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Hydroponics Giant Hydrofarm Plans New Northern California HQ After IPO, 3 Acquisitions
Becoming a publicly-traded company, moving its headquarters from Petaluma temporarily to the East Coast, spending $343 million to acquire three more companies, prepping to return to a larger North Bay hub. It’s been a busy seven months for indoor farming equipment maker and distributor Hydrofarm
THE NORTH BAY BUSINESS JOURNAL
June 25, 2021
Becoming a publicly-traded company, moving its headquarters from Petaluma temporarily to the East Coast, spending $343 million to acquire three more companies, prepping to return to a larger North Bay hub. It’s been a busy seven months for indoor farming equipment maker and distributor Hydrofarm.
On Dec. 14, nearly 10 million shares of Hydrofarm Holding Group stock started trading on the Nasdaq Global Select Market under the ticker symbol “HYFM,” harvesting proceeds of $182.3 million, according to the March 31 annual report. The company did a follow-on offering of 5.5 million shares ended May 3, netting $309.8 million more.
After peaking at $92 in mid-February, the share price was $56.96 at the close of trading Friday.
Then early this year, Hydrofarm shifted its headquarters to its Philadelphia-area distribution center. It’s one of nine totaling 900,000 square feet that the 4-decade-old company operates in the U.S., Canada, and Spain. Hydrofarm also has offices in China.
That happened because Hydrofarm was lining up a larger location elsewhere in the North Bay, something it has been looking for over the past few years.
Hydrofarm had planned to relocate its headquarters from Petaluma to the 250,000-square-foot Victory Station warehouse south of Sonoma, but that deal didn’t materialize amid the rapid cooling of demand for real estate from the newly legal cannabis industry, according to real estate sources.
Hydrofarm couldn’t be reached for comment on its North Bay plans.
While cannabis has become a key driver of demand for controlled environment agriculture products, Hydrofarm got its start in Marin County during the disastrous drought of 1977-1978, the Business Journal reported in 2010. Founder Stuart Dvorin developed water-saving hydroponics that gained traction among gardeners.
The product line expanded to energy-efficient grow lights and germination kits. Then Hydrofarm moved into manufacturing and distributing indoor gardening equipment for both professional growers and hobbyists.
Today, key markets are growers of cannabis, flowers, fruits, plants, vegetables, grains and herbs. The portfolio now includes 26 internally developed, proprietary brands with about 900 product variations under 24 patents and 60 registered trademarks. The company also has over 40 exclusive and preferred brands totaling another 900 stock-keeping units.
Company brands account for about 60% of sales. The total catalog, which carries products from over 400 suppliers, includes over 6,000 SKUs.
“Our revenue mix continues to shift towards proprietary brands as we continue to innovate, improving overall margins,” the annual report said. “Further, our revenue stream is highly consistent as, in our estimation, we believe that approximately two-thirds of our net sales are generated from the sale of recurring consumable products including growing media, nutrients and supplies.”
Net sales last year were $342.2 million, up 45.6% from 2019. The company speculated in its annual report that the coronavirus pandemic shelter-at-home public health orders contributed to this jump in sales. Net revenue the previous year grew only 11.0% from 2018.
First-quarter net sales were $111.4 million, up 66.5% from a year before. The company attributed that to a 59.6% increase in the volume of products sold plus a 6.9% increase in price and mix of those products.
A sign of its commitment to remain in the North Bay, Hydrofarm earlier this year secured a lease for a 175,000-square-foot new distribution warehouse at 2225 Huntington Drive in Fairfield. Meanwhile, Hydrofarm founder Stuart Dvorin was preparing to sell the 110,000-square-foot main Petaluma facility at 2249 S. McDowell Blvd. Extension, a $17.5 million deal that closed June 7.
“We also intend to relocate our existing distribution operations in Northern California from the existing Petaluma building to a larger distribution center in the surrounding area,“ the company wrote in its annual report.
Started in Marin County in 1977 as Applied Hydroponics, Hydrofarm moved the headquarters to Petaluma in 1994, employing 65 at the time. It gradually expanded to 150,000 square feet there with a staff of more than 150 employees by 2010 and then to 195,000 square feet in the city in 2017. The company employed 327 full-time in all locations as of the end of February, it reported.
2017 is when Hydrofarm made a big expansion into Canada with the acquisition of Eddi’s Wholesale and Greenstar Plant Products. That deal helped Hydrofarm become a top supplier of hydroponics gear in Canada, the company said.
This year, Hydrofarm has acquired three more companies. Los Angeles-area premium nutrient maker Heavy 16 was picked up for $78.1 million, and Humboldt County’s House & Garden portfolio of brands for $125 million. A $161 million deal was announced this month for Aurora International Inc. and Gotham Properties LLC, Oregon-based manufacturers and suppliers of organic hydroponic products.
“We view M&A as a significant driver of potential growth as the hydroponics industry is fragmented and primed for consolidation,“ Hydrofarm wrote in its annual report.
Hydrofarm also has been fertilizing its C-suite with acumen in the past couple of years. At the beginning of 2019, Bill Toler came in as CEO, bringing with him over 3 decades of senior executive experience at major consumer packaged goods companies, including most recently seven years as CEO and president of Hostess Brands. B. John Lindeman came in as chief financial officer in March 2020 with 25 years of agriculture and finance executive experience.
Inside The Deals
Lease: Fairfield Commerce Center, 2225 Huntington Drive, Fairfield
Property type: Industrial
Size: 175,404 square feet
Tenant: Hydrofarm
Owner: TreaJP Venture Fairfield LLC
Date: Early 2021
Sale: 2249 S. McDowell Blvd. Extension, Petaluma
Property Type: Industrial
Size: 110,000 square feet
Buyer: Scannell Properties 531 LLC
Seller: Stuart Robert and Emily Alice Dvorin LDGT Grantor Trust
Agents: Cushman & Wakefield represented the buyer, and Meridian Commercial the seller.
Date: June 7, 2021
Price: $17.5 million
Sources: Cushman & Wakefield and Business Journal research
Lead photo: Hydrofarm's former headquarters on South McDowell Boulevard Extension in Petaluma (Facebook.com/Hydrofarm)
Jeff Quackenbush covers wine, construction, and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.
FRANCE: In The Jungle Vertical Farm, The Aromatic Herbs See Life In Pink
Founded in 2016 by former financier Gilles Dreyfuss and a founder Nicholas Segui, this young growth launched the first site in chateau-theory. It plans to open two more by the end of 2022 and become the number one vertical vegetable farm in the country
June 26, 2021
Pascal Mollard-Chenebenoit
France Media Agency
Founded in 2016 by former financier Gilles Dreyfuss and a founder Nicholas Segui, this young growth launched the first site in chateau-theory. It plans to open two more by the end of 2022 and become the number one vertical vegetable farm in the country.
This agriculture works on hydroponics, i.e. without soil, the plants grow on a surface and receive water rich in nutrients. In all warm and humid weather, the garden is lit by LEDs.
Two production “towers” operate with platforms ten meters high. “By the end of this year, we will have nineteen,” Jungle president Gilles Dreyfus told AFP.
A tower can produce 400,000 plants a year. When all is said and done, the 38-year-old former financier explained that the annual production would be 8 million plants.
Taste
Jungle grows aromatic herbs (basil, parsley, cilantro, chives), microgreens (mustard, ple da radish, red shiso, wasabi) and salads (lettuce, arugula).
Playing in Ultra-Fresh its products are intended for mass distribution and its herbs are already available in some Parisian stores.
“Keeping the power of industrial innovation in the service of plant life”: this is the motto of the Jungle. “With pesticide-free plants we meet consumer uses and new needs, they taste, they are alive, they are recognizable and most of all they are produced very close to where they are sold and eaten,” says Gilles Dreyfus.
In the warehouse, the seed course, mounted on a tray, begins on an automated belt. Sow them accurately in a small container filled with surface.
Then to the germination rooms, with tropical climates, the plants stay for a few days. Before joining cultivation tours to thrive and reach maturity.
In the tower, a computer controls all the parameters (water, nutrients, lighting, temperature, humidity, CO2, Ventilation) and constantly adjusts them according to the desired target.
“By playing with the light spectrum and different color ratios, we can make a plant flower faster, more compact, have larger leaves, and change its morphology,” explained Michael Mittrand, agronomist and research and culture administrator.
Robot
A robot has the maneuver to manipulate the trays set up at fifteen levels and control their health condition.
“We have a lot more productivity because we optimize all the parameters,” Gilles Dreyfus stressed. “On earth, you will have a maximum of 3 to 5 crops of basil a year. We have 14 ”.
It aims for profitability by the end of 2022, with the second site at half its capacity.
Jungle also relies on plant production for perfume manufacturers and cosmetic brands. This activity already represents 30% of its turnover, but the company is silent on the flowers produced.
Product area is hidden from visitors. It grows there “rare flower”, which enters into the recipe for perfume, Gilles Dreyfus has the content to say.
After ten years in finance, he decided to change his life in 2015 after reading an article about vertical farming and went to New York to meet the “Father of Concept”, Professor Emeritus Dixon Despomier at Columbia University. He goes to a world conference on vertical agriculture in California.
“When I got back to Paris, I quit my job. I went all over the world to see what was already there ”. On the way, he meets Nicholas Dupuy, who has become his partner.
The Jungle raised just 42 million euros for takeoff.
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Experienced Media Personality skilled in Breaking News, Television, Intelligence Gathering, News Analysis, and Social Media. Strong media and communication professional with a Master of Science (MSc) focused in Economics from Harward University.
Robots Take Vertical Farming To New Heights
Braddock, Pa., is where Andrew Carnegie first mass-produced steel. The city, now one-tenth its former size, is home to a new kind of industry: robotic farms that grow greens inside buildings
Braddock, Pa., Is Where Andrew Carnegie First Mass-Produced Steel. The City, Now One-Tenth Its Former size, Is Home To A New Kind Of Industry: Robotic Farms That Grow Greens Inside Buildings.
June 28, 2021
A decades-long decline of industry in Braddock has left the western Pennsylvania town in ruins. Ten miles upriver from Pittsburgh in the Mon (Monongahela) Valley, most of the city’s factories, businesses and homes were abandoned long ago and leveled. Among the ruins, a sprawling steel mill, built by Andrew Carnegie in 1874, is still producing slabs of steel, 24 hours a day, seven days a week. It’s stained blue walls and maze of giant, rust-colored pipes and vents stand in contrast to the brand-new, block-long, gleaming white structure directly across the street. The mill’s neighbor is Fifth Season, a vertical farm growing greens indoors by stacking racks of plants on top of each other.
Fifth Season is the brainchild of brothers Austin and Brac Webb, and co-founder Austin Lawrence. “We view vertical farming as really a smart manufacturing system,” says Austin Webb. “We just happen to manufacture living organisms.”
The partners consider their fledgling enterprise as more than a means to feed people, but also a chance to work with a community in need. Almost none of the old steel plant’s employees live in Braddock. Conversely, everyone hired to work at Fifth Season lives close by and in the surrounding communities. “We’re creating a workforce of the future,” Webb says. “It’s an entirely new ag-manufacturing job that hasn’t existed before.”
Since the collapse of the steel industry in Braddock, the borough has struggled to attract new business and residents.(David Kidd/Governing)
Automated City Farming
Two shifts of 20 people oversee operations at the vertical farm. And like the steel maker across the road, the work never stops. Dressed in blue scrubs and lab coats, with heads covered and gloves on their hands, workers inside the plant look more like medical research professionals than farmers. The entire process, from seed to harvest, is controlled robotically. “What we have built is the industry first, and industry only, end-to-end automated platform,” says Webb.
Fifth Season’s proprietary software allows efficiencies otherwise not attainable. Spinach, arugula and other greens move around the 60,000-square-foot facility in plastic trays, each with its own unique ID. Sensors are constantly monitoring everything from nutrient mix, carbon dioxide levels and light spectrum, in order to ensure that the greens follow their prescribed grow recipe. Every plant can be traced from any point in the process, at any time.
Webb is quick to tout the advantages of vertical farming. Fifth Season uses up to 95 percent less water and 98 percent less land than conventional farming. Water from the municipal system is filtered and proprietary nutrients added before getting to the plants directly through their roots. “It means you can replicate any form of soil environment,” he says. Whatever water is not used by the plants is retreated and recirculated, with nutrients added as needed. A peat mix is used to support the roots, but all the nutrients are in the water, not the “soil.”
“We use no herbicides and no pesticides,” Webb says. “And that’s because we have hermetically sealed environments.” The possibility of contamination is all but eliminated. Fifth Season recently received a perfect score from the Safe Quality Food (SQF) program, an international, independent body that certifies food safety management. “The second time in 25 years they gave 100 percent,” he says.
With only their faces exposed, employees work among the various conveyor belts that crisscross the high, white-walled rooms of Fifth Season’s production floor. But there are no humans in the adjacent grow room, where tightly spaced racks, supporting trays of plants, are stacked 30 feet high, bathed in an otherworldly purple-magenta glow. The dramatic color comes from the LEDs that replicate the most useful parts of the spectrum of sunlight. “You can’t control the sun,” Says Webb. “But what you can control are LEDs.”
Fifth Season’s proprietary systems allow more plants to be grown in less space. The purple-magenta LED lighting replicates the most useful parts of the spectrum of sunlight, improving growth of the greens.(Fifth Season)
Every few minutes, a robot glides forward and back along a raised guideway that runs down the center of the room, dividing the stacks in half. The machine is not much more than a plain box, just a few feet tall. A metal beam rises from its back, extending to the ceiling. Its task is to place and remove trays of plants, taking its instructions from the all-knowing software. Because they are so tightly spaced, more trays can be stacked on top of each other, resulting in greater production.
“Compared to some other vertical farms out there, we have a lot more density,” says Webb. “We’re able to have more racks that grow inside the same space.” Moving trays is a task well-suited to a machine. Not only does the robot fit into places no human could, it always knows where every tray of greens should be, and for how long.
Vertical Farming Comes to Braddock
After a five-year career in finance, Austin Webb enrolled in an MBA program at Carnegie Mellon University in Pittsburgh. “I believe that robotics will possibly disrupt every industry in the world,” he says. “And so I went to C.M.U., specifically because it’s the No. 1 school in computers, science and robotics.”
