollution, some measures have been taken:

• Choose some faraway abandoned factories to store all food waste
• New technology of transformation reduces the time of storing

Emission of greenhouse gases
Biogas can easily be generated from the garbage, which is 21 times higher than CO2 on the dangers of greenhouse. To prevent the occurrence of greenhouse gases, some new technology for transforming the food waste to useful fertilize has been created as the whole process of transforming will be only 3 weeks while the traditional transformation needs more than 3 months. As a result, less greenhouse gas will be generated.

Negative-effect resources
Not all food waste is suitable for fertilizer productions, as especially garbage collected from some Chinese restaurants did some great damage to the plant. Some fertilizer produced by these food wastes may even kill the plant in 12 hours. To deal with this problem, EcoScraps set up a temporary research laboratory for repeated tests of food waste. As a result, they found that some food can produce a useful fertilizer, while others can not.

C. What makes you believe this company is really ethical and why you trust it?

We dream to connect to those companies which really devote themselves to improve the existing problems and worsening situation of the world, with their core driving innovative pattern. EcoScraps comes into our vision and we believe this company makes us dream, because it is not merely a company that engages in charity projects and CSR programs to appear socially responsible in public. Its business concept itself is in fact ethical. There are four elements constituting the key factors of EcoScraps’ success which we find most inspiring: simplicity, quality, efficiency, values.

Simplicity . The most surprising thing about EcoScraps’ business concept is its simplicity: It literally turns trash into cash. The raw material, leftover food (fruits and vegetables such as tomatoes, cucumbers, oranges and grapefruits),is available in huge amounts and the suppliers are willing to hand it in. Garbage haulers can throw away food waste at an EcoScraps facility for free, instead of otherwise paying the dumping fees that traditional landfills charge. Subsequently, haulers are enabled to offer their services at a discount to the stores whose garbage they are collecting. Likewise, EcoScraps stakes a store’s garbage in its own trucks at a lower charge. So basically, the business model is economically advantageous for everyone involved.

EcoScraps is not only selling the produced compost directly to consumers, it is also selling its products back to the retailer stores that it obtained the food scraps from in the first place. One of the company’s first big customers is warehousing giant Costco, from whom it collects food waste to turn into compost and sell it back to Costco for re-sale in its garden department. Apparently, retailers are even willing to pay for their own garbage. This closed-loop system represents a sustainable solution in a society of waste and dissipation.

Quality . The organic, chemical- and manure-free lawn and garden products of EcoScraps are of high quality, free of manure, organic, chemical-free and thus can be sold at a premium charge. Considering the low costs of the material, high profit margins can be achieved.

Efficiency . EcoScraps created a novel composting method that reduces the time it takes to turn food waste into fertilizer from three months to three weeks. It has therefore gained a competitive advantage, because unlike traditional composting facilities, it can prevent bottleneck issues.

Values . EcoScraps contributes to the protection of the environment as it reduces rotting waste from landfills that produces methane gas resulting in a lower greenhouse effect and an improved air quality. Moreover, EcoScraps products contain nearly double the nutrients of chemical-based manure fertilizer alternatives and are subsequently healthier for the soil.

In addition to that, the business model of EcoScraps offers an economic incentive to everyone involved to choose the green, environmentally beneficial option, because everyone wins. Produce suppliers and haulers save money, customers get high quality products that are good for the planet and employees are motivated to work for a good cause and do the right thing to save the planet. So not only is EcoScraps producing a good product, everybody in the whole chain is improved and benefits from the business as a result. Accordingly, The business model is unique and highly profitable.

All of the social and environmental gains mentioned above make us believe: The company’s revolutionary concept brings important values for our world.

In summary, EcoScraps is our dream company as it combines ethics and business successfully. The company is clearly structured as a for-profit, since the problem NPOs have to deal with is that they can only operate until they run out of funds. However, for the founders of EcoScraps, "sustainability means shaving a balance between financial viability, environmental responsibility, and being meaningful for everyone involved". Therefore, the more profits this company makes, the greater the positive direct impact on the environment, which makes the future a little less wasteful for mankind.

D.The possible challenges facing the company in the future and how you think this company may improve.

It is well known that nowadays the world has witnessed the increasing issues of food waste and how to recycle it into organic compost has been a popular project. The significance of EcoScraps’ progress is self-evident, but there are still some challenges the company has to deal with in the future, on both demand and supply side.

Excess demand
According to Jackson Emery, Account Executive at EcoScraps, the biggest challenge is to keep up with the demand. Over the past years, EcoScraps has attracted a lot of attention from the industry and its customer base already includes several retailers. However, the existing manufactories produce enough to cover demand of local nurseries and groceries, but still there is a deficit in supply, so that potential customers such as Home Depot or Walmart cannot be served.

Product and Market Development
One challenge for EcoScraps is to develop its product line and expand its operations into new markets. Currently there are only four major product groups, which will not be sufficient to meet the needs of the customers in the long run. Moreover, EcoScraps could think about broaden its constituency by cooperating with local farms and major hotel chains, which are potential suppliers of huge amounts of food waste too.

Cash Flow problems
Co-founder Dan Blake explains another challenge EcoScraps was facing: Because of the seasonality of compost sales, there have been cash flow difficulties and problems concerning bootstrapping.

Potential Environmental Issues
Although it makes much sense to turn food waste into the compost fix products, the environmental outcomes it leads to are unclear and may become a critical aspect which will be questioned by public. There is no evidence that the contamination like waste gas or water will not also be produced more or less in the productive process of the compost and potting mixes of EcoScraps. Moreover, the detrimental effect of air pollution for the workers in the factories may be inevitable. In this way, they reduce the landfill waste and methane emissions of food waste, but at the same time it might cause unclear consequences in the process of producing.

Improvement
EcoScraps clearly needs to attract new investors to obtain money for overcoming cash flow and supply problems, as well as realizing products and market expansion. The company should also consider to invest in research to effectively reduce the potential dangers during production processes through improved technology. Furthermore, it could spend money on advertisement to increase the awareness of potential new customers and promote its brand.