SAKURA, Japan (Reuters) - With animal feed and fertilizer prices at record highs, Japan's food recycling industry is seeing greater demand than ever before for pellets for pigs and poultry made from recycled leftovers.
Japan disposes of some 20 millions tonnes of food waste a year, five times as much as world food aid to the poor in 2007. The leftovers used to be dumped in land fills where they decomposed and produced the greenhouse gas methane.
But government legislation since 2001 has spurred a recycling industry that turns food scraps into animal feed and fertilizer, or ships leftovers off to facilities where the methane gas produced by rotting food is harnessed to power industrial plants.
"Given higher fuel and feed prices, the (food recycling) business is on the rise now," said Yasufumi Miwa, researcher at Japan Research Institute Ltd.
Farmers had been loathe to use recycled animal feed, but rising feed prices have made them more receptive to recycled feed, which is about 50 percent cheaper than regular feed.
A pig farm in Akita Prefecture, northern Japan, has offset a 20 percent jump in compound feed prices in the past year by making its own recycled feed from scraps disposed by local food manufacturers.
"We could have faced a critical situation this year if we didn't produce feed by ourselves," said Hideki Sato, a spokesman at Sugayo Co, which currently raises 20,000 pigs.
Former garbage truck driver Hiroyuki Yakou became so fed up with dumping loads of discarded food every day that he started a food recycling company, Agri Gaia System Co, Japan's largest recycled animal feed maker.
"It really was a waste," said Yakou.
Nowadays, his drivers cart truckloads of rice balls, sandwiches and milk discarded by 1,200 Seven-Eleven stores to his factory on the outskirts of Tokyo where the food scraps are turned into dry and liquid animal feed for pigs and chickens.
The feed is not used for cattle or sheep due to strict health regulations to prevent Bovine Spongiform Encephalopathy (BSE), more commonly known as Mad Cow's disease.
Food recyclers often use leftovers from convenience stores and restaurants where strict health laws mean unsold items must be thrown out at the end of the day.
"They don't take disposed food from households as they are not in good conditions," said Miwa.
Japan imports about 75 percent of its feedstocks from abroad. It is the world's biggest corn importer to feed animals.
But recent price hikes due to high corn and soy meal prices, the main ingredients in animal feed, has made recycled feed more popular. Although it still accounts for only 1 percent of feedstocks in Japan, or about 150,000 tonnes in 2006, double the volume of 2003. In Japan, companies such as food manufacturers, retailers and restaurants produce some 11 million tonnes of food waste a year. They are responsible for disposing the waste, often paying hefty fees to have it carted away and dumped.
A revised recycling law introduced in Japan in December sets gradually increasing recycling targets for companies that dispose of more than 100 tonnes of food waste a year, adding to their incentive to work with feed recycling companies.
Japan's food industry, the biggest producer of food waste, recycles more than 70 percent of leftovers. About half is turned into feed, less than 5 percent into methane and the rest into fertilizer.
"At first, corporate waste was converted into manure, and more of the waste is now turned into feed, which is more lucrative," Miwa added.
Some have begun to use the waste to produce methane to save energy and at the same time reduce dumping costs.
Regional governments, which incinerate waste to reduce volume before dumping in landfills, are now trying to produce alternative energy from the waste. Methane from food waste is used to generate electricity in some parts of Japan.
The Tokyo metropolitan government's cleaning service agency and Tokyo Gas Co began a test plant in February to produce methane and ethanol from waste from school meals. It is the first plant in Japan to produce two types of fuel at the same time.
At Yakou's plant, workers carefully sift through food carted in by cool trucks to remove non-edible objects, such as skewers and plastic, before sending the leftovers to a cooking facility.
The food waste is turned into two types of dry feed after a final heating process -- rich in fat and protein and less fat and protein but more carbohydrate -- and a liquid type from pasteurized drinks such as milk and chopped vegetables.
"A blind test of pork shows respondents tell the difference immediately. That's because the fat of our pork is sweeter than usual," Yakou said. "Another effect of tasty feed is that hens produce more eggs than usual".
Despite the 'waste not, want not' attitude, some animal rights activists and nutritionists are critical of feeding animals leftovers that have often passed their use-by-dates.
Junichi Kowaka, head of Japan Offspring Fund, a consumer interest NGO, said feed made from fast food may lack minerals necessary for both humans and animals.
"I think the chances are high that the animals will get sick if they eat only that kind of feed while being kept in artificial environments," he said.
(Editing by Megan Goldin)