Since breaking our story in early June, the protein trade has been doing quite well. Top protein stocks like Tyson Foods (NYSE: TSN), Hormel Foods (NYSE: HRL), Cal-Maine (NASDAQ: CALM) and Nathan's Famous Inc. (NASDAQ: NATH) are in an uptrend. They are benefitting from a drought scare and headlines like the hottest day on earth. Part of that protein trade is Impact Fusion International Inc. (OTCMKTS: IFUS) which is a cattle feed technology company that just started selling a new, proven game changer cattle feed, made in part from agricultural waste fiber. They take bagasse which is the byproduct of sugarcane sugar production and enhance it with their proprietary mixture of Nutri-Mastic™ and process making the feed extremely digestible for cattle. This technology can save the cattle industry, lower greenhouse gas emissions, clean up the environment and make investors a lot of money in the process.
The CEO of IFUS. Mark Walther had an interesting take on why he is seeing a sea change in the receptiveness of ranchers to try their feed Supreme Gold Plus™ (SGP+).
“Things don’t change until a disaster happens” CEO IFUS - Mark Walther
Cattle stand in the burn scar from the Smokehouse Creek fire on March 3 in Hemphill County.
Credit: Justin Rex for The Texas Tribune
Investors skeptical of an OTC’s company ability to ramp sales might need to rethink that mentality. The writing is on the walls that a disaster is unfolding right before our eyes. Recent headlines about wildfires in the west taking thousands of square miles of grazing land out of commission are putting huge strains on the cattle industry. Many of the stocks in the protein trade including IFUS continue to benefit from the tight market conditions.
The Smokehouse Creek wildfire in the Texas panhandle took out 1.1 million acres of grass lands virtually overnight and left 9.35 million cattle starving for food. Walther saw an opportunity to help and donated 2 truckloads of SGP+. This gave him local attention from ranchers spanning from Ohio, Illinois, Kansas, Texas, and Oklahoma after he was interviewed by a CBS affiliate. He also landed repeat customers from ranches to a feedlot. With the increasing rate of fires, ranchers are inevitably going to be put in this situation where their food source disappears overnight. When all the local resources are depleted and there is nowhere to turn, IFUS and their SGP+ will change the way feed buyers think and so should investors.
https://www.epa.gov/climate-indicators/climate-change-indicators-drought
Hay Replacement
The reason replacing hay is such a sexy story is because at the end of the day we all gotta eat. Humans have to eat which means cows have to eat. That’s the essence of the investment thesis. People need to eat protein and droughts are causing massive shortages of the food cattle eat. As a result the ranchers are hemorrhaging money at an unsustainable pace to keep their cattle alive. Cattle ranchers are facing a binary choice to slaughter their herd effectively jettisoning them out of the business or paying through the nose to feed their cattle. A third option that few know about is to simply feed them Supreme Gold Plus™ (SGP+), a hay replacement sold by IFUS, and make record profits. This is a no brainer for farmers as the drought worsens with record heat.
Feed Represents Over 60% of Herd Costs
In Nebraska the annual cost to raise a calf for a year is $1300 which includes the feed costs which represent 60% of the overall cost. Since feed represents the main cost for ranchers, dairies, and feedlots, it’s not surprising that it is the determining factor in the profitability of the ranch. The challenge for ranchers is that feed costs are rising, and the drought conditions are taking away the free grass ranchers get to feed their cattle for part of the season. This is a double whammy for ranchers because after their cattle run out of free grass they have to bring in hay to bridge the gap until the cattle are ready to be fattened at a feedlot. So ranchers get less time on the free grass gravy train and have to spend money. Dairy cows eat even more feed daily. Feedlots are specialized ranchers that fatten the beef cattle and they have to buy 100% of the feed and are very sensitive to hay and feed prices. Some IFUS customers have already reported saving up to 85% on feed costs by switching to IFUS SGP+, because of the improved digestion and absorption, which by itself is hard for feed buyers to ignore. They have also reported more rapid healthy weight gains and increased dairy cow milk production volumes.
