Bion Environmental Technologies, inc.

For Immediate Release - June 8, 2004

Bion Dairy’s Nutrient Management System Significantly Reduces Nutrient and Air Emissions at Texas Dairy

June 8, 2004. New York, New York. Bion Dairy Corporation announced that the Bion Nutrient Management System (BNMS) installation on the DeVries Dairy’s 1,235 cow dairy in Dublin, Texas substantially reduces polluting releases to air and water caused by dairy manure. At a time when the City of Waco is suing eight large dairies in the Bosque River Water Basin for polluting the city’s primary source of drinking water [Lake Waco] with phosphorus and pathogens, the DeVries Dairy is working to avoid the need for a law suit by developing a settlement with Waco that would include implementing remediation technology and aggressive cropping to eliminate phosphorous runoff from its operations.

The patented BNMS installed at the DeVries Dairy uses naturally-occurring bacteria, which feed on the manure waste stream, substantially reducing most pollutants. The bacteria convert the nutrients into a particulate form which can be composted to produce an organic fertilizer that can be used in growing certified organic foods. The BNMS at the DeVries Dairy is presently a temporary installation due to the current ban on any modifications to existing manure treatment facilities.

Bion’s process has been installed on dairies in New York State and North Carolina, among others. The largest installation serves 3,700 cows. The oldest system dates back to 1992. Since 2000, Bion has been refining its technology to make installations more easily adaptable to various climates and conditions while also improving cost effectiveness. The DeVries installation is the latest version of Bion’s NMS technology. The system was installed as a result of Bion's desire to place a system in one of the most phosphorous-impaired watersheds in the nation and DeVries’ desire to seek out a technology solution, since a strategy that only utilizes additional land for manure application did not appear to be practicable in this watershed.

The Bion process converts or stabilizes most of the organic matter in the manure. The BNMS converts over 90% of the phosphorus in the wastewater into particulate form. At the same time, a majority of the nitrogen is converted into solids and stabilized in particulate form. The process releases a substantial portion of the remaining nitrogen as harmless nitrogen gas (air is 80% nitrogen). This is in contrast to the fate of nutrient nitrogen handled by other waste management approaches. Those systems typically emit a substantial portion of their nitrogen load to the atmosphere as troublesome ammonia gas. Air emission rates of from 20 to 100 pounds of ammonia per cow per year are considered normal. Ammonia releases from the BNMS are approximately 1/5 of a pound of atmospheric ammonia per cow per year, less than 0.004% of the nitrogen entering the system. The BNMS conversion process results in the ability to harvest a substantial portion of both the particulate phosphorous and the particulate nitrogen produced as solids for use as an organic fertilizer.

Since late 2003, the Bion system at the DeVries Dairy has sent weekly effluent samples to independent labs, documenting its ability to convert nitrogen and phosphorous into particulate forms. Trial runs through April, using a centrifuge for harvesting the particulate phosphorus, produced results equivalent to approximately an 80% reduction in phosphorous being applied by irrigation of cropped land.

In April, Bion completed the installation of an enclosed tank system at DeVries, from which air samples can and are being taken under approved testing protocols to determine the extent of the reduction in air emissions from the dairy waste stream. To date, reductions in excess of 95% have been recorded. The air emission and final nutrient reduction data generated by this system will be reviewed by a scientific review panel, including independent pollution control experts from several land grant universities, including the University of Nebraska and South Dakota State University. A report will be released within the next 45 to 60 days.

The provisions of the Clean Water Act now require that all large dairies control their polluting releases just like any other designated point source. The capital cost of a BNMS retrofit for an existing free stall dairy would vary, depending upon many factors including the size of the dairy, climate, and nutrient removal requirements. However, by dramatically reducing both the nutrient discharges and air emissions, a BNMS will support permitting applications by dairies to significantly increase herd sizes without adding large amounts of additional land, while simultaneously becoming and remaining environmentally compliant.

Due to the economic advantages of increased herd size on dairy profitability, there has been a 28% growth in the number of herds with over 1,000 animals over the previous four years (USDA NASS 2002). However, based upon an estimate by the USDA that only 2% of dairy farms have sufficient land to absorb the phosphorus produced by their herds, dairies would have to significantly increase their acreage to address existing nutrient discharge requirements, let alone support herd expansion.

Insufficient land to adequately support existing herd size is a significant problem in the Bosque River basin of Central Texas. Current management practices, assuming aggressive cropping removals of up to 120 lbs. of phosphorous per acre per year and annual per cow phosphorous land application of approximately 40 lbs. per year, would result in a phosphorous management plan requiring one acre of cropland for every three cows. This requirement for nutrient management acreage would meet current production. Bion’s technology will enable 10 cows or more per acre of cropland, which will increase potential dairy herd size. With farmland in the area currently valued at $2,000 to $3,000 per acre, the technology can be worth much more to the dairy owner than its cost. An additional environmental and cost benefit of a BNMS will be the ability to remediate the sludge and phosphorous that has built up over a period of years in the existing lagoons on the dairy.

The current discussions regarding a settlement agreement between the City of Waco and the DeVries Dairy are based upon the desire of the City to accomplish two goals: 1) improve water quality in the Bosque River watershed based upon reductions in phosphorus nutrients in surface water runoff from fields, and 2) reduce the risk of spills from dairy treatment lagoons. Past dairy waste management practices across this region, and in many other instances across the United States, have resulted in storage of phosphorous in the soil and as solids in waste storage lagoons. The high phosphorous concentrations in the soil can increase the release to surface waters.

Field soil remediation can only be accomplished by removing more phosphorus through cropping than is applied to the field in the effluent irrigation water such that overall soil phosphorous concentrations (or the amount of stored phosphorous) are substantially lowered to meet acceptable soil concentration levels. It is anticipated that phosphorus levels in DeVries’ effluent irrigation water will be reduced by close to 80% through utilization of the BNMS. Lagoon phosphorous remediation will be accomplished by processing the stored solids through the BNMS along with the daily load generated by the dairy. The combination of efficiently treating the dairy’s on-going waste load to remove nutrients, lowering phosphorous loads to the fields to rates less than crop uptake and processing stored lagoon solids will meet the City’s requirements of remediation of existing storage lagoons and the reduction of the phosphorous soil content to 200 ppm over time. The amount of land required to successfully comply with these requirements will be determined by the projected cropping removal rates and the reduction in phosphorus concentrations in the effluent applied to the land as a result of the BNMS.

Bion has agreed to operate the system through June and both the city of Waco and the DeVries Dairy have agreed to use the lab data from this centrifuge operating run to be the basis of determining the phosphorous load that DeVries will be land applying. That loading will be used to determine total land and cropping requirements to meet Waco’s objective of improved water quality.

Ultimately, the BNMS will serve to significantly reduce the amount of land needed by the dairy to meet the requirements of the settlement agreement at current levels of operation, as well as support potential future herd expansion.

Bion Dairy Corp. is a subsidiary of Bion Environmental Technologies, Inc.

This material includes forward-looking statements based on management's current reasonable business expectations. In this document, the words "anticipate," "will (be)," "believes" and similar expressions identify certain forward-looking statements. These statements are made in reliance on the Private Securities Litigation Reform Act, Section 27A of the Securities act of 1933, as amended. There are numerous risks and uncertainties that could result in actual results differing materially from expected outcomes.

For further information, please visit the Company’s website at www.biontech.com, or contact:

Kathy Paradise
Office Administrator, Bion Dairy Corp.
kathy@biontech.com
212.758.6622

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