There he met Austin Lawrence, who shared his interest in controlled environment agriculture. Together they visited a few vertical farms, coming to the conclusion that what was needed was an entire robotic platform, something the two of them could not accomplish on their own. Webb’s brother Brac, a self-described engineer and entrepreneur, was soon recruited to help. Their new business was incorporated in 2016, initially as RoBotany, which later morphed into Fifth Season.
With financial backing in hand, the partners looked for a place to build, quickly settling on nearby Braddock. They broke ground in May of 2019, were installing equipment less than a year later and were at full production before the end of 2020. “I think there’s a lot of opportunity for resurgence in a place like this,” says Webb. “A lot of folks that stayed are passionate around Braddock being able to grow and thrive and we want to be a part of that.”
In the foreground, Fifth Season’s new structure stands in contrast to the steel plant behind it that still dominates the town.(David KIDD/Governing)
Andrew Carnegie’s mill was the first of many that would proliferate in the Mon Valley, making it the nation’s steel capital. The churches, schools, stores and restaurants that served the town’s 20,000 inhabitants are mostly gone now. Shops and services are few and far between for the 2,000 that remain. “The nearest grocery store is up the hill, two towns over,” says Braddock Mayor Chardae Jones. “And most people don’t have cars.” It’s a hot day in June when a few of the locals gather in a brand-new park along Braddock Avenue. Everyone agrees the park is nice, but it’s no consolation for the hospital that used to stand on the site.
Many years ago, steelworkers and their families lived close to the mill.(David Kidd/Governing)
A few blocks away, an ever-present din still emanates from Carnegie’s steel mill, and a parade of trucks continues to roll past the boarded-up stores and empty lots that line the borough’s main thoroughfare. “We have a lot of vacant buildings,” says Mayor Jones. “That’s our biggest issue.” But there are signs of a revival among the ruins.
Present Day Braddock
Against the backdrop of empty and dilapidated storefronts, “The Ohringer,” a former furniture store built in the streamline moderne style of the 1940s, has recently been completely rebuilt and modernized as apartments and studio space for artists. Applicants are expected to present their work for review and answer a few questions, one of which is “why are you interested in becoming part of Braddock’s resurgence?”
Not only does Braddock lay claim to Andrew Carnegie’s first steel mill, but also the first Carnegie library, dedicated in 1889. Narrowly escaping demolition in the 1970s, the impressive stone structure is today undergoing a comprehensive restoration and modernization. Bright yellow notices of this year’s street sweeping schedule are affixed to telephone poles near the library and all over town, an indication that the local government is still functioning.
A repurposed furniture store now provides updated living and studio space to area artists.(David Kidd/Governing)
Further up the avenue, more official-looking signs are attached to random telephone poles. “NOTICE, WRITE MORE LOVE LETTERS” says one. “NOTICE, LOVE IS FREE,” says another. The signs were placed there, unofficially, by Gisele Fetterman, wife of former mayor and current Lt. Governor John Fetterman. Among her many initiatives to improve the lives of people in Braddock, she founded the Free Store nine years ago, a place where “surplus and donated goods are received and redistributed to neighbors in need.”
Fifth Season is a regular contributor to the Free Store, having recently given them a new refrigerator and donating 100 pre-packaged salads every Thursday. “We’re treated like we’re a customer,” says Gisele Fetterman. “We’re not getting things that didn’t sell, or surplus. Our families get to come in and choose. They can feel like they are at a grocery store. There is great dignity in the process of being able to choose.”
Offering “produce grown in soil by humans in Braddock,” workers at Braddock Farms do it the old-fashioned way.(David Kidd/Governing)
There are more signs along Braddock Avenue. “BE ALERT: VEGETABLES AHEAD.” Another simply says “TURNIPS.” Back in 2007, when John Fetterman was the mayor, he encouraged a nonprofit group of community gardeners to establish a farm in Braddock. Bisected by a side street, the organic farm has expanded to a little less than an acre in size, growing greens, tomatoes, onions, peppers and eggplant. This is Nick Lubecki’s fourth year as manager of the farm. “We’re here in Braddock, so the people in Braddock are our main focus,” he says. “We want to be useful.”
At best, the little farm on Braddock Avenue can produce 13 plantings of greens in a year. It is entirely different from the computer-controlled, machine-driven, non-stop production that takes place a few blocks away at Fifth Season, where a half-acre indoors can produce the equivalent of nearly 100 acres of farmland. But higher yields don’t matter as much if a significant portion is ultimately lost in transit to the table.
Serving a Market
Localized food production means less spoilage and waste. “If it takes anywhere from five to eight days to go from California to Pittsburgh, you’ve just lost five to eight days of shelf life,” says Austin Webb. Most of what Fifth Season produces is consumed in the Pittsburgh area. “The day after it was cut, not 10 days later.” Their ready-to-eat salads can be purchased at a local supermarket chain, or delivered directly to the consumer at home, a direct response to the pandemic. Local restaurants, hospitals and universities are also customers.
Convinced they have successfully demonstrated the viability of their proprietary technology, the three partners are looking to expand beyond western Pennsylvania. “We can build these anywhere… even larger than what we have here today,” says Austin Webb. “And we don’t have to re-create the wheel. It’s not like it would take us another five years.”
Conversations are already taking place about licensing the technology, proceeding in partnership with someone else, or going it alone. “That will allow us to build a facility just like we built in Braddock, in other parts of the U.S., and other parts of the world, even faster.”
A Job You Can Walk to
Andrew Carnegie built his steel mill in the Mon Valley because he needed the river, the raw materials, and access to labor. His plant was expressly designed to use the Bessemer Process, the first method to inexpensively mass-produce steel. Nearly 150 years later, the Webb brothers and their partner Austin Lawrence chose the exact same location to showcase their own new manufacturing technology and to fill a need in the community. “Knowing that we could build these anywhere, we wanted to build in Braddock because we knew that we could create jobs,” says Austin Webb. “That we could create this new workforce of the future.”
Employed since January, John Davis lives less than a block away from Fifth Season. “I have family in Braddock. They’re very happy I’ve got a job.”(David Kidd/Governing)
Braddock resident John Davis may or may not think of himself as part of the workforce of the future. But he’s happy to have a good job. Covered head to toe in his surgical outfit, he works in the seeding department at Fifth Season, a job he’s held since January. He’s lived here for 20 years, and this is the first job he’s had that didn’t involve a commute. He walks to work from his house, half a block away.
Davis is 32 years old and anxious to put the past behind him. “To have a job that you like, where you live, it’s comfortable,” he says. “And you can see that this is going to change Braddock for the better because it gives the residents jobs and new innovations. It’s going to bring life.”
While awaiting their fate, many of Braddock’s empty buildings provide space for murals and artwork.(David Kidd/Governing)
Lead photo: Greens leave the grow room at robot farm Fifth Season, ready for harvest. (Fifth Season)
Tags: Economic DevelopmentFood AssistanceTechnology
David Kidd is a photojournalist and storyteller for Governing. He can be reached at dkidd@governing.com.
UNITED KINGDOM: The Secret Underground Farm In The Middle of Sheffield With An Important Mission
Mr. Ellis, from Sheffield, has been growing greens beneath the streets of Sheffield's Kelham Island since last December, after developing an interest in sustainable hydroponic growing techniques
June 20, 2021
Luke Ellis Grows Plants Underground
Using Hydroponics And Artificial Light
Sheffield has its very own underground farm growing microgreens and veg (Image: coloboque (Pixabay)
Luke Ellis used to be a builder, but now he spends his days underground growing sustainable vegetables.
Mr. Ellis, from Sheffield, has been growing greens beneath the streets of Sheffield's Kelham Island since last December, after developing an interest in sustainable hydroponic growing techniques.
Hydroponics replace the need for a conventional soil and sunlight approach to growing vegetables, using water-based growing techniques instead.
This inventive method of growing means that Mr Ellis can produce a huge amount of leafy greens year-round, without needing to wait for the right season or growing conditions to become available.
Mr. Ellis' business, named 'Leaf + Shoot', now grows a wealth of leafy greens, microgreens, herbs, houseplants, and mushrooms for the people of Sheffield to enjoy - with very little food miles, zero pesticides, and no water waste.
On his business website, Mr. Ellis said: "We are a vertical bioponic farm in the heart of Sheffield, underneath 92 Burton Rd, Kelham in an old spring factory.
"Sustainability is at the heart of everything we do, in fact, it's why we started in the first place. Born out of a desire to produce nutrient-dense, tasty produce with minimum food miles and zero water waste.
"We grow 10 x as much food in the same space as traditional farming twice as quickly, year-round. Reducing the need to import seasonal produce and increasing the nutrient density and freshness."
All of Leaf + Shoot's produce is grown with organic principles, which means that there are no pesticides, herbicides, fertilizers or other chemicals used.
And the delicious and eco-friendly produce is sold around the city, with many businesses benefitting from Mr. Ellis' innovative underground farm.
And individuals can also purchase the fresh produce as Leaf + Shoot regularly sell their harvested greens at pop-up shops outside their farm on Burton Road, where people can bag freshly harvested salad mixes and house plants.
Have you ever tried Leaf + Shoot greens? Let us know in the comments!
USA - KENTUCKY: AppHarvest Announces Ground-Breaking For Fourth And Fifth High-Tech Indoor Farms
The high-tech Somerset farm marks the company’s expansion into growing berry crops. The Somerset indoor farm will be 30 acres
The Company’s Newest Large-Scale Controlled Environment Facilities, Located In Somerset and Morehead, Ky., Will Grow Strawberries And Leafy Greens, Respectively
June 21, 2021
Source: AppHarvest
MOREHEAD, Ky., June 21, 2021 (GLOBE NEWSWIRE) -- AppHarvest, Inc. (NASDAQ: APPH, APPHW), a leading AgTech company, public benefit corporation and Certified B Corp focused on farming more sustainably using up to 90% less water than open-field agriculture and only recycled rainwater, today announced the start of construction for two new high-tech indoor farms in Central Appalachia. The company’s new farms, located in Somerset and Morehead, Ky., will grow berries and leafy greens, respectively.
The high-tech Somerset farm marks the company’s expansion into growing berry crops. The Somerset indoor farm will be 30 acres.
The high-tech Morehead, Ky. farm is the second AppHarvest farm in Rowan County to date. The new Morehead facility will produce leafy greens and will be about 15 acres.
AppHarvest’s newest indoor farms in Morehead and Somerset are preceded by the company’s flagship 2.76-million-square-foot facility growing tomatoes in Morehead; a 15-acre facility in Berea that will grow leafy greens; and a 60-acre facility in Richmond that will grow vine crops.
"These new facilities place us exactly where we want to be at the forefront of AgTech. With today’s dual announcement, we put ourselves ahead of our development schedule,” said AppHarvest Founder & CEO Jonathan Webb. “Our Somerset and Morehead farms will build on the success of our flagship farm to provide higher quality produce using cutting-edge technology at a large scale.”
AppHarvest’s goal is to operate 12 high-tech indoor farms by the end of 2025, and today’s announcement means five of those now have been put on the map. Construction for both the Somerset and Morehead facility is anticipated to finish by the end of 2022.
“AppHarvest has positioned Kentucky as a leader in the AgriTech industry, created hundreds of good-paying jobs for our people and pushed through and thrived during some of our most difficult times,” said Gov. Beshear. “Even as a pandemic raged, Jonathan Webb and his team built one of the biggest indoor farming operations anywhere using one of the most advanced LED-lighting systems ever created. We know the jobs and investments of the future will flow to those who can meet these challenges, so why not us? AppHarvest is making it happen.” AppHarvest’s newest facilities will provide hundreds of well-paying jobs to Eastern Kentuckians in and around Somerset-Pulaski and Rowan Counties.
Both the Somerset-Pulaski and Rowan County facilities will produce non-GMO fruits and vegetables free of harsh chemical pesticides, to be distributed to top U.S. grocers and restaurants. Because of the company’s strategic location in Appalachia, AppHarvest can reach nearly 70% of the U.S. population in a day’s drive, with up to 80% less diesel fuel compared to existing growers in Mexico and the Southwestern U.S.
Supporting Quotes
Congressman Hal Rogers: “I am excited to welcome AppHarvest to Pulaski County and the Lake Cumberland area. Our rich farming history and skilled workforce makes southern Kentucky a prime partner for this innovative AgTech industry. As AppHarvest expands efforts to farm for our future, they are also inspiring a new generation of ingenuity and stellar work ethic that will benefit our region for generations to come.”
Somerset Mayor Alan Keck: “AppHarvest is breaking ground literally and imaginatively across Southern and Eastern Kentucky, and the company’s record growth creates a beautiful synergy with the record growth we are seeing in Somerset and Pulaski County. We share a vision for what this community and this region of Kentucky can become, that it can grow and thrive with the right nurturing and investment. We are thrilled AppHarvest chose Somerset and Pulaski County to expand and are honored to partner with this visionary company.”
Morehead Mayor Laura White-Brown: “This groundbreaking continues to highlight the progression of Eastern Kentucky and Appalachia. AppHarvest continues to pave the way for communities in this region by contributing to the workforce and economic development and at the same time helping to combat world hunger.”
Pulaski County Judge-Executive Steve Kelley: "What an exciting time this is to witness up-close an industry disruption. Who would have imagined that Southern and Eastern Kentucky could be an industry leader in produce supply? With AppHarvest’s vision and determination, we have that chance. We welcome AppHarvest to our county with open arms, and we can’t wait to see its prosperity here. It is victories like these that make me proud of my county."
About AppHarvest
AppHarvest is an applied technology company building some of the world’s largest high-tech indoor farms in Appalachia that grow non-GMO, chemical pesticide-free produce using up to 90% less water than open-field agriculture and only recycled rainwater while producing yields up to 30 times that of traditional agriculture on the same amount of land with zero agricultural runoff. The Company combines conventional agricultural techniques with cutting-edge technology including artificial intelligence and robotics to improve access for all to nutritious food, farming more sustainably, building a domestic food supply, and increasing investment in Appalachia. The Company’s 60-acre Morehead, Ky. facility is among the largest controlled environment agriculture facilities in the U.S. For more information, visit https://www.appharvest.com/.