Due to drought conditions the cost of hay has gone up as well. Faster than normal. Hay is also seasonal, and can run up in cost 1000% during seasonal shortages, making it unsustainable for year round use. Hay is also a fire hazard, while SPG+ is not a fire hazard. The ranchers are losing their grass in historical fires due to droughts, lighting and high winds, like the recent Texas panhandle fire that burned up 1.1 Million acres of grass that most of the Texas ranchers used to feed their cattle. Drought conditions affect the ranchers in a number of ways because the longer ranchers have grass the less they spend on buying feed, and all the drought does is increase those feed costs and shorten the time they have grass to feed the cattle. Some parts of the country have very poor quality grass.To make matters worse, once the free grass is gone, they need to buy expensive feed, and hay and before sending them to costly feedlots to increase the final weight.
Lowest Cattle Inventory in Over 70 Years
The United States recorded its lowest starting cattle herd in 2024 since 1951 which means beef could see record high prices. Contributing to this decline are two years of back to back drought conditions leading to record slaughters. High prevailing interest rates also contributed to the cost of keeping cattle and discouraged ranchers from investing in the purchase of more cattle in order to keep supply and demand in balance.
This is a huge megatrend coming because food inflation and prolonged drought have pushed cattle ranchers and dairies to the brink. Ever hear of the saying “the definition of insanity is doing the same thing over and over and expecting different results.” Ranchers have entered that cycle and the antidote is IFUS and their Supreme Gold Plus (SGP+). The Biden Administration, Bi-Partison approved legislation and now the USDA, EPA and the State of Louisiana and local Universities, home to the IFUS plant and local sugarcane waste fiber supply, just announced multiple funding grants available, and grants and multiple Universities working with IFUS, all aimed at IFUS and the many problems that IFUS SGP+(™) is already known to solve.
Breakthrough in Breaking Down Lignin
IFUS recently announced in a letter to shareholders that local Universities along with State and Federal agencies are interested in funding research that can lead to the depolymerization of lignin. The University Professor, Dr Bagley, working with IFUS has 43 years of research experience in this same field of research. He testified at an inquiry of the Louisiana State legislature and indicated SGP+ was the “Holy Grail” of unlocking the energy of lignin. Until SGP+ was developed few considered bagasse to be of any use as a cattle feed, or any other use, which is why mountains of it are sitting in piles outside almost all sugarcane processing plants.
https://twitter.com/ImpactfusionI/status/1814645193632542945
IFUS has a chance to completely disrupt the feed business dominated by the $30 billion giant ADM because they can reduce feed costs by up to 85% according to customers while increasing milk and beef production at no added cost. And IFUS can self fund capacity expansion with its 90% gross margin, without loans.
Lignin is the problem compound in waste agriculture Fiber that the world has spent over a century trying to figure out how to unlock it, and commercialize it. IFUS is the first and only one to ever do it, with a final feed cost reducing game changer super healthy cattle feed and Mulch known as SGP+.
Environmental Benefits
One of the problems IFUS’s hay alternative eliminates is cattle liver abscesses. It does this by neutralizing toxic ammonia levels in cattle. Butchers alerted the early users of SGP+ that the cattle consuming SGP+ were showing perfectly healthy livers. In over 75% of the cattle butchered the livers are normally so diseased they cannot even be sold or used for dog food.
https://www.rfdtv.com/liver-abscesses-are-costing-packers-both-money-and-time
The science behind the low ammonia levels are linked to the manure and urine from Cattle that consumed SGP+. Ranchers observed the manure and urine from these cattle have no ammonia or ammonia odor, which means it does not kill the grass where it falls or smell. Instead of killing the grass it acts as a super fertilizer and the grass grows up right through it. In addition, the female flies no longer lay eggs in the manure, and the 1.5 Billion dollar a year flies control problem vanishes. The female flies are smart, and by smell can tell there are no fly larva nutrients left in the manure, a sign the cattle completely digested the feed. Ammonia is also a huge environmental problem for feedlots and is toxic to the healthy digestive bacteria and the livers.
Lowering Greenhouse Gasses
Scientists have known for decades that cattle’s high fiber diet isn’t easy to digest and leads to poor nutrition evident in the methane laden cow patties and the need for supplements but “finding an affordable and nutritious additive has proved difficult.” In 2019 UC Davis researchers found out that a new diet of seaweed showed a 60% reduction in greenhouse gasses. The problem was procuring a stable supply of this wild seaweed wasn’t sustainable. Another seaweed trial in Australia ended raising the feed cost, as the beef cattle lost weight. Many are unaware that cows belch methane when they eat and it’s a result of their inability to break down the grasses and extract the nutrients without fermentation. Researchers estimate that 2% of greenhouse gasses emanate from the cows belching methane. This video shows how they measured it.
