Tuesday, 5 June 2012

Got Milk? BioLargo (BLGO) Quietly Targets the Dairy Industry- Article in Green Investments




POSTED BY ON JUNE 5, 2012 IN ENVIRONMENTAL PROTECTION


BioLargo Inc. (OTCBB: BLGO), a company focused on leveraging Nature’s Best Solution® – iodine – to solve a variety of common problems around the world and working in industries dominated by companies like Clorox Company (NYSE: CLX) and Colgate Palmolive (NYSE: CL), recently and quietly announced its entry in the multibillion dollar dairy industry.

The company’s CupriDyne® technology combines micro-nutrient salts with water from any source to deliver on-demand “free-iodine” that can disinfect in a safe, efficient, environmentally sensitive and cost-effective manner. And in an industry that’s increasingly subject to safety regulation, the technology is uniquely poised to capture significant market share in the dairy market.

The Large & Growing Dairy Industry

The dairy industry in the U.S. is estimated to be approximately $35.4 billion in size with some 71,510 farmers, according to CGGC based on USDA/NASS data. With a 13% market share of global raw milk production, the United States milk market is driven primarily by domestic sales. That data also concludes that forecasted demand will continue to grow at 1-2% annual rate for the foreseeable future.

Meanwhile, demand for U.S. food safety products is projected to reach $4.5 billion by 2016, according to ReportLinker. Increased public awareness, additional government regulations and industry initiatives are driving demand for companies to improve their food safety practices, including the use of safe and effective disinfectants.

BioLargo Enters the Dairy Industry

In late March, BioLargo announced that it contracted with a California-based dairy distributor, Green Alpha Solutions LLC, led by two regional dairy industry experts. The new distributor will distribute the company’s new and existing iodine products to consumers under the terms of the new agreement, according to the company’s blog post.

Meanwhile, the company plans on continuing separate discussions with licensing and manufacturing partner to advance new product designs to best serve this highly specialized market. Successful entry into this enormous and growing industry should pave the way for higher revenues and profits down the road.

Improving Dairy Quality & Output

BioLargo’s CupriDyne® based products can help not only improve the overall quality of the dairy products, but also increase output for the dairy industry. A key problem faced by dairy farmers is mastitis and other infections, which are reflected in a measure the industry refers to as a somatic cell count (SCC) in cows. These somatic cells, or white blood cells, are produced by a cow’s immune system to fight infection.

By reducing such infections among cows, dairy farmers may be able to increase their output of milk in addition to increasing the quality of the milk. Based on current milk prices available as reported by the California Depart of Food and Agriculture, milk prices have averaged about $18 cwt (per hundred pounds) over the last quarter. If a farmer can improve the quality of milk by 2 grades then he can realize a much higher price in the market. Class I milk can often demand up to $5.00 cwt above the prices paid for lower quality milk like Class IV B milk. In a farm that currently produces Class IV B milk, at an average production level of milk equal to 14,000 lbs per cow per year, then, realizing a $5.00 ctw price increase would translate to $700 per cow per year in increased value. If the farmer had 250 cows then this would generate an extra $175,000 in income per year. The calculation does not even attempt to address the potential savings in veterinarian bills or overall herd health.

The company believes that its unique iodine solution can help with these goals in a safe and cost-effective manner.

A Great Investment Opportunity

BioLargo Inc. (OTCBB: BLGO) may be a great investment opportunity at its current levels, if it can successfully commercialize its products in these key end markets. With a market capitalization of just $24.5 million, the company appears to be significantly undervalued given its long-term potential in not only the dairy industry, but also industries ranging from medical wound care to consumer goods.

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