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Probiotic ag company hopes to raise $20m

Derek Rose
Terragen Holdings says its probiotic feed supplement can make cows healthier and stronger

A Sunshine Coast company that makes probiotic formulas for cows and soil is hoping to raise $20 million in an initial public offering.

Terragen Holdings sells its Mylo live microbial cattle feed supplement to farmers in Australia and New Zealand that it says makes cattle heavier, healthier and stronger.

The company also sells a soil conditioner called Great Land that's produced under sterile fermentation conditions to produce high-quality bacteria useful for improving crop yield and health.

"We're using microbials to do a lot of the work that people for the last 50 years have used chemicals to do," managing director Justus Hornburg told AAP.

The bacteria is sourced from soil, plants and animals, then screened, tested and profiled in a laboratory and finally blended together at Terragen's R&D facility in Coolum Eco Industrial Park.

Terragen is also working to develop a teat conditioner to improve the udders of lactating production animals, as well as an anti-inflammatory product for dairy cattle and dogs.

The cost of the soil conditioner - Terragen's first product - works out to around $42 a hectare, with twice-yearly spraying recommended.

It sells Great Land to dairy farmers, growers of bananas, macadamias, avocados and vegetables, and vineyard owners at outlets including RuralCo and Elders.

Terragen early this year commercialised its second product, the Mylo feed supplement.

A recent study by the University of Queensland's veterinary school found 22 eight-week-old calves who had been given it daily were 8.4 per cent heavier than calves in a control group.

"The farm owners observed many notable differences in health indicators compared to the Control Group: reduced scours [diarrhoea], visually more energy, improved appearance and more aggressive feeding," the study concluded.

Terragen says it plans to talk to regulators in the European Union and the United States about selling both products there.

It says the market for biological products used for soil and plant health is projected to reach $US23 billion ($A33 billion) by 2025, with the similar market for animal health applications projected to hit $9.4 billion ($A13.6 billion) by then.

Unlike chemical pesticides and fertilisers, Terragen's soil conditioner can be used where organic crops are planted.

Also, farmers are looking for alternatives to antibiotics to keep their animals health, as treating livestock with antibiotics prophylactically has contributed to the rise of deadly antibiotic resistant-bacteria in the food chain.

In FY19 Terragen had a net loss of $3.2 million, down from $3.4 million the year before, on $981,000 in revenue.

Terragen's initial public offering began on Tuesday, with the company planning to list on the ASX in early December.

"We've got some real potential and opportunity in the area of helping farmers have more sustainable agriculture, more sustainable farming, that provides a solid foundation for the future," Mr Hornburg said.