The amount of methane a cow produces is directly linked to their diet and overall health. For example, cows fed corn and grains produce ⅓ the greenhouse gasses and gain weight much faster but they are missing the essential nutrients from the grasses and this takes a toll on their overall health and necessitates the need for antibiotics. Antibiotics aren’t cheap but necessary in the current paradigm. In the end the cow patty tells the tale.
Positive Regulatory Environment & Grant Funding
The COWS Act of 2023 which stands for Converting Our Waste Sustainably has a mandate to reduce greenhouse gas emissions, improve air, and water quality, and improve soil health through sustainable alternative and pasture-based manure management practices. This definition is essentially the mission statement of IFUS. There is $1.5 billion set aside for grants that deal with projects like IFUS. It's reasonable to think that hard hit ranchers could tap into these grants in partnership with the Universities as a source of funds to buy Cattle Feed from IFUS. The company also has scientific studies that would be supportive to that end. They have an ongoing research project with Southern University Agricultural and Research Center (SUARC) & LSU with an expected readout from the study in mid August.
“Considering the 1.5-Billion cows, bulls, calves, and steers, this could well become one of the most powerful Green-to-Gold Solutions discovered on planet Earth, thus far.” Bagley - SUARC University Professor
Once a couple of farmers get grant funding there's no telling how quickly this could go viral in that community. As a bonus, as these ranchers become customers, there is likely to be a strong underlying bid in IFUS stock price as ranchers realize what a game changer the technology is and decide to invest for themselves.
Overseas Expansion
IFUS has a letter of intent with a group in India to expand the technology. The group in India known as Agriglow Biotech owns approximately 500,000 dairy cows and has 11 sugar mills which is a perfect combination for a JV partner. Agrigrow is set to save over $150 million annually assuming the US pricing model which is very conservative. The model was outlined by the company in the April shareholder letter. The plant in India is already blueprinted and ready to build once the JV deal is closed. Trey Schmidt was brought on as the VP of International Operations. He is a 6th generation cattle rancher with significant experience, and has worked as a nutrition expert in 21 countries and has lived in India for a couple of years. He will likely be instrumental in closing a deal in India given that he has agreed to move there. However, the India deal may be contingent upon the results of the University Studies on Milk production in order to formalize the joint venture. The study data may also accelerate closing the deal. IFUS processed 2200 lbs of Indian bagasse that is in the process of being exported back to India as SGP+ 2.0(™). If there is a 50/50 split of the plant in India that is saving the Indian group $150 million, it reasons that IFUS could get a good part of that saving for just operating the plant on behalf of the Indian Group. There is upside to this number considering there are an additional 642 sugar mills in India that they could contract manufacture for.
Investment Summary
IFUS is a sleeper stock just starting to get traction. It's a technology company not a product company where you would traditionally want to look at sales figures. Investors need to resist this temptation and do a deep dive in the huge problems this tech solves and value the Company based on its potential to disrupt the feed business dominated by the $30 billion giant Archer’s Daniels Midland (NYSE: ADM). They can reduce feed costs by up to 85% as reported by customers, while increasing milk and beef production at no added cost. IFUS has the potential to deliver outsized returns, if investors can grasp the big picture that the world is burning up and that their product significantly lowers greenhouse emissions, is better & cheaper than the hay alternative, and puts more money in ranchers pockets. Possible reduced fire insurance rates and the long, shelf stable nature of SGP+ also make it attractive. The adoption rate on this product is bound to increase and the inflection point will be once some of the scientific studies start getting published in mid-August. The risk of failure is quite low since they have cash flow, own everything, have an existing customer base, and potential grant money on the immediate horizon. It all boils down to one simple truth, when cattle ranchers, farmers, and dairies, and beef feedlots run out of free grass, hay and grain costs skyrocket. Are ranchers really going to say no to feed like SGP+ that costs less, helps them make their cattle gain weight faster, keeps them healthier, and eliminates the environmental cleanup? This is a no brainer. Food inflation means IFUS is a name you want to hold.
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Disclosure: Insider Financial and its owners do not have a position in the stocks posted and have posted this article for free without editorial input. A guest contributor wrote this article and solely reflects his opinions.
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