AppHarvest’s Mega-Indoor Farm Offers Economic Alternative To Coal Mining For Appalachia

Inside AppHarvest's 60 acre state-of-the art indoor farm in Morehead, KY.

In the first year of business, Jonathan Webb and his growing team at AppHarvest are riding high on what he calls the “third wave” of sustainable development: high-tech agriculture, following the waves of solar energy and electric vehicles. Since launching the concept in 2017, Webb and AppHarvest have raised more than $150 million in funding while building and opening one of the largest indoor farms in the world on more than 60 acres near the Central Appalachian town of Morehead, Kentucky.

For Webb, who grew up in the area and has a background in solar energy and other large-scale sustainable projects, AppHarvest is both a homecoming and a high-profile, purpose-driven venture that addresses the need for additional production to feed a growing population and reduce imported produce. 

Webb’s vision for AppHarvest was inspired in part by a National Geographic article on sustainable farming in the Netherlands, where indoor growing is part of a national agriculture network that relies on irrigation canals and other innovations. He traveled across the Atlantic Ocean to see the farmers in action, then decided it was a venture he wanted to pursue — in his home state of Kentucky, where the coal industry is in decline and unemployment levels are on the rise. 

“Seeing that the world needs 50% to 70% more food by 2050, plus seeing that we’ve shifted most of our production for fruits and vegetables down to Mexico — produce imports were tripled in the last 10 to 15 years,” he says. “I would go to a grocery store, pick up a tomato, and it could be hard, discolored. That’s because it’s been sitting for two weeks on a semi truck, being bred for transportation. So first it was seeing the problem, then asking, ‘How do we solve the problem?’”

As part of my research on purpose-driven businesses and stakeholder capitalism, I recently talked with Webb about AppHarvest’s whirlwind initial year in business, successful investor fundraise, plans to go public, and B Corp Certification.

Good for Business, Good for Community

Jonathan Webb, founder and CEO of AppHarvest

“Where we’re doing what we’re doing is incredibly important. One of our biggest competitive advantages, frankly, is doing it here,” he says. “Some of the hardest-working men and women are the people in this region that power the coal mines, and all we’re trying to do is tap into that and harness that passion. It’s good for our business, but it's good for communities.”

The location has been central to AppHarvest’s benefit in another way, Webb says, as local enthusiasm for the project enabled swift construction that likely would’ve been a challenge in some other regions.

“It's all about economies of scale. We have to build a really big facility to get our costs on materials down so that we can compete with products that are being imported into the country from Mexico,” he says. “We built one of the largest facilities in about a year, so speed and scale are definitely advantages for the company, and a lot of that’s possible based on where we’re operating here in this region.”

While the Bluegrass State has been a good home for AppHarvest, Webb wants the business to be a resource for nearby communities and a beneficial workplace for residents.   

“A fundamental part of the way we’re building and growing this company is that every entry-level employee gets full health care, full benefits, living wage, paid time off. So we’re not just creating jobs, we’re creating a lifestyle for your career path,” he says. “We want to see people with high school degrees in this region grow with the company and be assistant growers and head growers three, four years from now. I know this region, and I know what people can do here. Those are the success stories that I look forward to having happen.”

Creating Positive Stakeholder Impact

Producing needed food and building a stronger workforce aren’t the only goals at AppHarvest; Webb says growing produce sustainably, with minimal impact on the environment, also is paramount. 

“We’re land constrained in the world, and water constrained. And we have to grow a lot more food and use fewer resources,” he says. “It’s simple in theory; it’s complex in scale. Just the fact that the place is so big is what makes this challenging. But we’re collecting rainwater on the roof and using it directly on the root of the plants. We’re growing hydroponically, and as a result we can use 90% less water than open field agriculture.

“The way we treat water and handle water and how we use rainwater efficiently is the really biggest driver of resiliency long term for us.” 

In building a business to have a positive impact on workers, community, and environment, Webb also created a company that is a natural fit for the B Corporation community made up of businesses that achieve a certification based on how well they incorporate all stakeholders into their policies and practices. 

“The impact side of this is incredibly important. We didn’t chase certifications,” he says. “We just did the right things: We’re paying a living wage, we're offering health care. It’s the right way to do business. And as a result, we get a huge ROI on our dollar.”

Thanks to its bottom-line success and future promise, AppHarvest has found favor with investors, including Martha Stewart and venture capitalists; and is part of a growing cohort of businesses with a social purpose that are finding traction in the public markets. The company announced in September that it’s going public through a combination with special purpose acquisition company Novus Capital Corp. (Nasdaq: NOVS).

“Why are we going public now? Because full transparency in agriculture is desperately needed,” Webb says. “We want the people who buy our fruits and vegetables to also have the ability to buy into our company. We want the record. We want the institutional rigor. It’s hard to have this spotlight this early, but it’s making us stronger.”

