- Study Finds a Nine Per Cent Increase in Daily Weight Gain for Cows Fed Using HydroGreen Fresh Forage
- Study Validates Value for Carbon Commercialization Using HydroGreen Fresh Forage Emission Reductions, Validates Potential for Additional Cash Flow Stream
VANCOUVER, British Columbia, August 10, 2022 – CubicFarm® Systems Corp. (“CubicFarms” or the “Company”) (TSX:CUB), a leading local chain agricultural technology company, today announced the preliminary results of its methane and carbon dioxide-equivalent reduction study (the “Carbon Study”) and beef finishing carcass study (the “Carcass Study”). The Company also provided updates related to the Company’s HydroGreen division and previously announced carbon commercialization program and a corporate update.
Study data indicates significant improvements in animal performance and a reduction in the environmental footprint of cattle, while providing compelling unit economics and payback period.
- Results through the beef finishing stage demonstrated approximately a nine per cent increase in daily weight gain, a six per cent increase in dry matter intake, and a four per cent increase in nutritional efficiency
- Confirmed: In line with previous studies, the Carcass Study showed that feeding beef cattle HydroGreen fresh forage lowered methane emissions by approximately 48 per cent on a per kilogram weight gain basis
- A preliminary lifecycle analysis indicates total carbon dioxide equivalents (“CO2e”) reduction in the range of approximately 1.8 to 2.3 tonnes per head per annum for beef cattle, largely dependent on certain assumptions related to daily rate of gain versus control
- Six commercial scale HydroGreen Automated Vertical Pastures™ (“AVPs”) generating fresh forage have the potential to reduce over 5,000 metric tonnes of CO2e per year
Quantification of Value
- The daily rate of gain increase of 0.13 kilograms per day, when combined with an assumed approximately USD$6.61 realized revenue per kilogram of weight gain(1), results in daily increased revenue of approximately USD$0.86, or USD$314 annually, per animal fed fresh forage grown using commercial scale AVPs exclusive of additional qualitative benefits described below under “Premium Co-Benefits”
- Carbon credits could conservatively realize between USD$12.50 to over USD$20 per tonne of CO2e at current pricing in various offset markets, which is expected to increase with global net zero commitments. The opportunity given compliance market acceptance, or with party-to-party carbon inset sales, could be significantly greater
Verra Carbon Standard certification can be used to monetize greenhouse gas (“GHG”) emission reductions by converting them into tradeable carbon credits. The enteric methane reductions are understood to be categorized under the VM40001 methodology, which would allow for sales in carbon credit offset markets.
HydroGreen Patents Pending Issuance
HydroGreen has filed patent applications that protect its proprietary growing methods, including HydroGreen’s indoor growing system hardware design. Over the past several months, HydroGreen has filed eight additional patent applications related to HydroGreen’s process and benefits of sprouting grains, reducing methane in beef cattle, and improving fertility in cattle.
In addition to the Carbon Study and the Carcass Study beef data, previously announced research data demonstrated that feeding dairy cows HydroGreen fresh forage lowers methane emissions by approximately 24 per cent on a per unit milk output basis. HydroGreen continues to pursue further dairy studies to extend the addressable carbon commercialization for the dairy market.
Carbon Credit Opportunity
Global consumer demand for beef and dairy is expected to grow for the foreseeable future(2) as global living standards rise. To mitigate the environmental effects of increased global consumer demand for beef and dairy, livestock producers will need to invest in innovative solutions to reduce methane emissions from cattle, such as HydroGreen technology.
By pre-selling farm-based inset and offset carbon credits to organizations with net-zero goals, the Company believes it is ideally positioned to create recurring cash flow from operations and capture carbon credit streams as demand and value of carbon credits increase.
In addition to the methane reduction from feeding cattle fresh forage grown in commercial scale AVPs, the Company identified premium co-benefits, including:
- Reducing the number of acres needed to grow feed crops
- Land upcycling by substituting 15 to 20 per cent of conventional feeds
- Diminished fuel and energy use contributing to a 7.4 per cent reduction in fuel and energy emissions
- Potential qualitative benefits, which remain to be fully validated, include fewer liver abscesses, optimized fat distribution, and an improvement in rumen papillae length and width
“It isn’t often that a globally applicable technology can both benefit the environment and drive performance increases supported by compelling unit economics,” said Dave Dinesen, Chief Executive Officer, CubicFarms. “HydroGreen continues to prove its value as a leading livestock feed technology that not only significantly improves animal performance and delivers meaningful environmental benefits, but also positions us to enter the carbon credit market.”