Forward-Looking Statements
Certain statements included in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. All statements, other than statements of present or historical fact included in this press release, regarding Novus Capital’s proposed acquisition of AppHarvest, Novus Capital’s ability to consummate the transaction, the benefits of the transaction and the combined company’s future financial performance, as well as the combined company’s growth plans and strategy, future operations, estimated financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of AppHarvest’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on as, a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of AppHarvest. These forward-looking statements are subject to a number of risks and uncertainties, including those discussed in Novus Capital’s registration statement on Form S-4, filed with the SEC on October 9, 2020 (the “Registration Statement”), under the heading “Risk Factors,” and other documents Novus Capital has filed, or will file, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. In addition, forward-looking statements reflect AppHarvest’s expectations, plans, or forecasts of future events and views as of the date of this press release. AppHarvest anticipates that subsequent events and developments will cause its assessments to change. However, while AppHarvest may elect to update these forward-looking statements at some point in the future, AppHarvest specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing AppHarvest’s assessments of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements.
Important Information for Investors and Stockholders
In connection with the proposed transaction, Novus Capital has filed the Registration Statement with the SEC, which includes a preliminary proxy statement to be distributed to holders of Novus Capital’s common stock in connection with Novus Capital’s solicitation of proxies for the vote by Novus Capital’s stockholders with respect to the proposed transaction and other matters as described in the Registration Statement, as well as the prospectus relating to the offer of securities to be issued to AppHarvest’s stockholders in connection with the proposed transaction. After the Registration Statement has been declared effective, Novus Capital will mail a definitive proxy statement, when available, to its stockholders. Investors and security holders and other interested parties are urged to read the proxy statement/prospectus, any amendments thereto and any other documents filed with the SEC carefully and in their entirety when they become available because they will contain important information about Novus Capital, AppHarvest and the proposed transaction. Investors and security holders may obtain free copies of the preliminary proxy statement/prospectus and definitive proxy statement/prospectus (when available) and other documents filed with the SEC by Novus Capital through the website maintained by the SEC at http://www.sec.gov, or by directing a request to: Novus Capital Corporation, 8556 Oakmont Lane, Indianapolis, IN 46260. The information contained on, or that may be accessed through, the websites referenced in this press release is not incorporated by reference into, and is not a part of, this press release.
Participants in the Solicitation
Novus Capital and its directors and officers may be deemed participants in the solicitation of proxies of Novus Capital’s shareholders in connection with the proposed business combination. Security holders may obtain more detailed information regarding the names, affiliations and interests of certain of Novus Capital’s executive officers and directors in the solicitation by reading the Registration Statement and other relevant materials filed with the SEC in connection with the business combination when they become available. Information concerning the interests of Novus Capital’s participants in the solicitation, which may, in some cases, be different than those of their stockholders generally, is set forth in the Registration Statement.
MEDIA CONTACT: blair.carpenter@appharvest.com
INVESTOR CONTACT: kaveh.bakhtiari@appharvest.com
IMAGE/VIDEO GALLERY: Available here
Vertical Farm Merger Valued At $1.1 Billion
Strategic partners include food and agriculture industry giant Cargill and Sarath Ratanavadi, CEO of Gulf Energy Development Public Company Limited – Thailand’s largest private energy and infrastructure company and one of the world’s leaders in sustainable energy
June 18, 2021
HAMILTON, Mont.–(BUSINESS WIRE)–Breakthrough U.S. indoor agriculture company Local Bounti Corporation (Local Bounti) has agreed to go public through a merger with Leo Holdings III Corp. (Leo or Leo Holdings) (NYSE: LIII), a publicly-traded special purpose acquisition company, pursuant to a definitive business combination agreement. The transaction values the combined company at an equity value of $1.1 billion (assuming no redemptions) and upon closing of the transaction, the combined company is expected to remain listed on the New York Stock Exchange under the symbol “LOCL”.
Strategic partners include food and agriculture industry giant Cargill and Sarath Ratanavadi, CEO of Gulf Energy Development Public Company Limited – Thailand’s largest private energy and infrastructure company and one of the world’s leaders in sustainable energy – which are investing in the combined company through a private investment in public equity (PIPE) arrangement. Cargill is also expected to provide $200 million in debt financing to accelerate Local Bounti’s expansion plans. Local Bounti plans to use the capital to build local strategically-located indoor farming facilities across the Western U.S. to provide fresh, superior-tasting, long-lasting and sustainably-grown produce with minimal carbon footprint.
Local Bounti Investment Highlights
Superior unit economics, with high yield and low-cost operations, enabled by unique hybrid facility configuration that addresses the challenges of conventional greenhouse and vertical farming
Producing leafy greens today at initial facility with pipeline to grow to eight facilities and the company expects to have over 30 SKUs by the end of 2025, which extends Local Bounti’s penetration, beginning in the largely untapped Western U.S. market
Superior brand and product that is local and sustainable across a growing number of SKUs, currently in more than 400 retail stores, including Associated Food Stores and URM served retail banners such as Rosauers, Super 1 Foods and Yoke’s
Strong commitment to Environmental, Social and Governance (ESG) practices and standards, including an executive team member who is Global Reporting Initiative (GRI)-certified to ensure aggressively transparent reporting per GRI and Sustainability Accounting Standards Board
Best-in-class, established management team of seasoned veterans at scaling early-stage companies, with Fortune 500 and public company experience
“Today’s announcement takes Local Bounti to the next level in enabling local, sustainable production and delivery of fresh, delicious and nutritious produce, including in regions that traditionally don’t have access to local supply, starting in the Western U.S. and expanding globally,” said Local Bounti Co-Founder and Co-CEO Craig Hurlbert. Based on publicly available market research on CEA, Local Bounti believes the current Western U.S. market opportunity is approximately $10.6 billion, and estimates that the total U.S. market for vegetables and herbs will reach up to $30 billion by 2025.
“We look forward to leveraging our proven business model as we accelerate the building of cutting-edge local production facilities that feature our proprietary IP, referred to as Stack & Flow Technology™, and transforming conventional agriculture practices for the benefit of all our customers, no matter where in the world they’re located,” he said, adding that the company’s growth plans include adding seven new facilities and local leadership in different geographic regions, as well as global expansion of its proprietary technology.
An industry disruptor changing the way food is grown and re-imagining the Farm of the Future™, Local Bounti is a premier controlled environment agriculture (CEA) company redefining ESG standards for indoor agriculture. The company’s unique business model is based on building local facilities, operated by local teams, to deliver the freshest and highest quality produce to local communities while maintaining a limited carbon footprint. Using proprietary technology to grow leafy greens and herbs in a smart, indoor controlled environment – and with a cultivation process that uses 90 percent less water and land than conventional agriculture, free from herbicides or pesticides – Local Bounti delivers high-quality produce that not only has a longer shelf life, but is also superior in taste.
“Local Bounti is set to be a transformational force in the AgTech industry with its demonstrated concept and model in food production and distribution,” said Lyndon Lea, President and CEO of Leo. “Combining Local Bounti’s emphasis on innovation, entrepreneurial spirit, and technology-driven approach with the institutional knowledge of the Leo Holdings team, we are confident in the company’s ability to expand in both reach and consumer offerings.”
Leveraging its innovative proprietary modular and scalable building system, which is designed to easily and efficiently replicate the company’s sustainable indoor farm model, Local Bounti is more than doubling the size of its flagship facility in Hamilton, Montana, and plans to break ground on additional facilities in the Western U.S. before the end of this year.
To learn more about Local Bounti’s unique growing process, diversified product offerings and experienced leadership team, please visit localbounti.com.
Transaction Overview
As a result of the transaction with Leo, Local Bounti will receive up to $400 million in gross proceeds (assuming no redemptions), including $125 million from a fully committed PIPE anchored by existing investors and new investors, including Fidelity Management & Research Company LLC, BNP Paribas Asset Management Ecosystem Restoration Fund and Cargill.
The Boards of Directors of Local Bounti and Leo unanimously approved the transaction, and the transaction will require the approval of the stockholders of both Local Bounti and Leo and is subject to other customary closing conditions. The transaction is expected to close in the second half of 2021.
Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Leo Holdings III with the Securities and Exchange Commission (SEC) and will be available at www.sec.gov. For materials and information, visit the investor section of www.leoholdings.com for Leo, which can be found HERE.
Advisors
Morgan Stanley & Co. LLC, Deutsche Bank Securities Inc., and Nomura Securities International, Inc. served as placement agents on the PIPE and Debevoise & Plimpton LLP served as legal advisor to the placement agents. Kirkland & Ellis LLP served as legal advisor to Leo. Morgan Stanley & Co. LLC and Nomura Greentech served as financial advisors to Local Bounti and Orrick Herrington & Sutcliffe LLP served as legal advisor to Local Bounti.
About Local Bounti
Local Bounti is a premier controlled environment agriculture (CEA) company redefining conversion efficiency and environmental, social and governance (ESG) standards for indoor agriculture. The company operates an advanced indoor growing facility in Hamilton, Montana, within a few hours’ drive of its retail and food service partners. Reaching retail shelves in record time post-harvest, Local Bounti produce is superior in taste and quality compared to traditional field-grown greens. The company’s USDA Harmonized Good Agricultural Practices (GAP Plus+) and non-genetically modified organisms (GMO) produce is sustainably grown using proprietary technology 365 days a year, free of pesticides and herbicides, and using 90 percent less land and water than conventional outdoor farming methods. With a mission to ‘bring our farm to your kitchen in the fewest food miles possible,’ Local Bounti is disrupting the cultivation and delivery of produce. The company is also committed to making meaningful connections and giving back to each of the communities it serves. To find out more, visit localbounti.com or follow the company on LinkedIn for the latest news and developments.
About Leo Holdings III Corp and Leo Holdings
Leo Holdings III Corp is a special purpose acquisition company (SPAC) that seeks to invest in entrepreneurially driven growth companies that seek to disrupt existing industries or business models. The management team has extensive experience owning and operating businesses on a global scale through its private equity vehicle, Lion Capital. Leo Holdings’ management team has collaboratively worked together for over 20 years.
Leo Holdings III Corp is part of a special purpose acquisition company initiative, Leo Holdings, which is focused on investing in disruptive, innovative business models. The initiative seeks businesses positioned to thrive in the evolving digital information age where changing consumer behavior creates the opportunity for outsized returns. In 2020, Leo Holdings Corp entered into a business combination with DMS, a disruptive performance marketing business which delivers high-intent customers while de-risking client advertising spend. Leo Holdings Corp II (LHC) and Leo Holdings III Corp (LIII) are currently listed on the NYSE.
Leo Holdings was formed by the principals of Lion Capital, which is led by Founder and Managing Partner, Lyndon Lea. For more information, visit https://leoholdings.com/.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements included in this Press Release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of other financial and performance metrics and projections of market opportunity. These statements are based on various assumptions, whether or not identified in this Press Release, and on the current expectations of Local Bounti’s and Leo’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of Local Bounti and Leo. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political and legal conditions; the inability of the parties to successfully or timely consummate the proposed transaction, including the risk that any required regulatory approvals are not obtained, are delayed or are subject to unanticipated conditions that could adversely affect the combined company or the expected benefits of the proposed transaction or that the approval of the stockholders of Leo or Local Bounti is not obtained; failure to realize the anticipated benefits of the proposed transaction; risks relating to the uncertainty of the projected financial information with respect to Local Bounti; the effects of competition on Local Bounti’s future business; the impact of the COVID-19 pandemic on Local Bounti’s business; the ability of Leo or the combined company to issue equity or equity-linked securities or obtain debt financing in connection with the proposed transaction or in the future, and those factors discussed in Leo’s final prospectus dated February 25, 2021 under the heading “Risk Factors,” and other documents of Leo filed, or to be filed, with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that none of Leo or Local Bounti presently know or that Leo or Local Bounti currently believe are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect Leo’s and Local Bounti’s expectations, plans or forecasts of future events and views as of the date of this Press Release. Leo and Local Bounti anticipate that subsequent events and developments will cause Leo’s and Local Bounti’s assessments to change. However, while Leo and Local Bounti may elect to update these forward-looking statements at some point in the future, Leo and Local Bounti specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing Leo’s and Local Bounti’s assessments as of any date subsequent to the date of this Press Release. Accordingly, undue reliance should not be placed upon the forward-looking statements. Certain market data information in this Press Release is based on the estimates of Local Bounti and Leo management. Local Bounti and Leo obtained the industry, market and competitive position data used throughout this Press Release from internal estimates and research as well as from industry publications and research, surveys and studies conducted by third parties. Local Bounti and Leo believe their estimates to be accurate as of the date of this Press Release. However, this information may prove to be inaccurate because of the method by which Local Bounti or Leo obtained some of the data for its estimates or because this information cannot always be verified due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process.
Important Information
In connection with the proposed transaction, Leo intends to file a registration statement on Form S-4, including a proxy statement/prospectus (the “Registration Statement”), with the SEC, which will include a preliminary proxy statement to be distributed to holders of Leo’s ordinary shares in connection with Leo’s solicitation of proxies for the vote by Leo’s shareholders with respect to the proposed transaction and other matters as will be described in the Registration Statement, and a prospectus relating to, among other things, the offer of the securities to be issued to Local Bounti’s stockholders in connection with the proposed transaction. After the Registration Statement has been declared effective, Leo will mail a definitive proxy statement/prospectus, when available, to its shareholders. Investors and security holders and other interested parties are urged to read the proxy statement/prospectus, and any amendments thereto and any other documents filed with the SEC when they become available, carefully and in their entirety because they contain important information about Leo, Local Bounti and the proposed transaction. Investors and security holders may obtain free copies of the preliminary proxy statement/prospectus and definitive proxy statement/prospectus (when available) and other documents filed with the SEC by Leo through the website maintained by the SEC at http://www.sec.gov. These documents (when they are available) can also be obtained free of charge from Leo upon written request to Leo by emailing brown@leo.holdings or by directing a request to Leo’s secretary at c/o Leo Holdings III Corp, 21 Grosvenor Pl, London SW1X 7HF, United Kingdom.
Participants in the Solicitation
Leo and Local Bounti and their respective directors and certain of their respective executive officers and other members of management and employees may be considered participants in the solicitation of proxies with respect to the proposed transaction. Information about the directors and executive officers of Leo in its final prospectus dated February 25, 2021. Additional information regarding the participants in the proxy solicitation and a description of their direct interests, by security holdings or otherwise, will be set forth in the Registration Statement and other relevant materials to be filed with the SEC regarding the proposed transaction. Stockholders, potential investors, and other interested persons should read the Registration Statement carefully before making any voting or investment decisions. These documents, when available, can be obtained free of charge from the sources indicated above.
