A spout-fluid bed drying system and process is comprised of a spout-fluid bed dryer having a conical shaped lower section provided with a packing of heat exchange particles. A cyclone separator is connected to the top of the dryer with separated particles collected by a receiver connected to the leg of the cyclone. A vapor fan compresses the air-vapor mixture before it goes to the heat recuperator and mixing chamber. A tube-shell type heat exchanger, wherein effluent gases from the vapor fan are preheated with heat exchange with the outcoming high temperature gases. A combustion and incineration chamber wherein a natural gas burner is installed at the top and the high temperature flame is used to incinerate the effluent gases introduced from the annulus channel of the chamber to have the odors and VOCs destroyed. A mixing chamber wherein high temperature stream from the incineration chamber is mixed with low temperature stream from the vapor fan to serve as the drying media with the temperature maintained at around 400.degree. C. A slurry discharge nozzle is disposed below the packing and connected to a slurry container via piping and a slurry pump for releasing slurry to the surface of the particles within the packing. Evaporation of water occurs mostly on the surface of particles by contact with hot drying media. A gas-air mixture is fed to the burner through a feed pipe line wherein fresh air is supplied from an air blower.