Recovering value from food waste – food that gets thrown away either before or after it spoils – is no longer an unrealistic idea conceived by wistful entrepreneurs and perpetuated by academia. As a society, we have the know-how to extract value from food waste to feed people, animals and soil right here in our communities. What we don’t know is how to marry political will and industry incentive to provide a sound policy framework for this emerging industry.

Late last year, the San Diego City Council approved revisions to the San Diego municipal code’s recycling ordinance. The revisions, set to go into effect July 1, are designed to provide funding for the city’s Zero Waste Plan and require that food waste can only be collected and transported by companies that are licensed by the city as franchised haulers.

This franchise requirement would shut down small-scale food waste recycling enterprises at a time when San Diego’s residents and restaurants are screaming for options to divert food waste from ending up in landfills.

Until a few years ago, San Diego had one or two options to recycle food waste. A business located within the city of San Diego could get on a waitlist to participate in Miramar Greenery’s composting program. That program is currently running at full capacity and is not accepting new participants. The second option for businesses in the city – and the only option for businesses in all other jurisdictions of San Diego County – was to compost on site – which, for many food service businesses, wasn’t an option at all since composting can be complicated and requires lots of time and space. While many individuals and community groups attempted to fill the gap, local regulations and exclusive contracts with haulers made the market practically inaccessible to innovators.

In 2015, the nonprofit I run, Inika Small Earth, incubated a social enterprise called Food2Soil. Food2Soil operates as a collective of community gardens, chefs and soil growers who want to manage their food scraps responsibly and resourcefully. By creating hyper-local loops, Food2Soil connects restaurants with their nearest community garden. A soil grower facilitates the transformation of scraps into compost. Food2Soil is funded through the fees paid by participating restaurants and sales of the finished compost. Entities like Food2Soil are not so much a waste diversion approach as they are a resource recovery approach. By sourcing select streams of clean vegetative scraps, Food2Soil makes compost that is teeming with beneficial microbes.

Under the city’s new revisions to its municipal code, Food2Soil and other small businesses that do similar work would not be able to charge restaurants a fee for collecting and recycling food scraps; essentially choking a vital revenue stream and forcing these businesses to close.

CalRecycle, the department that oversees California’s waste management programs, already exempts composting activities less than or equal to 100 cubic yards from permit requirements. In spite of this, community-scale composters all over the state face an avalanche of barriers from local municipal codes and exclusive contracts between cities and waste haulers. Fees collected from the hauling industry on traditional waste collection and transportation provides funding for recycling programs run by local governments. Opening up the marketplace to non-haulers like Food2Soil not only impacts the hauling industry, but also the waste and recycling budgets of local governments.

Certain homogenous, clean streams of waste such as spent brewery grains and preconsumer vegetative scraps lose economic value when they are placed with other food waste in a dumpster. Progressive hauling and recycling companies already recognize their limitations in rescuing these streams since it requires developing customized solutions for a large number of small food generators.

We need to crack open the door to the waste market so the long line of innovators and entrepreneurs waiting on its other side can legitimately enter this marketplace. A well-designed resource recovery economy cannot be delivered without the creation of robust small enterprises operating in well-defined niches to efficiently close the loop between disposal and sourcing. Business models that feed people, animals and soil in our communities need to coexist alongside the more traditional approaches of waste reduction and recycling.

So far, small enterprises in waste recovery are restricted to business models arising from regulatory loopholes and policy carve-outs. If we are serious about waste recovery, we have to allow innovators the freedom to select their business models based on their competitive strengths.

The Healthy Soils Coalition, consisting of organics recyclers, nonprofits, local food businesses, farmers and gardeners, is working with the city to formulate an appropriate policy response to the city’s code revisions. After numerous meetings with City Council members and the mayor’s staff, who have expressed commitment to innovation and enterprise, a solution seems possible.

The coalition is requesting the city consider a one-year exemption for organizations that demonstrate value to their communities by transforming food scraps into food for animals and soil. Organizations also have to commit to working closely with the city to shape a framework for organics recovery that furthers the city’s Zero Waste goals and Climate Action Plan in a fiscally responsible manner. Policy options suggested so far include exempting activities that recycle up to 1,000 tons of food waste, extending the state’s exemption of 100 cubic yards to local composting, certifying community-scale composting enterprises and forming cooperatives between food-waste generators and recyclers.

In doing this thoughtfully, deliberatively and transparently, San Diego may just set the stage for all of California in allowing traditional waste diversion to coexist with innovative resource recovery

Sarah Boltwala-Mesina is executive director of Inika Small Earth Inc. Boltwala-Mesina’s commentary has been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here.