March 23, 2017

Greenhouse farming company BrightFarms announced it is investing $10 million for the construction of a 160,000-square-foot greenhouse 55 miles outside of Cincinnati, Ohio.

The New York-based company is tapping into the farm-to-table consumer movement, and disrupting the U.S. fresh produce supply chain through the development, construction, and operation of state-of-the-art commercially scaleable greenhouses that can provide locally grown fresh fruit and produce to supermarkets that is significantly fresher than standard produce, which is often shipped long distances prior to sale.

On pace to be completed later this year, the facility will have the capacity to produce 1 million pounds of non-GMO and pesticide-free salad greens, tomatoes, and herbs every year, and will use 80 percent less water, 90 percent less land, and 95 percent less transportation fuel than traditional agricultural production.

“A model for the future of local, low-impact farming, the BrightFarms Ohio Greenhouse will be the most sustainable source of local year-round salad greens, herbs and tomatoes in the Ohio market,” said Paul Lightfoot, CEO of BrightFarms. “In addition to creating jobs, it will significantly reduce food miles and improve the environmental impact of the food supply chain.”

Funding in September

The announcement of the Ohio greenhouse project follows six months after BrightFarms announced the completion of a $30.1 million Series C led by Catalyst Investors, and including existing investors, Chicago-based WP Global Partners and New York-based NGEN Partners.

At the time, BrightFarms stated that it planned to use the funding, which it claimed was the largest equity investment to date in the U.S. controlled environment local produce sector, to strengthen its position within the space and to further its goal of making all U.S. fresh fruit and vegetables locally sourced. In addition to planning more greenhouses, the company said it was also exploring plans to expand the crops it grows to include green peppers and strawberries.

Business Model

Much like the business model used in the solar power industry, TechCrunch explains that BrightFarms offers its wholesale customers a long-term fixed rate on the leafy greens and tomatoes the company produces in its greenhouses. Once an agreement is fixed, BrightFarms then raises funds from economic development programs, banks, and equity firms to finance the building of a new greenhouse to serve that contract – giving the company guaranteed offtake and revenue prior to growing their first plant.

This unique and innovative model of securing offtake agreements prior to construction of greenhouses designed to meet already established demand gives the company greater ability for scalability, while the ability of its greenhouses to incorporate natural light translates to lower energy usage and cost.

BrightFarms is definitely tapping into a segment ripe for disruption. Approximately 90 percent of the salad greens consumed in the U.S. is sourced from California and Arizona – two sites that not only need to secure long-distance shipping, resulting in older produce on the market shelf, but are both regions facing challenging drought scenarios.

Subsequently, consumer demand for locally grown produce and foods continues to climb. Fortune reports that local food sales topped $11.7 billion in 2014, and are on pace to continue to climb to $20.2 billion by 2019, according to a report by Packaged Facts.

Furthermore, Walmart’s yearly sales of locally grown produce are $749.6 million – however, Packaged Facts states that almost 50 percent of respondents surveyed stated that they would be willing to pay up to 10 percent more, and nearly one third of respondents stated that they would pay up to 25 percent more for locally grown foods.

This demand, along with BrightFarms’ sustainable and innovative business model, are behind the company’s rapid expansion. This greenhouse in Ohio will be the company’s fourth, adding to its established greenhouse farms in Pennsylvania, Virginia, and Illinois.

“The nation’s best supermarkets are responding to consumer demand for fresher, tastier and more sustainable produce, and so demand for local produce like ours continues to grow extremely quickly,” noted Lightfoot.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.