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy or subscribe for any securities or a solicitation of any vote of approval, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, and otherwise in accordance with applicable law.
USA - ALABAMA: Yellow Hammer Farms Opening Birmingham-Based Hydroponic Farm, Market
The farm and market will operate using technology that will be able to provide fresh and affordable produce year-round. A typical farm may be limited to five or six harvests a year for some crops, but Yellow Hammer Farms can have 11 to 12 harvests a year within its climate-controlled environment
Yellow Hammer Farms is opening a new indoor farm near downtown Birmingham. YELLOW HAMMER FARMS
Birmingham will have a hydroponic farm and market starting this weekend.
Owners Frank and Jillian Fitts will open Yellow Hammer Farms on June 18 at 702 Third Ave. N.
The farm and market will operate using technology that will be able to provide fresh and affordable produce year-round. A typical farm may be limited to five or six harvests a year for some crops, but Yellow Hammer Farms can have 11 to 12 harvests a year within its climate-controlled environment.
“From the beginning, our mission has been to bring Birmingham high-quality, locally grown produce," Frank Fitts said. "With so many of Birmingham’s residents living in a food desert, it was vital that we find a location where we could provide everyone a convenient option for affordable, fresh produce. Working in the food and beverage industry, I also saw firsthand the need and desire of restaurants and consumers wanting to purchase local produce throughout the year. So much of the produce that comes to this area travels a long distance. We are hoping to change that.”
The venture began with the Fittses converting an empty warehouse in the Titusville community. The building now is retrofitted with an advanced vertical hydroponic growing system to create a highly efficient, controlled growing environment that uses no soil. Water loaded with nutrients recirculates throughout the system, feeding the plants, while LED lights and a climate control system are overhead.
Crops that will always be on hand include basil, lettuce mix, kale, and other leafy greens and herbs. Other produce will be featured throughout the year, and 20 items will be available on June 18 for the grand opening.
Hours of operation will be Tuesday through Friday from noon to 6 p.m. and Saturday from 11 a.m. to 4 p.m
AeroFarms: An Unproven Business With Enormous Risk
AeroFarms's mission is to grow the best plants possible for the betterment of humanity
June 13, 2021
Written by Jamie Louko
Spring Valley Acquisition Corp. (SV) APPHSVSVU
Summary
AeroFarms is a SPAC that is being brought to the market by Spring Valley Acquisition Corp. The deal was announced on March 26.
AeroFarms runs and operates vertical greenhouse farms. Unlike most greenhouses, AeroFarms' greenhouses take up little horizontal space, which allows them to pay less in expenses.
AeroFarms's mission is to grow the best plants possible for the betterment of humanity.
Currently, AeroFarms is not a buy, but it should be on a watchlist for investors to watch closely to see how well they can execute.
sompong_tom/iStock via Getty Images
Investment Thesis
AeroFarms (SV will become NASDAQ: ARFM) is a business that has high hopes, but with little edge from their other tech-savvy competitors, I struggle to see how they will be able to achieve the immense growth they are claiming. With poor financials and only $2.5 million in revenue, this business has not yet shown that it can achieve these expectations. Until AeroFarms can consistently show investors they are able to meet the guidance they set for themselves, it should be avoided by long-term investors.
SPAC Details
AeroFarms is being brought to the market by Spring Valley Acquisition Corp. This was announced on March 26. AeroFarms is expected to receive $317 million in cash from the deal, and the deal is expected to close in the second quarter of 2021, which would assume that AeroFarms would branch off into their Nasdaq listing, ARFM, within the month. However, SPACs usually take 4-6 months from announcement to go public, which would pin AeroFarms around July-September. September is on the longer side of this estimate, and considering estimates from Spring Valley and AeroFarms, a September target is likely inaccurate. I would expect that AeroFarms will go public sometime between late June and late July.
This process would estimate AeroFarms' equity value to be roughly $1.2 billion, which is slightly lower than another competitor that recently SPAC'ed in 2021, AppHarvest (NASDAQ: APPH). After the SPAC process, AeroFarms expects to nominate two of Spring Valley's existing directors, Debora Frodl and Patrick Wood, III, to its Board of Directors. Now that we have the basic details of the SPAC out of the way, let us dive into what AeroFarms does and why they are coming to the public markets.
AeroFarms' Mission
AeroFarms is a vertical greenhouse that is trying to change how Americans create sustainable food. This Certified B-Corp uses vertical farming, AI, and biological sciences to improve the way fresh produce is grown and distributed locally and globally. Their product, Dream Greens, "wins on quality, flavor, taste, and texture," and they sell in many major distributors like Whole Foods, ShopRite, Amazon Fresh, and FreshDirect.
AeroFarms was founded in 2004, and it became a B Corp in 2017. AeroFarms is trying to solve issues brought on by the megatrends of population growth, water scarcity, arable land loss, and climate change.
Source: Analyst Day Presentation
Currently, AeroFarms focuses on leafy greens, primarily bok choy, kale, micro broccoli, and arugula. AeroFarms' reason for existing today is to meet the need to solve issues brought on by climate change and other environmental issues. Due to strong droughts and water scarcity, water will be needed more and more if our world continues to use water at the pace we do today. AeroFarms uses 95% less water than traditional farms, which allows them to be less reliant on these problems, as well as open up water that would have been used to go towards other needs. This lack of water has also caused droughts, which can, in turn, lead to food shortages. Because AeroFarms' greenhouses are not as reliant on water, as well as the fact that they are indoors, these droughts are not as impactful to AeroFarms' business.
Source: Analyst Day Presentation
Simply put, AeroFarms sees great problems with our future if we continue to farm the way we do today, and they are trying to preemptively solve these problems.
Both co-founders are still involved, one as the CEO and the other as the CMO. Considering that AeroFarms was founded in 2004, it is clear that the founders are very dedicated to the vision and the mission of AeroFarms, and they will likely stay with the business for the long haul. If they founded this business simply to make a quick buck, the founders likely would have moved on already instead of dedicating 17 years of their lives to this business. This is a very good sign in my book. However, management is still extremely important for a business like this. If management were to cash out within a year of coming public, that would show me that the founders were not as dedicated as I thought, which would lower my conviction in this business to a more bearish conviction.
Being a SPAC, they were allowed to project revenues and estimates out to 2026. Therefore, it should come as no surprise that this company sees massive growth potential. They expect that vertical farming alone will be a $12.7 billion business by 2026, growing at over 22% 5-year CAGR. They also expect global fresh produce to become a $1.8 trillion industry by 2023, and leafy greens alone will contribute $108 billion to that large TAM. Clearly, this sort of farming is going to grow due to increases in demand (as the population increases). I have some skepticism as to whether it will be this large come 2023, but there is no doubt that the industry will be growing.
Quite frankly, it is near-impossible to correctly estimate how big this market will get. If it gets as big as AeroFarms claims it will, then AeroFarms will definitely have room to fight for market share and they will have vast opportunities to grow and become an amazing business. However, a 22% 5-Year CAGR in vertical farming is definitely aggressive. I worry that AeroFarms may be estimating on the extreme side, and that vertical farming will not grow that fast. If this is the case, then AeroFarms' potential will noticeably decrease, and it would make it a much less interesting investment.
Also, I am a firm believer that the world is going to need more greenhouses as it becomes harder to grow outdoors due to climate change and other sub-optimal weather conditions. There have been many recent droughts and other disasters that make it hard to count on reliable crops from outdoor farms, and greenhouses can minimize the impact that Mother Nature is having on our crop yields.
The sustainability of greenhouses is also a major benefit to society. The water usage is drastically lowered in greenhouses like AeroFarms, and so are emissions. These negative impacts are greatly reduced compared to traditional farms, so AeroFarms is not only helping create a sustainable supply of food, but they are also doing in a very environmentally friendly manner.
Their mission and drive to make our world better is the reason that I am writing about this stock today. I believe that AeroFarms and companies like it are trying to solve a major future problem for our world, and I am happy to give them attention for it. As I have mentioned a few times already, they have tons of competition. This competition is fierce, and it definitely has the potential to make AeroFarms fight for this market share.
Competition Concerns
As I have mentioned many times already, AeroFarms has some steep competition in the greenhouse space they are playing in. Although no major competitors are actively engaging in vertical farming (excluding one), they still have plenty of competition in the sustainable farming space.
Probably the company that first comes to mind is AppHarvest. I have written an article that dives deep into AppHarvest, but I will go over it quickly for anyone who is not extremely interested in AppHarvest. AppHarvest is a business that is based out of Kentucky and Appalachia. Unlike AeroFarms, which primarily focuses on growing leafy greens, AppHarvest's current focus is tomatoes. AppHarvest has plans in place to expand into leafy greens in a major way in the next 5 years, however. With their 60-acre farm (and 9 more facilities on the way), AppHarvest is planning to ramp up production in a major way.
AeroFarms is not expected to grow as fast as AppHarvest. Currently, the only things they are building is an R&D farm facility in Abu Dhabi, and another farm in Danville. The Abu Dhabi facility plans on breaking ground this month. They do, however, have a total of 3 farms, their biggest and only cash-generating farm bring their vertical farm headquarters in Newark, New Jersey. On April 29, 2021, AeroFarms announced that they are breaking ground and starting construction of their second farm, located in Danville, Virginia. Their third farm is the new facility in Abu Dhabi.
Clearly, both of these businesses are growing at a very fast rate. and there is no doubt that it will continue. Although they are not directly competing currently, they will likely be competing in the leafy greens area quite soon. In terms of technology, they are using similar kinds of tech, although I believe that AppHarvest has a very slight edge.
Source: Investor Presentation
The main thing that gives AeroFarms an edge over AppHarvest is how they commercialize their product. One of the weaknesses I have with AppHarvest is how they sell their product. Simply, AppHarvest partners with a distributor, Mastronardi, who then is the sole buyer of AppHarvest's product and they distribute it out to larger companies. This results in a customer concentration for them. AeroFarms does not do this, but rather they partner directly with large businesses like Whole Foods. I like AeroFarms' distribution model much more than AppHarvest's.
I would be remiss if I did not briefly mention some of the private competitors. First, Bowery Farms, another vertical farming company that is private, is a major threat to AeroFarms. First, they are roughly double the size of AeroFarms. Second, they are operating in the same rough geographical region that AeroFarms is selling in. Bowery operates in New York, with plans to expand into Pennsylvania.
Source: Bowery Website
Bowery has 2 operating farms compared to just one for AeroFarms, and they are building one more today. These farms are in New Jersey and Maryland, which is quite intrusive on AeroFarms' market. Bowery also is planning on expanding into berries, tomatoes, and carrots, while they currently grow leafy greens. Due to greater size, they have been able to reach better economies of scale than AeroFarms, so their prices are actually lower currently. Bowery also sells in 850 grocery stores. Like AppHarvest and AeroFarms, Bowery is using a similar structure of technology that enables sustainability and limits pesticides in their farming.
Another strong (and private) competitor is Gotham Greens. They operate a very unique business model: instead of building large facilities, Gotham builds its greenhouses on the rooftops of its customers. This enables extreme freshness for its customer and nearby customers.
Source: Gotham Greens Website
Gotham Greens obviously has more greenhouses built and producing crops than any of the businesses mentioned. They have 8 greenhouses, encapsulating the Northeast, as well as the West of the U.S. Currently, they are operating and selling in 40 U.S. states. Freshness is clearly Gotham's edge over AeroFarms, however, their business model can be both a blessing and a curse. Gotham is limited to small greenhouses, whereas large, 60-acre greenhouses like AppHarvest's are much more cost-effective. AeroFarms sits in the middle of these sizes for its facilities.
All of these businesses have their own edge, and it is still unknown which will make the greatest difference. However, farming is by no means a winner-take-all market. There will be many winners in this space, and potentially even all of these competitors could be successful along with AeroFarms. To quickly summarize, each company has benefits that separate them from the pack. AppHarvest has its central location (Kentucky), Bowery has strong economies of scale due to its size, and Gotham has its ability to deliver the freshest products. Now, I am going to take a look at what makes AeroFarms special compared to some of its competitors.
The Edge
Compared to traditional farming, AeroFarms' technology and sustainability is what separates them. Due to the nature of greenhouses, AeroFarms can have tight control on conditions that the plants experience, so AeroFarms can create the most optimal environment for the plants to grow faster, and be of the highest quality. They also excel at full automation of their farm. Everything from seeding to packaging their produce is fully automated.
Source: Investor Presentation
AeroFarms uses data science and a fully-controlled technology platform that enables it to better understand plants and optimize farms while improving quality and reducing costs. Simply, they are analyzing plant biology to optimize the growth of these plants.
Teams of plant scientists develop custom algorithms to precisely define the conditions each plant needs to thrive. This understanding allows AeroFarms to optimize performance, cultivate new varieties, improve quality, lower costs and optimize efficiency.
Source: Investor Presentation
This understanding of the biology of plants is extremely important for AeroFarms. One of the primary benefits they have over traditional farming is that they can create the best-looking and tasting produce. Understanding exactly how plants thrive and do this is crucial. If they were to expand into different products, such as berries or tomatoes, they would have to do this again. This knowledge may take time to learn, and if they are testing environments to see which one produces the best crops, it could take a while. However, once learned, this can be easily replicated in dozens, if not hundreds, of other facilities. Once AeroFarms learns that leafy greens thrive under (and these numbers/metrics are not accurate but for the example) 75-degree heat with high sun exposure and light water levels, they can replicate those conditions in whatever facility they grow leafy greens in. This intellect is somewhat time-consuming to learn, but once it is learned, it gives the company a massive advantage.
Through the integration of these disciplines, AeroFarms achieves up to 390 times greater productivity per square foot annually versus traditional field farming while using up to 95% less water and zero pesticides. Therefore, due to the productivity, clearly the knowledge that they learned from the data and plant biology is paying off.
Source: Investor Presentation
Another thing that most traditional famers do not have is data. AeroFarms can create lasting network effects and benefit greatly from scale if they can efficiently use and act on data they receive from their facilities.
Lastly, AeroFarms has been creating a strong library of IP since its founding. With over 250 invention disclosures and a vast library of data collected over 15 years of operations, AeroFarms is continually improving its systems to understand plants at unprecedented levels and solve agriculture-related supply chain issues. Currently, AeroFarms has 15 granted patents, with 38 more pending approval. They also have 46 designated trade secrets. The vast amount of trade secrets show that they want to keep its operations relatively unknown to its competitors, so they do not elaborate much on what those secrets entail. However, their strong number of patents show that they have actual technology that is working effectively and it is independent to them. No other greenhouse or direct competitor could do the same thing AeroFarms is doing in some of its capacities.
