Loading

The mulch in its "current form", was "not suitable for use on broadacre agricultural soils" because of residual metals, plastics and glass contaminants, it found.

However, the Australian Council of Recycling representing firms such as Suez and Veolia, has highlighted the EPA's own finding that "the use of mixed waste organic material on [farmland] is unlikely to present any health risk to the general public" to demand its use to be permitted.

"It's a test for the minister," Pete Shmigel, the council's chief executive, said, "NSW has the chance under [Energy and Environment Minister Matt] Kean to shift its approach to actively supporting recycled products, not only regulating them sometimes bluntly and without transparent.

"Otherwise, more material goes to landfill, recycling targets are not achieved, jobs will be lost and millions [of dollars] squandered."

Mr Kean, who last week flagged his intention to tackle plastic waste "head on" as the state's container deposit scheme passed two billion bottles and cans returned in just 19 months, said the decision on organic outputs was for the EPA to decide.

“Before making any regulatory changes, the EPA will consult industry, councils, and sectors that historically used MWOO," he said.

“My top priority as Minister for the Environment is to protect both human health and the environment.”

An EPA spokesman said it had yet to make a final decision, and would release its position on the future land application of organic waste for consultation "in coming weeks".

Loading

"The NSW EPA is developing a comprehensive support package in consultation with waste management companies and local councils to minimise potential impacts and assist them to respond over the longer term," he said.

The industry estimates the government has paid out more than $6 million to compensate for landfill levies triggered by the diversion of waste - and the proposal for more support indicates the sector will be shut down.

Jeff Angel, executive director of the Boomerang Alliance, said the EPA had been right to highlight the microplastics and other contaminants finding their way to farms and other sites.

"There are little bits of plastics and whatever else in the mulch," he said. "Because it is on the surface of the soil, it gets into the air and waterways."

Kate Washington, Labor's new environment spokeswoman, said the impending ban on the organic waste "could lead to mounting landfill and local job losses".

"This Liberal-National Government has a history of slapping on bans without listening or working through the consequences," she said.