By-product or waste: how classification decides the revenue

Waste is any substance or object which the holder discards or intends or is required to discard (Art. 3(1) Directive 2008/98/EC). The definition therefore does not hinge on the quality of the substance, but on its intended purpose and on how it is handled. Press cake, whey, pomace, spent grain, breakage and trimmings are not waste by nature — they become waste when nobody has a purpose for them.

An intention to discard is presumed where the original purpose of a substance ceases without a new use taking its place directly; what counts is the producer's view, taking account of common perception in trade. This is exactly where classification in food manufacturing is decided: a stream with no intended use and no buyer is waste. The same stream with an intended use, a specification and a buyer is a product or a by-product.

In practice, classification is frequently determined not by a conscious decision but by disposal logistics. What goes into the collection container has been discarded. What is captured separately at the line, stored and specified like goods can be a by-product.

A substance resulting from a production process the primary aim of which is not the production of that substance is regarded as a by-product and not as waste if four conditions are met together (Art. 5(1) Directive 2008/98/EC, transposed into the national waste legislation of each Member State):

If one of the four criteria is missing, the stream is waste — until it ceases to be waste through a recovery operation (Art. 6 Directive 2008/98/EC). That is the more expensive route: the substance goes to a permitted waste operator as waste, is recovered there, and only afterwards may become a product again.

There is a relief for the feed route: substances intended for use as feed materials within the meaning of Regulation (EC) No 767/2009 that neither consist of nor contain animal by-products are excluded from the scope of waste law insofar as they are covered by feed law (Art. 2(2)(e) Directive 2008/98/EC). The intended purpose must, however, be genuine and demonstrable — a feed mill as buyer, a specification, a registration as a feed business operator.

Classification is not a matter of terminology. It decides which law applies, which papers travel with the goods, who may transport them and who may accept them — and thus whether the end result is revenue or an invoice.

The point that costs most in practice is traceability. A feed mill must know the origin and process of its raw materials and usually works to private standards such as QS or GMP+, which require supplier approval. A stream that is managed as waste within the plant does not fit into this quality assurance — even if it is materially identical to a properly managed by-product.

Classification is a decision of the producer, and it takes effect from the moment the substance arises. Whoever has put a stream into the waste container for months and documented it with disposal records cannot retroactively declare it a by-product towards the authority. Conversely, a stream can be managed as a by-product from the day of the changeover — if the four criteria are met and evidenced from then on.

In writing means: an internal determination per material stream with designation, point of origin in the process, quantity per period, composition, intended use, buyer and the assessment of the four criteria. Add to that the specification, the analyses and the supply contracts. This file is what the authority wants to see in an inspection — and it is at the same time what a buyer needs in order to take the goods into their own documentation.

Handling is part of classification. A by-product is captured separately at the line, stored in dedicated clean containers, protected from foreign bodies and packaging residues, and treated like goods, not like waste. Separation at the line is the single biggest lever for revenue — bigger than any price negotiation, because a mixed stream is practically no longer marketable.

There is no approval procedure for classification as a by-product. The producer classifies and carries the responsibility; the competent waste authority — in Germany, depending on the federal state, the lower or higher waste authority — checks in the course of supervision and may come to a different conclusion. In cases of doubt, coordination in advance is sensible. The European Commission's communication on waste and by-products (COM(2007) 59) serves as an interpretative aid that authorities refer to in practice.

If the stream goes into feed manufacturing, feed supervision comes on top: the producer becomes a feed business operator for this activity and must be registered under Art. 9 Regulation (EC) No 183/2005. That applies even if the goods are supplied to a trader.

For substances of animal origin — whey and other dairy side streams, egg, meat and fish fractions — the animal by-products regime with its three categories applies in addition (Regulation (EC) No 1069/2009). It governs registration, commercial documents and permitted uses independently of the waste-law question. The four criteria are identical across the EU, because they come from the Directive; responsibilities and procedures are regulated differently at national level.