Christopher Marquis, Contributor

US: NEW JERSEY - Will NJ's Million Dollar Investment In Vertical Farming Yield Long Term Growth?

View fullsize

Written By: Theo Longsdon, Agritecture Intern

Amidst the growth of urban farming projects in the US, a notable development took place earlier in June with the announcement that Jersey City, New Jersey, is to fund the construction and operation of 10 vertical farms in the city; the first municipal vertical farm program in the country. 

View fullsize

The city has partnered up with AeroFarms in a three-year contract worth $987,000 - with just over half of this sum funding the construction of the farm units and the rest covering the project’s maintenance. The farms will use aeroponics to grow a range of vegetables and will be situated at senior centers, schools, public housing complexes, and municipal buildings across the city, taking six weeks to install, and the first vegetables being ready just two weeks after.

The principal motive behind the program is the recognition that there is a growing need to enhance access to locally grown nutritious food and improve the diet and overall well being of citizens. This is in part related to the impact of Covid-19, which according to Steve Fulop, the mayor of Jersey City, has had a “disproportionate impact on people with pre-existing heart conditions, high blood pressure, obesity and diabetes which is directly linked to a person’s diet”. The venture will seek to counter these issues and promote a healthy, sustainable lifestyle through producing 58,000 lb of fresh vegetables over three years – roughly equating to 100,000 servings – and through holding dietary workshops and health screenings for participants. The hope is that a surge in awareness about healthy eating practices, coupled with the distribution of fresh, nutritious produce, will drive a change in people’s eating habits that leads to improvements in the wider, long-term health of the community.  

The creation of jobs will be a further benefit of the program. AeroFarms are significant job providers; they have created about 120 jobs through their projects in Newark, and their new indoor vertical farming facility in Danville is projected to generate 92 jobs for the area. Whilst there has been no indication about the exact number of jobs that will be created as part of the program, with the introduction of 10 farms across the city it is clear a number of employment opportunities will arise, thus helping to stimulate economic development in the area.

Yet despite these upbeat anticipations, the cost of constructing and maintaining the 10 vertical farms is high, with the contract worth just under $1m. By AeroFarms’ own estimation the 10 farms will produce around 58,000 lb of produce over their 3 years, meaning that it will cost the city about $17 to produce one lb of produce. This is a colossal sum and represents an expensive economic venture in a time when the city faces a $70m budget shortfall as a result of Covid-19.

In such a climate, an alternative option for the city would be to invest money in supporting local farms and promoting the distribution of their produce. A quick look at local farms in the region highlights how this may be a far more cost-effective option: Alstede Farms, a 600-acre farm based in Chester Township retails a wide range of fresh organic vegetables at a significantly lower price – selling a bunch of their spinach for $2.99; a bunch of kale for $2.99; and a pound of beans for $3.99. Another organic farm in the region – Terhune Orchards - offers similarly low prices, retailing a bunch of their kale for $3.25 per bunch, a Romaine lettuce head for the same price, and a head of green cabbage for $2.95. If the city was seeking a more cost-friendly way of promoting healthy consumption patterns, then taking such an approach may have been the more viable option. 

But whilst they may represent the more costly option, vertical farms hold a number of advantages over traditional soil farms. Crop yields tend to be higher, as crops can be grown all year round and conditions can be controlled to maximize growth. Having this controlled environment reduces the susceptibility to climate and local weather conditions that is a major drawback of traditional soil farming. The land area needed to cultivate the produce is far lower, as the vegetables can be stacked vertically – a major benefit at a time of increasing pressure on land. Vertical farms also use much less water as they facilitate the production of crops with 70-95% less water compared to traditional cultivation practices. Finally, the generation of local, year-round farmworker jobs is a clear advantage over conventional outdoor farms in the NJ area that depend primarily on seasonal labor. Taking such factors into account may indeed justify the higher cost of produce associated with the program.

One notable stipulation of the program is that those wanting to gain free access to the produce must partake in healthy eating workshops and quarterly health screenings. This entails the obvious risk that the city has overestimated the demand for education and health monitoring amongst Jersey City residents, which could mean that the uptake is lower than anticipated. If the demand does fall short of what the city anticipates, then issues of distribution may arise and the program’s effectiveness may be undermined. Its success will, therefore, depend to a large extent on the willingness of residents to spend time participating in these workshops and regular health screenings.

Jersey City’s newly launched program represents a pioneering attempt to combat deficiencies in access to locally grown, nutritious produce and awareness about healthy dietary patterns. The decision by the municipal body to step in and sponsor the vertical farms is ambitious and unprecedented in the US, but it also throws up some major questions. For example; will the plan of action lead to a long-term alteration in the diets and lifestyles of those involved? Do the associated benefits outweigh the cost of the program? And ultimately, is it a city’s duty to feed people through its own asset, or should it instead focus on policies, incentives, and programs that encourage the growth and support of local farms?