AeroFarms plans on bringing these trade secrets to future facilities, with plans to start construction on three farms, none of which have been announced or actually planned yet, by the start of 2023. AeroFarms also sees strawberries as a major growth avenue. Strawberries are highly cyclical due to growing conditions and they carry lots of pesticides, both of which AeroFarms is trying to solve in the farming universe.
AeroFarms has a clear edge above traditional farming, just as AppHarvest, Gotham, and Bowery do. Where I struggle to find an edge is between the technology of these businesses. After looking at the technology for all of these businesses, the results seem to be the same: more efficient production and productivity, better tasting produce, less use of water, greater sustainability. Also, all of these businesses have some sorts of patents that make their business stand out. Personally, I believe that it is not the technology that gives AeroFarms an edge over its competition, nor do I think it is vertical farming (itself).
Vertical farming alone does not provide any greater benefits over non-vertical farms in terms of quality of produce. However, I believe the optionality that comes from vertical farming when it comes to growth is the edge for AeroFarms. Unlike AppHarvest, where they need 60 acres of land to have a 60-acre farm, AeroFarms only needs a small portion of that land. With even a 48-towered farm, AeroFarms could theoretically create the same sized farm in a fraction of the horizontal size of one of AppHarvest's farms. This is beneficial in one primary way: AeroFarms would be able to go to places AppHarvest would not. For example: AeroFarms' HQ is in Newark, New Jersey. AppHarvest could never find a large enough space in that city to build a farm, but AeroFarms can.
Simply, AeroFarms has the agility in its farms to travel to cities and more urbanized geographies that competitors like AppHarvest cannot. This can give them an edge, for if both AppHarvest and AeroFarms are selling in the same city, but AeroFarms actually has a greenhouse in the city, grocers would likely sell more AeroFarms' products because of locality and freshness.
Financials and Valuation
Financially, AeroFarms is quite lacking. AeroFarms has over $48 million in cash and no long-term debt, which is wonderful, but that is just about where the good news stops. Their net revenues were $2.5 million for the FY 2020, yet their cost of goods sold was almost $8 million, resulting in a gross profit loss of $5.4 million. As they continue to scale, at least for a while, this number can get worse too. AeroFarms is spending a whopping $17 million in SG&A compared to only $1 million in R&D. This is exactly the opposite of what I want to see in a business. I want their R&D expenses to be high, because it shows me that they are heavily investing in the future of their business.
All of this combines for a grand net income loss of over $25 million. However, as most SPACs do, they are projecting monstrous growth.
Source: Investor Presentation
They are expecting their current one farm to grow to 16 farms and their revenue to grow to $553 million (from the $4 million today) by 2026. They also expect their gross margins to be roughly 50% by 2026, which is high for any farming business. EBITDA margin is also expected to reach a whopping 35%. AeroFarms is clearly spinning an optimistic story with these growth projections, and I am not sure how confident I am that they can get that done. Transitioning from negative to positive gross margin is going to be hard enough for them, and I think it will take at least until 2023 for them to do that. Therefore, the fact that they believe that they will have margins of 50% just 3 years after turning their gross profit positive is a bit of a stretch to me. I have no doubt that this company will grow, but I do doubt that they will be able to grow at such a high rate.
Also, they project that they will be able to get 3 new farms up and running and producing every single year until 2026. That is extremely optimistic growth. AeroFarms only broke ground on 2 farms recently, and they are expecting to build both of those up to production capacity in 1.5 years? That is quite aggressive. Not to mention that they would still need to find another area to build a farm, build it, and start producing crops in that same time frame. That is an extremely tall order, just to meet 2022 estimates. Then they have to do that again, and again, until 2026, just to meet guidance. Not exceed, just meet.
Clearly, I am quite skeptical about how rapidly they will be able to grow. Personally, I do not think they will be able to do this, and for me, a company that does not meet their own expectations is not worth an investment. For me, missing expectations gives me a lack of confidence in the ability of management, and therefore I lose trust. AeroFarms has not missed any expectations yet, but they have a tall order ahead of them, and any small slip in any form would likely cause consistent misses on growth estimates.
Considering that this business has not become its own public company yet, the valuation metrics are slim. Also considering that this business is gross profit negative, operating income negative, EBITDA negative, and net income negative, the only valuation metric available is Price-to-Sales Ratios.
Valued at $1.2 billion, AeroFarms has $2.5 million in sales (let's say $3 million to be super generous). At these metrics, AeroFarms' P/S Ratio would be 400. This is absolutely ludicrous. Even at AppHarvest's insanely optimistic revenue estimates, their forward 2023 P/S Ratio is over 22.
It does not help that I am skeptical on AeroFarms' own estimates for the success of their business, but 22x forward sales is quite an expensive multiple. At those high forward multiples, I would stay far away and make sure they execute and (hopefully) beat their expectations. If they can meet or beat their revenue guidance, maybe these valuations can be justified, but until they prove my skepticism wrong, this company is extremely highly valued for no good reason at all.
Why I'm Not Buying Today
Today, this business should not be touched with a 10-foot pole. The reasoning for this ultimately comes down to two concepts: Their technology is not drastically different than its direct competitors, and their financial situation is simply miserable. The first one is going to be hard to fix, which is why I am likely to remain bearish on the business, but the second one could change within the next 2-3 years. In which case, I would likely take another look at this business and rethink my thesis. For the meantime, while they are still gross profit negative, investors should definitely stay away.
Lastly, I must mention again that the valuation and AeroFarms' guidance are insane. AeroFarms' guidance assumes some of the largest growth we have seen in any modern day company, within only 5 years. These growth estimates might be accurate if they were placed out 7-10 years in the future, but 5 years for this business to go from its first sales to fully-scaled economics is highly unlikely. Even if we assume these drastic growth rates, their valuation is still quite high.
Investors should stay away from AeroFarms for now, but watch it closely for the next 2-3 years. As this business operates, we can watch to see how they prove themselves out. If they can consistently meet their own guidance and expectations, then AeroFarms' might be investment material. Until, however, they have some time to prove themselves out, AeroFarms is merely a company with little edge that is hopeful to grow at astronomical rates. Today, this business is not worth the high risk of investment.
This article was written by
Long Only, Growth, Long-Term Horizon, Tech
Contributor Since 2021
I am a college student who has found a deep thirst for learning and investing. Being very young, I have leaned toward very long-term investments and growth stocks, primarily in tech. I do, however, love consumer goods companies as well. Currently, I am studying International Business and Economics.
Disclosure: I am/we are long APPH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
What Is Aeroponics?
Aeroponics is an advanced variation of hydroponics where plants are suspended in the air; their roots dangle down and are periodically misted with water from a timed sprinkler system connected to the main nutrient reservoir
How Aeroponics Works,
Types, And Pros, And Cons
June 14, 2021
Aeroponics is an advanced variation of hydroponics where plants are suspended in the air; their roots dangle down and are periodically misted with water from a timed sprinkler system connected to the main nutrient reservoir. This soilless growing method is best for plants that need more oxygenation since aeroponic roots aren’t hampered by dense soil or thick growing mediums. Depending on the plant and specific type of aeroponics system, the grower typically uses little to no growing media at all.
In aeroponics, a specially designed pump and spray system is submerged into the nutrient-water solution and timed to release short mists of water to the plants’ roots throughout the day. Because roots will have more access to oxygen and humidity in an aeroponics system, they often grow two to three times larger and yield far bigger numbers than traditional farming methods. Generally, it also uses less water over time since excess water not absorbed by the roots is drained back into the nutrient tank, and the mist allows for higher concentrations of nutrients with less liquid.
Most of the plants that work with hydroponics will thrive in an aeroponics system, from leafy greens and herbs to tomatoes, cucumbers, and strawberries, but with additional perks. Because of the exposed root qualities of aeroponics systems, root vegetables like potatoes that would otherwise be ill-suited for hydroponics systems will flourish as they’ll have more room to grow and be easier to harvest.
Neznam / Getty Images
Aeroponics in Space
NASA began experimenting with aeroponics as early as 1997, planting adzuki beans and seedlings aboard the Mir space station in zero gravity and comparing them to controlled aeroponic gardens on Earth treated with the same nutrients. Amazingly, the zero gravity plants grew more than the plants on Earth. Aeroponics can not only provide long-mission deep-space NASA crews with fresh food, but it also has the potential to provide them with fresh water and oxygen.
How Does Aeroponics Work?
The seeds are planted somewhere they’ll stay in place, such as pieces of foam, pipes, or foam rings, which are then wedged into small pots or a perforated panel with a tank full of nutrient solution below. The panel elevates the plants so they’ll be exposed to the natural (or artificial) light and circulating air, providing light on the top and nutrient mist on the bottom, and an enclosure around the roots helps keep the moisture in. A timed pump rests inside the tank or reservoir, pumping solution up and through spray nozzles that mist the roots, with excess liquid draining straight down through an outflow chamber back into the reservoir. At the next timed interval, the entire cycle starts again.
Neznam / Getty Images
Nutrients for aeroponics systems, like hydroponics, come packaged in both dry and liquid forms. Depending on the plant and growth stage, primary nutrients may include nitrogen, phosphorus, and potassium, while secondary nutrients can range from calcium and magnesium to sulfur. It is also important to consider micro-nutrients, such as iron, zinc, molybdenum, manganese, boron, copper, cobalt, and chlorine.
In aeroponics systems where the nutrient solution is continuously recycled, the pH measurements need to be taken regularly to ensure that enough nutrients are getting absorbed into the plants.
Natural Aeroponics
Aeroponics occurs in nature, specifically in more humid and wet regions like the tropical islands of Hawaii. Near waterfalls, for example, plants will grow vertically on the rocks with their roots openly hanging in the air, the spray from the waterfall moistening the roots under the right conditions.
Types of Aeroponics
There are two types of commonly used aeroponics: low pressure and high pressure. Low pressure is the most used by home growers since it is low cost, easy to set up, and its components are easier to find. However, this type of aeroponics often uses a plastic spray nozzle and a typical fountain pump to deliver nutrients, so the droplet sizes are not exact and can sometimes waste more water.
High-pressure aeroponics, on the other hand, distributes nutrients through a highly pressurized nozzle that can deliver smaller water droplets to create more oxygen in the root zone than low-pressure techniques. It is more efficient, but much more costly to set up, so it tends to be reserved for commercial production rather than hobbyists.
High-pressure systems typically mist for 15 seconds every 3 to 5 minutes, while low-pressure systems may spray for 5 minutes straight every 12 minutes. Experienced growers will adjust the spraying interval according to the time of day, watering more frequently at night when the plants are less focused on photosynthesis and more focused on taking up nutrients. With both types, the reservoir solution is kept at a temperature range between 60 F and 70 F in order to maximize the absorption rate of the plant. If the water becomes too hot, it is more susceptible to algae and bacteria growth, but if it gets too cold, the plants may start to shut down and not take as many nutrients as they would at a more optimal temperature.
Aeroponics at Home
While some growers choose to use horizontal aeroponic systems similar to traditional soil farming, vertical systems can save more space. These vertical systems come in all shapes and sizes, even small enough to be used on a back porch, balcony, or even inside an apartment with the appropriate lighting setup. In these smaller systems, misting devices are placed on top, allowing gravity to evenly distribute the nutrient solution as it spreads downward.
Neznam / Getty Images
Aeroponics kits are available to make the setup process easier for beginners, but it is also possible to design and build your own system at home, similar to hydroponics, with tools found at most local gardening stores. Due to the complicated and expensive nature of high-pressure aeroponics, it is always prudent for beginners to start off with a low-pressure system before working their way up to more technical operations.
Fun Fact
The first recorded use of aeroponics happened in 1922 when B.T.P. Barker developed a primitive air plant-growing system and used it to research plant root structure in a laboratory setting. By 1940, researchers were frequently using aeroponics in plant root studies, as the dangling roots and lack of soil made it much easier to observe changes.
Pros and Cons
One of the most significant advantages of aeroponics systems is the fast and high crop yield and the fact that it uses the least amount of water over time compared to hydroponics and aquaponics. Roots are exposed to more oxygen, helping them absorb more nutrients and grow faster, healthier, and larger. Also, the lack of soil and growing medium means that there are fewer threats of root zone diseases.
On the flip side, aeroponic system chambers are constantly being sprayed with mist, keeping them wet and prone to bacteria and fungi; this can be remedied by cleaning and sterilizing misters and chambers regularly.
Affordability Factor
Studies show that the cost of growing a tuber (such as potatoes, jicama, and yams) using aeroponics is about one-quarter less than the cost of a conventionally grown tuber.
Due to the circular nature of the watering system and the higher nutrient absorption rate, aeroponics uses considerably less water than similar farming systems. Aeroponic equipment is also easier to move and requires much less space (nurseries can even be stacked on top of each other like a modular system). In a study comparing lettuce growth aeroponics, hydroponics, and substrate culture, results showed that aeroponics significantly improved root growth with greater root biomass, root-shoot ratio, length, area, and volume. The study concluded that aeroponics systems may be better for higher-valued crops.
surabky / Getty Images
Because the plants aren’t submerged in water, aeroponics is completely dependent on the misting system. If anything malfunctions (or in the event of power outages), then the plants will quickly dry up and die without water or nutrients. Seasoned growers will think ahead and have some sort of backup power and misting system waiting in storage in case the primary one fails. The system’s pH and nutrient density ratio is sensitive, and will require plenty of hands-on experience to understand how to properly balance them; as there is no soil or media to absorb the excess nutrients, proper knowledge about the perfect amount of nutrients is essential to aeroponics systems.
Lead photo: surabky / Getty Images
VIDEO: Can An Indoor Smart Garden Beat Outdoor Gardening? We Tested It
Can smart gardens really grow delicious vegetables inside your apartment? WSJ asked Timothy Hammond, an urban gardener, and educator in Houston, to test out Rise Gardens
Can smart gardens really grow delicious vegetables inside your apartment? WSJ asked Timothy Hammond, an urban gardener, and educator in Houston, to test out Rise Gardens hydroponic smart garden to see how the vegetables compare with his own outdoor garden.
