It is a costly venture for ratepayers, it produces more greenhouse gas emissions and it means the ground misses out on a natural and nutrient-rich boost.

Food waste collected in Maitland, Cessnock, Port Stephens and the Newcastle Local Government Area (LGA) becomes landfill and every piece increases the waste levy councils have to pay to the state government.

About 30 per cent of each 240 litre garbage bin in Maitland is food waste and in Newcastle the average household throws out 135 kilograms of food every year. That's more than 8600 tonnes of food waste.

Read more: Composting for the carbon

One council is tackling food waste head-on and has saved ratepayers about $7 million in the past year.

Lake Macquarie City Council has turned 40,000 tonnes of food waste into compost and reduced its waste levy by $5.6 million. It has also saved another $1.5 million between the garbage and green bin services.

The high-quality compost is used on gardens, sporting fields, parks, vineyards and farms.

Maitland council cannot recycle food waste because its organic bin contractor, Australian Native Landscapes (ANL), does not have the infrastructure - or a permit, to process it. Cessnock council also contracts to this company and is facing the same problem.

ANL has started the paperwork to expand its services.

Maitland council has contacts in place with the organics collection contractor Solo Resource Recovery and processor ANL so food waste can be recycled in the future.

"Recycling food waste is always a lot more complex, there is potentially a lot more room for contamination because people like to wrap things in plastic and then put it in the bin, or, if there is some dog food still in the tin some people will put the whole tin in the [green] bin instead of scraping out the food left in the tin," Maitland council's waste services coordinator Elfi Blackburn said.

"As soon as the composting facility is legally able to process food organics, council will commence an education campaign to include food waste within the organics bin."

Port Stephens council was recycling food waste included in the red garbage bin and turning it into compost which was used to help rehabilitate Hunter Valley mine sites.

Late last year the NSW Environment Protection Authority said that could not continue until new guidelines were created. Since then the organic waste has been going to landfill.