A total of 223 CubicFarm System and HydroGreen sales orders under contract that are pending manufacturing, installation, and site readiness, are valued at approximately USD$30.7 million:
|Geographic Territory||Country||Division||Number of Modules||Estimated Value
|Expected Completion Date|
|New South Wales||Australia||Fresh||19||2.7||2022 Q4|
|British Columbia||Canada||Fresh||26||3.4||2023 Q1|
|British Columbia||Canada||Fresh||100||12.6||2023 Q4|
FreshHub Commercial Validation Project
CubicFarms has completed Phase I of its rapid project to achieve commercial validation of its larger FreshHub configuration using the CubicFarm System technology and approach, prior to the installation of the first FreshHub targeting the end of December 2023. Phase II is currently underway, with Phase III equipment being ordered for installation:
|Intention||Target Commercial Outcome||Progress|
|Phase I||Proof of concept using latest CubicFarm System technology||Build and manufacture the FreshHub prototype modules||Complete|
|Phase II||Validate produce output||Growing the volume of produce necessary at scale and quality to run a FreshHub operation||Targeting October 2022|
|Phase III||Validate commercial earnings||Validate operating model economics to run a FreshHub operation, targeting a return on invested capital of 20%||Targeting February 2023|
(1) Assumed value based on estimates of realized pricing. Wholesale market pricing for beef ranges from approximately USD$3.50 per kilogram. for ground beef to approximately USD$24.50 for choice grade tenderloin. Source: United States Department of Agriculture market news for the week ended August 5, 2022.
(2) Organization for Economic Co-Operation and Development (OECD).
HydroGreen’s Automated Vertical Pastures™ technology utilizes a unique process to sprout grains, such as barley and wheat, in a controlled environment with minimal use of land, labour and water. HydroGreen’s fully automated indoor growing technology performs all growing functions including seeding, watering, lighting, harvesting, and re-seeding – all with the push of a button – to deliver nutritious fresh forage for livestock without the typical investment in fertilizer, chemicals, fuel, field equipment, and transportation. Automated Vertical Pastures™ not only provide superior nutritious feed to benefit the animal, but also enables significant environmental benefits to the farm.
CubicFarms is a leading local chain agricultural technology company developing and deploying technology to feed a changing world. Its proprietary ag-tech solutions enable growers to produce high quality, predictable produce and fresh livestock feed with HydroGreen Nutrition Technology, a division of CubicFarm Systems Corp. The CubicFarms™ system contains patented technology for growing leafy greens and other crops onsite, indoors, all year round. CubicFarms provides an efficient, localized food supply solution that benefits our people, planet, and economy.
For more information, please visit www.cubicfarms.com.
On behalf of the Board of Directors
Dave Dinesen, Chief Executive Officer
Forward looking and other cautionary statements
Certain statements in this release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws, including, without limitation, statements with respect to: the Company’s ability to qualify the methane reduction achieved through AVPs for carbon credits, the quantification of value of the AVPs and the market for carbon credits generally, the expected completion date of projects under contract and the anticipated dates for completion of Phase II and Phase III of the FreshHub Commercial Validation Project. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements including: verification, cancellation and other risks associated with carbon credits; reduction in demand for carbon credits; changes in government regulation; estimates of market opportunity for carbon credits and forecasts of market growth may prove to be inaccurate. Such statements can be identified by the use of words such as “intend”, “expect”, “believe”, “plan”, “anticipate”, “estimate”, “scheduled”, “forecast”, “predict”, and other similar terminology, or state that certain actions, events, or results “may”, “can”, “could”, “would”, “might”, or “will” be taken, occur, or be achieved.
These statements reflect the Company’s current expectations regarding future events, performance, and results and speak only as of the date of this news release. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Except as required by securities disclosure laws and regulations applicable to the Company, the Company undertakes no obligation to update these forward-looking statements if the Company’s expectations regarding future events, performance, or results change.