Photo: Ben Hallock for The Wall Street Journal
RotoGro (ASX:RGI) Updates Market On Vertical Farming Tech
The RotoGro Garden System is the core of the company's technology with the ability to maximize plant surface growing area by situating a spherical garden around a centrally placed lighting system
Source: RotoGro
RotoGro (RGI) provides an update of its vertical farming technology with encouraging results from recent trials
The company says recent data indicates its garden systems produce more yield per square meter when compared to other indoor vertical farming methods
Further, trials of RotoGro 710 are said to be progressing well and the team is trialing how to further reduce water and energy usage
RGI is also encouraged by its studies and customer feedback for its RotoGro 420 system which it says validates commercial-scale cultivation of lawful cannabis
Shares were trading 2.3 percent higher at 4.4 cents apiece
RotoGro designs and manufactures cultivation solutions for indoor vertical farming, operating in perishable foods and lawful cannabis.
The RotoGro Garden System is the core of the company's technology with the ability to maximize plant surface growing area by situating a spherical garden around a centrally placed lighting system.
The systems can be stacked, maximizing the yields per square meter when compared to the ground space occupied.
RGI said data collected from recent crop trials conducted in collaboration with agriculture company Verity Greens and herb grower and distributor Fresh Leaf indicates its garden systems produce more yield per square meter when compared to other indoor vertical farming methods.
Specifically, RotoGro projects yields 3.8 to 15.3 times the yield per square meter compared to industry-leading farming producers and greater in contrast to greenhouse and conventional farming.
CEO Michael Di Tommaso said ventures like the ones with Verity Greens and Fresh Leaf will "strengthen RotoGro’s market presence by successfully penetrating the burgeoning indoor vertical farming industry with its technology offerings".
Further, internal trials of the company's most recently developed garden system, the RotoGro 710, are said to be progressing well with cultivation of 48 kilograms of basil and 26.5 kilograms of cilantro in a single harvest cycle.
After multiple trials cultivating leafy greens, the agronomy team repeatedly achieved yields of 124 kilograms in a fully planted RotoGro 710, indicating single harvest yields of 372 kilograms could be achieved when the technology is at full capacity, stacked three-high.
The team is trialing shorter full crop cycle lengths while maintaining yields and aims to refine the plant irrigation schedules to further minimize water usage and refine the environmental controls to ensure enhanced energy efficiencies.
In other news, RotoGro has enabled full automation of its lawful cannabis cultivator, RotoGro 420.
The company's software controls the wheel revolution speed, lighting cycles, and spectrum variations, direct CO2 injection as well as the plant irrigation processes and environmental controls including temperature, air conditioning, and humidification.
Notably, the 420-garden system has been able to consistently produce 10.2 kilograms of dried cannabis flower in a single 56-day crop cycle when stacked three-high.
RGI said its studies in combination with its customer’s data validates the commercial viability of RotoGro 420 in the commercial-scale cultivation of lawful
cannabis.
Mr Di Tommaso said RotoGro is continuing to develop relationships globally to expand its presence in both the perishable foods and lawful cannabis markets.
Shares were trading 2.3 percent higher at 4.4 cents apiece at 1:31 pm AEST.
These High-Tech Strawberries Cost $6 Apiece. Here’s What They Taste And Smell Like
The Omakase Berry, a Japanese variety grown by the New Jersey-based company called Oishii, bills itself as an entirely different strawberry experience
By Hannah Selinger
June 11, 2021
Some months ago, a curious new strawberry began appearing in my social media feeds. The berry, which comes in packages of three, six, or eight, was a uniform pale red. Each berry in each plastic carton looked almost exactly the same — heart-shaped, symmetrical, and indented on the surface where, in a store-bought strawberry, yellow seeds would appear. One more notable thing: They cost between $5 and $6.25 apiece.
The Omakase Berry, a Japanese variety grown by the New Jersey-based company called Oishii, bills itself as an entirely different strawberry experience. The website even offers advice when it comes to eating them: Allow berries to sit at room temperature for 10 to 15 minutes; let the berries’ aromatics “fill the room”; inhale the “bouquet”; eat.
Oishii grows its berries indoors vertically, leveraging technology that its co-founder and CEO, Hiroki Koga, 34, explored in Japan. “I got my first start in the vertical farming industry as a consultant in Japan, where it took off before anywhere else in the world,” he said. “But the whole industry failed pretty quickly, you know, in the early 2010s in Japan, because it was too expensive to grow leafy greens in a very tech-savvy, costly environment.” The technology, he said, was there; someone just needed to find the right way to use it.
The first run of berries (the Omakase cultivar) has been geared toward the luxury market and is available only in the New York City area. But the company is in the process, Koga said, of expanding its market share. Some of the varieties the company is experimenting with can be grown in a much more cost-efficient way, he said, “which means that we should be able to place these into the market at a significantly affordable, reasonable price, compared to what it is today.”
Koga came to the United States in 2015, first to California, where, he said, the quality of produce was unexpectedly good, though not as good as in Japan. The strawberries he selected for the company’s first vertical farms in New Jersey are known as “short-day cultivars.” In Japan, “They’re grown during the winter in a greenhouse environment in a little more wet environment,” Koga said.
Long-day cultivars — American summer berries — are, he said, “optimized for mass production,” at the expense of flavor. Koga says Oishii’s low yields are guided by the same principles as fine wine production: An intentionally depleted crop, achieved by such tactics as crop-thinning, forces the plant to push more of its nutrients and flavor into fewer berries, yielding a more concentrated flavor. The growing environment, according to Koga, is also optimized so that berries yield the maximum amount of nutrients and sweetness.
“We constantly were testing and tweaking to find the perfect environment for the unique Omakase berry,” Koga said. That meant, he said, finding the optimal temperature and breeze; controlling plant management, water frequency, and pruning; and leveraging artificial intelligence to help predict yields.
I wanted to know how the Omakase Berry — billed by Koga as a berry with no American equal — would stand up to other domestic fruit. I arranged my own taste comparison, using three different strawberries: Oishii’s Omakase Berry, available only in the New York City area; widely available Driscoll’s strawberries, produced by a network of more than 900 independent growers around the world, in such places as North America, Europe, China and Australia; and first-of-the-season strawberries from Balsam Farms, in Amagansett, N.Y., down the road from where I live. (Full disclosure: My yearly CSA box comes from Balsam.)
Driscoll's organic strawberries. (Jennifer Beeson Gregory/The Washington Post)
The appearance
Perhaps most striking about the Omakase Berry is its utter uniformity. Each orangy berry — I purchased a package of eight for $50 — looks exactly the same. Glance quickly and you might mistake the berries for marzipan candies, their exterior is so flawless.
The Driscoll’s berries ($3.99 for the company’s standard 16-ounce plastic clamshell) were far deeper in pigment — the company aims for “deep red,” said Scott Komar, 58, the company’s senior vice president for global research and development — and were larger, overall, than the Omakase, though there was variability in size. They were covered in tiny yellow seeds. In selecting berry plants, Komar said, Driscoll’s considers “the color of the strawberry, the shape, the size, and the mouth texture.”
My local strawberries (a quart for $9) were smaller, deeply pigmented and visually much less consistent. The traditional heart shape that is associated with the fruit became more triangular here on Long Island, where conditions are unpredictable. Balsam Farms, said Ian Calder-Piedmonte, 41, the farm’s co-owner, uses a technique called plasticulture. A barrier between plants and the ground is formed using plastic, aiding farmers with weed control, assisting with water management and keeping berries cleaner.
Plasticulture, Calder-Piedmonte said, combined with pruning runners, keeps the plants compact and the berry placement concentrated. Without the plastic, he said, berries can “try to set down roots between rows, and actually will take away from the growth of the mother plants.” Still, holding in my hand the tiny first berries of the Long Island season, it was hard not to consider how much work had gone into producing just a pint of fruit.
Strawberries for sale at the Kuhn Orchards booth at the Fairlington Farmers Market in Arlington, Va. (Jennifer Beeson Gregory/The Washington Post)
The aroma
Oishii isn’t lying when it says the aroma of its berries will fill the room. When I unearthed my plastic container from its refrigerator pack, I could already smell them. Opening the box, I was assaulted with the most strawberry-smelling fruit I’d ever encountered. Aroma, Koga said, is one of the classic characteristics of the Omakase Berry.
In this category, there was no competition. My Driscoll’s berries did not have much of a scent, but aroma may not be at the top of the list in breeding priority. “We conduct quantitative measurements on the sugars, acids, and aromatics of our berries,” said Komar of Driscoll’s berries. “Then that information helps us pick the berry varieties we will commercialize for our brand.” Driscoll’s places a high premium on flavor and color, and the variety I tried may not have been bred, specifically, for aroma.
My Long Island berries smelled very much like strawberries, although their scent was not nearly as potent as the Omakases. “I think there’s probably more variation on local strawberries, as there are with probably everything that’s locally produced,” Calder-Piedmonte said. Other berries that come from “incredibly controlled” environments “where it’s sunny every day” are more likely to be consistent in size, shape, flavor, and even aroma. On Long Island, he said, “I think there are a lot more variables.”
The taste
Oishii’s Omakase Berries cost $50 for a package of eight. (Oishii)
Do you prefer a tart berry that’s firm to the tooth? Are you enamored by sweetness? What type of berry the average consumer perceives as “best” depends on such personal preference. The Omakase Berry was, without question, the sweetest that I sampled. (However, Driscoll’s grows a trademarked, premium fresh berry segment called the Sweetest Batch for strawberries, blueberries, raspberries and blackberries, which Komar said are “unique selections” from the company’s breeding program; I did not try these.)
The Driscoll’s berries were the firmest of the three, with a consistent mouthfeel and flavor. It seemed to me that the objective in their breeding was a distinct balance between sweet and tart — and that balance certainly came through on each bite. In some ways, the acid, a quality in food and drink that compels you to keep consuming, makes sense: You’re unlikely to eat only a single strawberry, but Driscoll’s berries come in large, satisfying packages. It’s okay to keep eating.
As for my local berries, there was something compelling about the unpredictability. They were not the sweetest berries I’d ever tasted, but they varied between sweet and tart. Pop a strawberry in your mouth and come alive with the surprise of how sweet it is. Get a slightly underripe berry and pucker in delight. That contrast might make you wish that berries at the farm stand were sold by more than just the quart.
And, as Ian Calder-Piedmonte pointed out, the distinct advantage of a local strawberry is that you’re eating it the day it’s picked. “They really are harvested that day or the day before,” he said. Many berries are picked and then held in refrigerators (or refrigerated trucks) for days before they reach the consumer, and flavor can diminish each day. A fresh-picked berry tastes far different from a berry that has been off the plant for a few days or, as happens in some cases, a week.
Then came the Omakase Berry. The berry, Koga said, was “specifically selected out of 250 cultivars that exist in Japan,” optimizing for “very strong aroma and high sweetness level.” “Because most of the conventional strawberries here in the U.S. have a very high acidity and very low sweetness level, we just wanted to differentiate our product,” he added. This berry, with its heightened sweetness, is the type of berry that sits heavy on the tongue. Eat one, consider it, let the sugar coat the palate. That’s more than enough. The point isn’t to keep eating. The point, in fact, is to stop. So I did.
Selinger is a writer based in East Hampton, N.Y.
Lead photo: The Omakase Berry, a Japanese varietal grown indoors by Oishii in New Jersey. (Oishii)
Artemis Releases 2020 State of Indoor Farming Report
The purpose of this report is to look at where the indoor agriculture industry is today as well as to give growers an industry voice around the latest trends, biggest challenges, and the immense opportunities in this rapidly expanding industry.
We are excited to release our third State of Indoor Farming report. Since their inception in 2016, the State of Indoor Farming reports have been downloaded by millions of people and used as a trusted resource on the industry.
The purpose of this report is to look at where the indoor agriculture industry is today as well as to give growers an industry voice around the latest trends, biggest challenges, and the immense opportunities in this rapidly expanding industry.
The report includes a high-level overview of the industry, as well as a deep dive on key topics such as expenses, sales channels, growth, cannabis, and projections for the future of the industry.
To learn more, you can access the report here.
You can also access our 2016 and 2017 State of Indoor Farming reports.
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Green Skyscrapers That Add A Touch of Nature + Sustainability To Modern Architecture!
Polish designers Pawel Lipiński and Mateusz Frankowsk created The Mashambas Skyscraper, a vertical farm tower, that is in fact modular!
06/09/2021
Skyscrapers have taken over most of the major cities today. They’re symbols of wealth and power! And most of the skylines today are adorned with glistening glass skyscrapers. They are considered the face of modern architecture. Although all that glass and dazzle can become a little tiring to watch. Hence, architects are incorporating these tall towers with a touch of nature and greenery! The result is impressive skyscrapers merged with an element of sustainability. These green spaces help us maintain a modern lifestyle while staying connected to nature. We definitely need more of these green skyscraper designs in our urban cities!
Zaha Hadid Architects designed a pair of impressive skyscrapers that are linked by planted terraces, for Shenzhen, China. Named Tower C, the structure is 400 metres in height and is supposed to be one of the tallest buildings in the city. The terraces are filled with greenery and aquaponic gardens! They were built to be an extension of a park that is located alongside the tower and as a green public space.
Polish designers Pawel Lipiński and Mateusz Frankowsk created The Mashambas Skyscraper, a vertical farm tower, that is in fact modular! The tower can be assembled, disassembled and transported to different locations in Africa. It was conceptualised in an attempt to help and encourage new agricultural communities across Africa. The skyscraper would be moved to locations that have poor soil quality or suffer from droughts, so as to increase crop yield and produce.
The Living Skyscraper was chosen among 492 submissions that were received for the annual eVolo competition that has been running since 2006. One of the main goals of the project is to grow a living skyscraper on the principle of sustainable architecture. The ambitious architectural project has been envisioned for Manhattan and proposes using genetically modified trees to shape them into literal living skyscrapers. It is designed to serve as a lookout tower for New York City with its own flora and fauna while encouraging ecological communications between office buildings and green recreation centers. The building will function as a green habitable space in the middle of the concrete metropolis.
ODA’s explorations primarily focus on tower designs, in an attempt to bring versatility and a touch of greenery to NY’s overtly boxy and shiny cityscape. Architectural explorations look at residential units with dedicated ‘greenery zones’ that act as areas of the social congregation for the building’s residents. Adorned with curvilinear, organic architecture, and interspersed with greenery, these areas give the residents a break from the concrete-jungle aesthetic of the skyscraper-filled city. They act as areas of reflection and of allowing people to connect with nature and with one another.
