The councils send about 15,000 tonnes of waste food to landfill
Two councils have joined forces to turn food leftovers into renewable energy or compost.
Powys and Ceredigion councils are working on a project to cut the amount of waste sent to a shared landfill site near Llanidloes.
The authorities plan to collect scraps from homes and transfer it to a special conversion plant, and hope to have this in place by 2013.
The counties send about 15,000 tonnes of food waste to landfill a year.
Plans are to recycle all 15,000 tonnes eventually, but at the moment proposals are to treat 11,000 tonnes.
Companies are being invited to tender for the contract, but it is unclear at the moment how the food will be recycled or what it will be turned in to.
Powys council has been transforming leftovers into compost for farmers for a few years.
Since 2007, a scheme has recycled hundreds of tonnes from homes in Abermule, Montgomery, Newtown, Tregynon, Welshpool, Llanidloes, Berriew, Caersws, Kerry and Sarn.
The agreement between Powys and Ceredigion, called the Mid Wales Waste Partnership, is the first of its type in Wales, said officials.
Both councils have good green credentials and are usually at or near the top of Welsh recycling league tables.
Steve Holdaway of Powys council said: "Over the course of the last year Ceredigion and Powys councils have made good progress to get to a position where this agreement has now been signed.
"By 2013 we will have a facility or facilities to treat food waste from the two counties."
Funding and support for the project has been provided by the Welsh Assembly Government.
Huw Morgan of Ceredigion council said: "The partnership is supported by a small regional team based in Ceredigion, and we are delighted that we've made such significant progress with the waste agenda.
"The productive partnership we've developed between the councils is also helping us look at further areas where we can come together in the future."