Heatherwick Studio built a 20-storey residential skyscraper in Singapore called EDEN. Defined as “a counterpoint to ubiquitous glass and steel towers”, EDEN consists of a vertical stack of homes, each amped with a lush garden. The aim was to create open and flowing living spaces that are connected with nature and high on greenery.
Designed by UNStudio and COX Architecture, this skyscraper in Melbourne, Australia features a pair of twisting towers placed around a ‘green spine’ of terraces, platforms, and verandahs. Called Southbank by Beulah, the main feature of the structure is its green spine, which functions as the key organizational element of the building.
Mad Arkitekter created WoHo, a wooden residential skyscraper in Berlin. The 98-meter skyscraper will feature 29 floors with different spaces such as apartment rentals, student housing, a kindergarten, bakery, workshop, and more. Planters and balconies and terraces filled with greenery make this skyscraper a very green one indeed!
Algae as energy resources are in their beginnings and are seen as high potential. Extensive research work has dealt with algae as an energy source in recent decades. As a biofuel, they are up to 6 times more efficient than e.g. comparable fuels from corn or rapeseed. The Tubular Bioreactor Algae Skyscraper focuses on the production of microalgae and their distribution using existing pipelines. Designed by Johannes Schlusche, Paul Böhm, Raffael Grimm, the towers are positioned along the transalpine pipeline in a barren mountain landscape. Water is supplied from the surrounding mountain streams and springs, and can also be obtained from the Mediterranean using saltwater.
Tesseract by Bryant Lau Liang Cheng proposes an architecture system that allows residents to participate in not just the design of their own units; but the programs and facilities within the building itself. This process is inserted between the time of purchase for the unit and the total time required to complete construction – a period that is often ignored and neglected. Through this process, residents are allowed to choose their amenities and their communities, enhancing their sense of belonging in the process. Housing units will no longer be stacked in repetition with no relation whatsoever to the residents living in it – a sentimental bond between housing and men results.
In a world devoid of greenery, Designers Nathakit Sae-Tan & Prapatsorn Sukkaset have envisioned the concept of Babel Towers, mega skyscrapers devoted to preserving horticultural stability within a single building. The Babel towers would play an instrumental role in the propagation of greenery in and around the area. These towers would also become attraction centers for us humans, like going to a zoo, but a zoo of plants. Seems a little sad, saying this, but I do hope that we never reach a day where the Babel Tower becomes a necessity. I however do feel that having towers like these now, in our cities, would be a beautiful idea. Don’t you think so too?
Growfoam Is Gearing Up For The Next Revolution In Controlled Environment Agriculture
The agricultural market stands on the verge of a true revolution and Growfoam is destined to pave the way for growers around the globe. Their mission? Enable growers to grow Greener, Safer and Faster
The agricultural market stands on the verge of a true revolution and Growfoam is destined to pave the way for growers around the globe. Their mission? Enable growers to grow Greener, Safer and Faster.
Rising demand for fresh & healthy vegetable crops.
With an increasing global population and rising global welfare, the fruit & vegetable market is expected to increase towards 260% in 2050, compared to current levels.
This rise in demand for fresh & healthy crops has resulted in a boom of investments towards greenhouse projects (e.g. in China and the US) and a steep rise in VC investments in AgTech Scale-ups. Such a swift market development offers the AgTech industry both a challenge, as well as an opportunity: we need to push ourselves in growing Greener, Safer and Faster.
Growfoam knows it is possible to sustainably feed a growing population. They contribute to this goal by continuously innovating their growing media and collaborate with growers around the world. This way Growfoam enables growers in cultivating their crops Greener, Safer and Faster.
Future-proof farms aim for de-risking the value chain
The horticultural industry continues to offer consumers fresh produce at increasing quality standards while maintaining efficient pricing. This trend will be further enabled by emerging technologies such as vertical farming, hydroponic cultivation, big data, and autonomous greenhouse cultivation. The next big leap for farms across the globe will be to de-risk the entire fruit & vegetable value chain.
Vertical Farms and other Controlled Environment Agriculture technologies are already enabling this by growing their produce locally near end-consumers while utilizing stable and predictable year-round cultivation methods. And it doesn’t stop at just predictable year-round cultivation, improved technologies such as automation and completely clean starting materials (e.g. clean Growfoam growing media) enable growers to further de-risk the value chain by offering traceable, pathogen-free and thus fully safe healthy greens.
These de-risked and highly efficient future-proof farms offer added value for the entire value chain by producing safer produce.
Reducing operational costs (OPEX) is key to farm success
The last major hurdle for vertical farms and hydroponic cultivation techniques is to increase production efficiency and reduce OPEX.
Although many important breakthroughs (e.g. lowered CAPEX/m2 farm, optimized growing methods, increased automation) have been realized in overcoming this hurdle, there is still much to win. One major enabler in reducing OPEX is the correct choice in growing media: most of the growing media available on the market today are less suited for vertical farms and hydroponic cultivation techniques.
Loose-fill growing media offer significant challenges in automation, increasing labor costs as well as maintenance costs. Growing media consisting of organic components such as peat and coir offer significant safety challenges by introducing potential pathogens into the farm and are destined to be banned completely over time. They increase risks of crop failure due to high variation in batch-to-batch consistency and increase logistical risk due to limited resource availability due to swift expansion of the horticulture industry.
Non-degradable growing media increase waste disposal costs when disposing of the growing media after crop cultivation. These waste disposal costs can be easily reduced and sometimes even be avoided by utilizing biodegradable alternatives such as Growfoam..
New website and brand identity
Today Growfoam unveiled its new brand identity. This premiere marks the start of a new era for Growfoam, to match the ambitious and innovative nature of the Growfoam products and signifying the evolution of the company from an innovative startup to an exponentially growing scale-up. Growfoam has created a cross-platform brand experience that is future-proof and authentic, focusing on their main client groups; vertical- and hydroponic farmers.
‘The new Growfoam brand design marks the start of great things to come,’ says Martin Tietema, CEO and one of the founding partners of Growfoam. ‘By formulating new content, sharing knowledge and with out-of-the-box solutions for growers all over the world, Growfoam is enabling a fast transformation towards a future with full circular possibilities for every vertical- or hydroponic farm. Now is the right time to make the new attitude of our brand visible to the outside world.’
The brand promise ‘grow greener, grow safer, grow faster’ can be seen and experienced in the design and production of the Growfoam products, in customer contacts, and the brand presentation as a whole.
Growfoams Chief Commercial Officer, Niels Steenvoorden, explains: ‘We have created a new global brand experience on all channels and across all touchpoints.. Our aim is to truly connect with our clients, grow with them, share knowledge and enable them to do what they do best; grow great crops.’ ‘We invite growers to contact us and join us on our journey to establishing the perfect grow zone for their crops. Enabling them in growing Greener, Safer and Faster.’
The new visual brand language will be very different from that presented by Growfoam to date. It will be bolder, more colorful and the focus will be on real-life situations and actual challenges of the controlled environment farmers.
An abstract representation of the foam bubbles they produce is incorporated in their new logo. The bold and bright colors they use are a direct link to both the RGB lights in vertical farms as well as the water used in hydroponic farms.
The strategic foundations for the new brand identity were laid by a joint team of Foamplant and JEEN, a marketing agency in Agri and food, over the last few months.
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Natural Gas Liquids Drive Geothermal Tech
A Canada-based firm has developed geothermal technology that removes water from the equation
A Canada-based firm has developed geothermal technology that removes water from the equation.
Commonly associated with water via hot springs, geysers, or plumes of steam, geothermal energy relies on underground heat. A Canada-based firm has developed geothermal technology that removes water from the equation, potentially expanding where the renewable resource can be tapped.
“Geothermal, derived from its Greek roots, means ‘earth’ and ‘hot’ and quite literally means that we bring heat up from the ground,” Chris Cheng, a senior development engineer with Eavor, told Rigzone. “This heat can then be used directly or converted to electricity with a power generation unit.”
Unlike conventional approaches to harness geothermal energy, Eavor’s technology uses a closed-loop energy system that eliminates the need to find hot water or steam resources, Cheng continued.
“Since there is heat under the ground everywhere, Eavor technology is applicable in many more places than traditional geothermal, places where that hot water or steam resource may not exist,” he said.
Cheng explained that his company’s technology generates electricity by bringing heat up to the earth’s surface with a working fluid inside the “Eavor-Loop” system, exchanging heat with the working fluid – often one of two natural gas liquids – used by the power-generating unit.
“For an Organic Rankine Cycle application, this working fluid is usually butane or pentane, shown in the red loop and is chosen for its lower-than-water boiling temperature,” Cheng said, referencing the diagram below that illustrates Eavor’s closed-loop technology. “The working fluid is allowed to vaporize and expand in the power turbine which turns this into rotational energy, making electricity. The working fluid is cooled and condensed back to a liquid and is ready to collect heat from the Eavor-Loop once again.”
This diagram outlines how Eavor's closed-loop geothermal technology works. IMAGE SOURCE: Eavor
“While the power generation unit is not unique to Eavor, Eavor’s novelty in its closed-loop design reduces exploration risk – no need for hot aquifers – and allows for more predictability and operational control, including dispatchability,” Cheng said.
The geothermal technology’s novelty evidently appeals to two major oil and gas players, which have steered investment dollars to Eavor. Find out which companies are supporting the technology developer in the following excerpts from Rigzone’s conversation with Cheng.
Rigzone: Where in North America is there sufficient geothermal potential to sustainably diversify the energy mix?
Chris Cheng: The average geothermal gradient around the world is about 30 degrees Celsius (86 degrees Fahrenheit) per kilometer (0.6 miles), which means that, on average, the temperature increases by 30 degrees for every kilometer you drill into the earth.
It all comes down to price, and Eavor believes there is geothermal potential in most places in the world, including all of North America, for both heat and electricity. For now, while the technology is new and costs are high, Eavor is targeting locales where the price for heat and electricity is also high, such as in Germany, the Netherlands, or Japan. These countries have what we call feed-in tariffs in place to help support the transition to renewables.
Eavor is working hard to reduce the cost of its technology so that it can be economic anywhere, comparable to the prices we see now for wind and solar but with the added benefit of dispatchability and small footprint.
Rigzone: What makes geothermal stand out as a renewable resource?
Cheng: Compared to wind and solar, geothermal has a relatively small surface footprint which is important in jurisdictions where surface space may be at a premium.
Secondly, as previously mentioned, Eavor’s closed-loop design allows for improved operational control, making the Eavor-Loop both load following and dispatchable. The heat in the ground is always present, while the wind and the sun may not always be there.
Rigzone: Where do you see geothermal contributing to the energy transition, particularly in North America?
Cheng: Eavor sees itself fitting into the energy mix alongside other renewables. It can fill in the gaps where wind, solar and traditional geothermal are less effective, such as during the night, when the weather is unfavorable, or where the geology doesn’t support traditional geothermal.
Rigzone: What are the biggest misconceptions you hear about geothermal energy, perhaps from the oil and gas community? How do you overcome them?
Cheng: We get a lot of questions about induced seismicity or fracing, which can be a non-starter in some places. With Eavor’s closed-loop system, there is no fracing and a very, very low probability of induced seismicity, so it’s important that we educate potential clients and partners about what separates our technology from the incumbents.
While we are adopting technology from oil and gas, Eavor’s technology eliminates some of the perceived negative aspects that may be associated with enhanced geothermal systems or hydrocarbon extraction, such as fracing.
In the grand scheme of things, the misconceptions are not that major – something that a few technical meetings can overcome – and the overall reception has been positive. Our latest round of investment back in February of 2021, which included bp (NYSE: BP) and Chevron (NYSE: CVX), are a good indicator that we have been embraced by at least some major players in the oil and gas industry as a viable solution.
Rigzone: Where do you see geothermal market opportunities for oil and gas industry players such as operating companies, drilling companies, service and equipment providers, etc.?
Cheng: One of the reasons Eavor is based in Calgary is because of the vast amount of geoscience and engineering expertise that exists due to the oil and gas roots of this city. There is a lot of opportunity for technical staff, service and equipment providers to pivot into geothermal due to the amount of overlap between the two industries.
For example, as a development engineer, the work that I do is remarkably similar to oil and gas. We have to select a good place to drill an Eavor-Loop, which begins with good geological and geophysical work, then we have to design the well and spend capital to drill the well and construct the facility, and finally sell a commodity for a forecasted price over many years.
Sound familiar? For geothermal, instead of oil and gas, the commodity is heat and power, but the development process and the financial modeling is very similar!
To contact the author, email mveazey@rigzone.com. Find out more about geothermal energy in recent Rigzone articles discussing orphaned oil and gas wells, market opportunities and collaboration, and ultra-deep drilling technology.
SpaceFarms Successfully Trialed With Grapes, Now Opts Almonds And Tomatoes
When Tusya first heard about vertical farming, she imagined a new generation of high-tech farming in Georgia. “I was fascinated when I heard about the possibilities of growing crops indoors in urban areas. Unfortunately, there’s little agricultural production in Georgia and lots of produce is imported from other countries.”
Introducing vertical farming to Georgia
Georgian vertical farming company SpaceFarms their product portfolio contains many different products such as salad greens, microgreens, herbs, and edible flowers. However, the company isn’t limiting itself to (leafy) greens only. “We’ve already grown three different grape varieties indoors because it’s a product we’re proud of here,” says Tusya Gharibashvili, Project author, and CEO. Tusya explains that Georgia is quite famous for its wine and its first wine was discovered 8000 years ago, research showed.
When Tusya first heard about vertical farming, she imagined a new generation of high-tech farming in Georgia. “I was fascinated when I heard about the possibilities of growing crops indoors in urban areas. Unfortunately, there’s little agricultural production in Georgia and lots of produce is imported from other countries.”
Crop trials
It’s important to us that we know how to enable grape cultivation indoors. Tusya noted they’re using cocopeat for the roots, and the results are promising thus far. “It gave us so much validation because we put so much effort into this and hopefully by rolling out more and more products, it will become more familiar to the Georgian (agri)culture,” Tusya affirms. Next to grapes, they’ve experimented with tomatoes and almond seedlings in a one-layer cultivar.
“We are now conducting strawberry trials so we still have supplied during the winter period. We’re constantly looking at opportunities for new crops to grow in our farm. We think it’s important to make people aware of the possibilities of growing in urban areas. We started experimenting with different crops in order to set the right growing parameters were.”
In 2017, Tusya started to dive into the concept of urban farming, together with her partner. Their first production facility comprised a 15 m2 cultivation area where various microgreens were grown. Produce was delivered to restaurants and other organizations in the catering sector. “It was something completely new for everyone and people were amazed by the concept of growing indoors.”
Government backing
After the initial success, Tusya started to follow up on more research in indoor vertical farming when she stumbled upon container growing. “After writing a motivation plan, I presented my ideas to Georgian investor to Mr. Temuri Ugulava the founder and the main driving force behind Adjara Group, decided to give it a try,” says Tusya.
At first, she started production inside a former Sovjet printing press building, now the award-winning Stamba Hotel., in order to supply fresh greens for the entire building. This was the first indoor farm space in Georgia. We had quite a tough time there, but with the help and support of Adjara Group, we made it through the first year.”
Nowadays, Space Farms produces 5000 plants per month and 30-kilo Microgreens in a 150m2 area, using seven layers. We grow our greens in the most efficient way possible. SpaceFarms applies 75% less water than traditional farming. Don’t use pesticides, using disruptive technologies, we fully control the environment (light intensity, nutrient intake, humidity, carbon dioxide emissions, and temperature) to yield optimal plant growth. Regardless of the season, we’re able to deliver fresh micro and leafy greens.
“It’s such a small effort, and yet such a big step towards sustainability. CEA growing is a great innovation that I think will change lots of the meaning of agriculture in combination with modern technology,” says Tusya.
Introducing modern agriculture
Space Farms collaborates with students from the University of Agriculture. The students are introduced to hands-on learning on the farm, from sowing to harvesting. Tusya says, “It’s a unique opportunity to have these students working on our farm, so they can get familiar with this new type of agriculture. In this way, we’re hoping to increase awareness on vertical farming throughout the country and eventually to neighboring countries.”
Next to running a farm, Spacefarms also working on a new project SpaceFarms spot, a farm growing kit that can be applied in any room. It’s the size of a fridge, which allows consumers or businesses to grow their own greens on location. “This will be something completely new in Georgia, so we hope to make a lasting impact. We might be a small country, but we can do big things with the help of technology. We’re backed by several programs from which we’ve received funding so we can further develop our Farm Pods,” adds Tusya.
Space Farms has received support from several programs. The programs are focusing on innovation and women in agriculture.
Lead photo: Tusya Gharibashvili
For more information:
Tusya Gharibashvili, Project author, and CEO Space Farms
1 Jun 2021
Author: Rebekka Boekhout
© VerticalFarmDaily.com
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[Webinar] Financing Indoor Ag Seed to Scale
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USA - VIDEO: President David Lee Recap Business Update
AppHarvest president and board member David Lee joined Yahoo! Finance to discuss the company’s mission, a business update, and the ways AgTech helps impact food security and sustainability
DAVID LEE:
‘OUR FOCUS IS CREATING VALUE
FOR OUR SHAREHOLDERS
OVER THE LONG-TERM'
AppHarvest president and board member David Lee joined Yahoo! Finance to discuss the company’s mission, a business update, and the ways AgTech helps impact food security and sustainability.
“It's about using technology at AppHarvest, creating a consumer movement, being radically transparent, and – trying to build a better food company, very similar to where we started back when we launched the business at Impossible Foods,” Lee said. These are two companies that are different, but they share a common approach. Do well for investors, do well for the planet, and demonstrate that you can do both.”
Watch Here
Purpose At Work: How Square Roots Is Growing A Sustainable Food Movement
How can we reduce the climate impacts of our food system? How can we get the freshest produce to people in urban areas? How can we offer fulfilling jobs to today’s youth? These are all issues that Square Roots is working to address
May 24, 2021
Purpose At Work: How Square Roots Is Growing A Sustainable Food Movement
PHOTO PROVIDED BY SQUARE ROOTS
How can we reduce the climate impacts of our food system? How can we get the freshest produce to people in urban areas? How can we offer fulfilling jobs to today’s youth? These are all issues that Square Roots is working to address.
“The mission of the company is to bring locally grown food to people in cities, all across the world while empowering the next generation of leaders in urban agriculture,” Tobias Peggs, Co-founder, and CEO of Square Roots, tells We First.
The agriculture startup’s modular and technology-first design is transforming how food is grown and distributed in amazing ways. The scalability and data-driven approach make Square Roots an excellent example of a company demonstrating how to scale business growth and impact.
Founding story
Before Square Roots, Tobias received a Ph.D. in machine learning and had worked for a number of successful startups, one of which was acquired by Walmart. “I worked as a data scientist there for a year. One of the projects they had me do was study global grocery buying behaviors.” With around 300 million customers, Tobias had a massive amount of data to pull insights from.
“That's a lot of bananas flying all over the world,” he says. “You begin to think about the impact of transportation on the planet. “As food is traveling, nutrients are breaking down and maybe the quality of food isn't as good at the end of long supply chains as it would be for local food. Customers don't have any idea of where that food comes from. The sense of community around food was just lost.”
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Vertical Indoor Farms Make Sense
The insights Peggs was having lit a spark in his entrepreneurial engine. “People want food from all over the world. That's not going to change,” he says. “Instead of shipping food, how about we ship environmental data from one part of the world to the other?” By collecting data on the best growing conditions, Tobias could hypothetically grow anything at any time of year in a controlled indoor environment made from repurposed shipping containers and deliver that to a nearby retail store on the day it’s picked. “It looks and smells amazing, which also means all the nutrients are intact,” he says. “That was the idea behind Square Roots.”
Peggs cofounded the company with Kimbal Musk, “He would say, ‘Can it feed the world? And are we going to make a massive positive impact? If so, let's figure out how to get this done,’” Peggs recalls. The two innovators began by working together in a WeWork office. “With the experience of being involved in a number of startup companies before—some successful, some failure—I know for sure that if you don't get started, you're going to fail.”
In the two-man brainstorming sessions, Peggs and Musk would visualize the business at scale. “We saw these modular farms in every city across the world. That is the way that we're able to think about feeding every consumer on the planet with locally-grown food,” Peggs says. “There was a missing piece of the puzzle. There wouldn't be enough farmers to hire to staff all of those farms.” That realization was the foundation of the second pillar of Square Roots’ purpose, “To provide pathways for young people to come into the farming industry and become the future leaders,” he shares.
Leading with purpose
Purpose At Work: How Square Roots Is Growing A Sustainable Food Movement
PHOTO PROVIDED BY SQUARE ROOTS
Square Roots’ core business was structured to address some of the world’s biggest challenges. Food is interconnected with climate, which also poses risks on outdoor crops. It is also fundamental to public health and prosperity. As the global population rises, our planet’s carrying capacity will be tested. We need to innovate to meet that rising global demand for food.
The model relies on able-bodied young people to tend to the crops. The talent pool of skilled farmers in the U.S. is aging. The average farmer is 58 years old. “Who the hell is going to grow all the food when our current farmers retire in five or 10 years’ time? ” Tobias proposes. “We had to figure out a way to bring young people into the industry and train them quickly so they could be not just productive farmers, but feel infused about a career in a completely new industry.”
To overcome the hurdle, the founders developed hardware, software and teaching methods. “We had an investment banker who was bored sitting behind a spreadsheet all day. He quit his job to join Square Roots because he wanted to make an impact on the world. He was growing the most delicious kale, you've ever tasted in your life,” Peggs says. “That was six months after making the transition, it was magic to see that.” Within a year they trained 10 people, many with no previous farming experience.
In addition to creating purpose-driven employment opportunities, Square Roots is addressing climate through transportation and waste. “Forty percent of food from industrial systems is wasted. We waste around 3%,” Tobias says. A significant portion of wasted food is discarded before it even hits the shelf, due to damages during shipping or spoiling quickly. “Because we're indoor, there's a lot of precision, a lot of control. We can grow food for demand.”
Modular design
Square Roots’ structure allows it to be replicated and optimized from a systems approach. It's a distributed model. “We deploy clusters of these modular farms together so there's some operational scale and the business economics work,” Peggs explains. “Each farm serves its local market and runs its own independent business entity, set on top of a standard technology platform.” Every compound grows, harvests packages and delivers produce to local retailers. “We look after everything from seed to shelf.”
The growing startup has set up operations in Brooklyn, New York, and Grand Rapids, Michigan with plans for expansion across the Midwest, the North East in cities around the world where demand is large enough. People can see inside the shipping containers and when Covid-19 is under control, you can schedule a farm tour. “While its a very scalable platform, the consumer experience is a hyper-local one.”
Leveraging data & technology
When it comes to deciding what to grow, Square Roots focuses on crops that require the least amount of energy. “Walk into a supermarket. Lineup every single fruit and vegetable from the lightest to the heaviest. And that's essentially our product roadmap for the next 20 years,” Peggs says.
They also choose crops based on economic yields based on competitive market prices. “This is where data science and technology marry,” Tobias says. “Outdoor farmers can’t suddenly look at the sun, make it twice as efficient and reduce costs or double their yield. Indoor farmers can.”
Integration of AI machine learning empowers Square Roots to optimize at scale. “We're building a network of cloud-connected modular farms,” Tobias says. The company monitors and collects data from each of those farms every second. “We’re looking at temperature, humidity, nutrients, yield, taste and texture,” Peggs says. “ If in one particular box, a farmer did something or we changed an environmental parameter that increased yield or improves efficiency, we can spot that information from the data and push that new instruction out across the whole network. The whole network is learning how to farm better as we go about building the business.”
Building community
Food has the potential to unite people. While Square Roots farms are indoors, they connect and share knowledge with outdoor farmers. “ I'll give you an example,” Tobias says. “A good technique in organic farming is known as integrated pest management, where a farmer might release beneficial insects onto the crop, essentially ridding the nasty insects that we don't want. We use that technique inside the farm.”
“The farmers that we work with are very much on the same mission, which is how do we get people more connected with where their food comes from? How do we build that sense of community around food? And I think the common enemy is the industrial food system,” Peggs says. That common enemy also resonates with employees, consumers and other key stakeholders who join together around a set of core values.
“I know pretty much every founder or CEO of every indoor farming company. There's remarkable alignment around that mission,” Tobias says. “Everybody understands that we've got to change the food system and if we're helping each other out, it's better for all of us,” Tobias mentions companies like Gotham Greens and Oishii that are also innovating in the indoor farming space.
Purpose also informs Square Roots’ investor strategy. “We’re a venture-backed company. When we're talking with investors, we want to make sure that they're mission aligned. I can’t tell you how many investors have talked to me about considering cannabis. It’s not aligned with our mission.” A lot of people don't realize that the power of purpose is just as compelling in terms of what you don't do, as opposed to what you do.
The takeaway here is that building your community around shared purpose fosters goodwill amongst team members and customers. It also presents collaborative opportunities with other brands and organizations working towards the same goal.
Challenges and opportunities
With the opaque information in the industrial food system and increased health consciousness, consumers are looking for transparency. In addition to its open invitation to check out the farms, the company includes a QR code on each product. You can scan the code and learn all about where it's made and the value chain.
Purpose At Work: How Square Roots Is Growing A Sustainable Food Movement
PHOTO PROVIDED BY SQUARE ROOTS
Covid-19 has also presented challenges for businesses across sectors and Square Roots is no exception. Before the pandemic, they trained new hires to be farmers in classrooms. “If we didn't have our mission, it would have been easy to say, ‘We got to keep growing, forget this farmer training stuff. We're just going to go hire experienced people.’ Or we could have developed a robot to do part of the job of a farmer,” Tobias says.
“The mission allowed us to focus on solving issues with our current business model,” he continues. “It was already misaligned. Everyone was able to get behind it very quickly. And we were actually able to solve problems and put in place new programs and new policies ridiculously quickly. Never waste a good crisis.”
Despite adversity, the startup has started true to its mission and transitioned to digital and socially distanced training, and built a more robust system than before.
The future of food
Technology and data are a critical aspect of emerging agriculture trends. “Food is a $12 trillion industry,” Peggs states. “There's about 20 companies that have raised a bunch of money and are doing this stuff in America.”
“Indoor farming actually reminds me of the internet in the early '90s,” he says. “We know this thing is inevitable, but no one can quite yet tell you what shape it's going to take in the future. Indoor farming is like that. We're all helping each other figure out how this eventually feeds every consumer in the world.”
While innovation is budding, “The food system has to become a lot more responsible and sustainable,” Peggs says. “The current food system cannot feed the new future world, which has 10 billion people, 70% living in urban areas that are not near these industrial farms.”
We’ve seen changes over the last two decades with the organic food movement, which now grosses $25 to $30 billion annually, Tobias says. He thinks that Covid-19 will accelerate the shift towards healthy and sustainable food. “People were forced to stay at home and cook. You get more curious about the food that you're buying, and you observe how long it lasts in your refrigerator. You get more educated,” Tobias says. “We are in the first inning of indoor farming. We're just getting started.”
Lessons for entrepreneurs
With his experience from Square Roots and beyond, Tobias Peggs’ insights offer valuable lessons for entrepreneurs looking to Lead With We. Here are three teachings from Peggs on how to build a successful startup.
“Be prepared to be told, "No, we're not interested."
“You have to be a bit of a missionary and sign up for having a lot of stamina. Just be consistent with the drumbeat that this idea—no matter how crazy it might seem—you can do it.”
“There are going to be bumps in the road, there are going to be things that don't go quite right. If there's a shared purpose articulation of what the mission is, you move through those things and you make it happen. Purpose is a very powerful multiplier.”
Simon Mainwaring is the founder and CEO of We First, a strategic consultancy that accelerates growth and impact for purpose-driven brands by putting 'We' first. I specialize in brand strategy, culture building and impact storytelling for startups, high-growth companies, and Fortune 500 corporations. My national podcast is LeadWithWe.com on Spotify, Google and Apple. My book, We First: How brands and consumers use social media to build a better world is a New York Times, Wall Street Journal, and Amazon bestseller, and strategy+business named it the Best Business Marketing Book of the Year. I deliver keynotes, training, and workshops that help brands define, integrate and activate their purpose to drive growth and scale impact.
Visit SimonMainwaring.com for speaking and WeFirstBranding.com for consulting