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The Spoon

Daily news and analysis about the food tech revolution

controlled-environment farming

AeroFarms to Go Public Via SPAC Deal

Large-scale vertical farming company AeroFarms announced today it will go public via a merger with special purpose acquisition company (SPAC) Spring Valley Acquisition Corp. Once the deal goes through, AeroFarms will become publicly traded on the Nasdaq under the ARFM ticker symbol. The combined company is expected to have an estimated equity value of about $1.2 billion.

Certified B Corporation AeroFarms also noted that the deal will help to fund things like expanding retail distribution, constructing additional farms, and further developing the technology that powers the company’s growing operations. 

Headquartered in Newark, New Jersey, AeroFarms grows leafy greens via indoor vertical farms that rely on LED light recipes, hydroponics, and software to grow plants. The company, which has raised $238 million to date, currently distributes products in the New York Metro Area as well as online via Whole Foods, FreshDirect, AmazonFresh, and Shop Rite.

The announcement comes not long after another controlled-environment agriculture company, AppHarvest, also went public via SPAC earlier this year. AppHarvest (also a Certified B Corp) completed a merger with Novus Capital Corp. and began trading on the Nasdaq on February 1. Its high-tech greenhouse model differs considerably from AeroFarms in terms of both the facility and the crops, but the end goal is similar — get pesticide-free, more locally grown produce to more people.

IPOs aside, it has been a busy month for the indoor farming space, with vertical farms Plenty and Bowery both expanding their retail footprint, Sweden’s Grönska raising $2.4 million, and Bablyon Microfarms closing a $3 million seed round.

AeroFarms said today that the merger has been approved by the Boards of Directors of both it and Spring Valley, and now just needs the approval of Spring Valley shareholders.  

Indoor Farming Got Big in 2020. Literally

One thing we can say about indoor farming in 2020: it grew, both in market size and investment.

At the start of the year, a big part of our attention focused on the potential of smaller vertical farms in grocery stores and consumer homes. Writing on the topic at the end of Dec. 2019, I figured we would see the most compelling developments in this area over the next 12 months when it came to controlled-environment agriculture.

There certainly were a lot of notable happenings. InFarm further expanded its concept of placing its pod-like mini farms in grocery stores. A number of companies, including Aerogarden, MyFood, Rise Gardens, Aspara, and Farmshelf offered vertical gardens built for the consumer home. And on that note, at CES 2020, both LG and GE unveiled concepts to turn indoor farming into the next big home appliance category. Manufacturers of at-home farms, in particular, reported spikes in demand resulting from the pandemic and our sudden collective interest in at-home food sovereignty.

There’s one drawback to at-home vertical farms and smart gardens: for now, at least, they come with a price tag that’s too high for many households. See Aspara’s $350 countertop farm on the low end and, on the high end, the $13,000 Natufia Kitchen Garden. When it comes to providing fresher, more local, and affordable greens to everyone, it was actually the large-scale commercial farms that made the most news.

A glance at some of the major announcements shows just how big controlled-environment agriculture got in 2020, both in terms of physical space and investment dollars:

There are plenty of differences in the way these companies approach controlled-environment agriculture. Some rely on vertical farming, while others stick to the greenhouse method aided by automation and AI. Many stick to growing leafy greens; others have expanded their wares to include tomatoes, the aforementioned strawberries, and other types of produce.

What all of these have in common is that they are trying to bring the concept of healthier, fresher food to more people at a price point the majority of households can manage. Many of them also provide much-needed jobs for local communities.

The world’s population is expected to hit nearly 10 billion people by 2050. At the same time, the limitations — and environmental dangers — of relying solely on traditional agriculture get more apparent each year. The past 12 months have shown us that these controlled-environment farms, which occupy millions of square feet and are now producing just as much produce, will be a major part of agricultural innovation going forward.

Stay tuned for more developments in 2021.

 

 

‘Great Challenge Can Expose Great Opportunity’: AppHarvest’s Jonathan Webb on the Role of Indoor Ag

For AppHarvest founder and CEO Jonathan Webb, the role of the high-tech greenhouse goes far beyond providing produce to surrounding locales. Over the phone recently, he went into great detail about his company’s role in not just growing plants but also in providing jobs and morale for the community and playing a part in the solution to some of the agricultural industry’s most pressing global issues.

As a company, AppHarvest, based in Morehead, Kentucky, is only a few years old. But since its inception in 2017, it has moved quickly to make good on its mission of build a network of high-tech, controlled-environment farms that can grow non-GMO, chemical-free produce and at the same time help create a more resilient economy for Appalachia.

The year 2020 has been especially eventful for the company, which raised $28 million in August and finished building out its 2.76 million-square foot flagship facility a few months ago. When we spoke on the phone, AppHarvest had just completed planting of its first crop of tomatoes. It has also broken ground on two additional farms in Kentucky, a 60-acre one in Madison for fruits and vegetables and a 15-acre facility for leafy greens in Berea. Earlier in 2020, it also announced a partnership with the Dutch government as well as multiple universities to bring more research and education on controlled ag into the area and effectively turn Appalachia into an agtech powerhouse. 

Technology is an important part of the plan, and AppHarvest employs it in its greenhouses to grow crops all year and use substantially fewer resources in the process. The company doesn’t build its own technology. Rather, it uses existing technologies on the market that, when put together, amount to a more efficient grow system in terms of both crop yield and cost. Webb cites AppHarvest’s use of Philips GreenPower LEDs, which improve climate and crop control in greenhouses, as one example. 

“There [are] a lot of great technologies that are cutting edge and available and we can use them to be better aligned with nature,” he says, adding that AppHarvest is “trying to use proven technologies that are at the cutting edge without jumping over the edge.”

What is unique to AppHarvest’s approach is its rainwater system. Eastern Kentucky gets abundant amounts of rainfall, which AppHarvest captures and uses for its hydroponic system. This has a distinct advantage over using groundwater, since the latter contains sodium, which leads to agricultural runoff and the need for a system to be periodically flushed. AppHarvest’s greenhouse runs entirely off this rainwater. Webb says that to his knowledge, no other controlled ag system of this size in the world does that.

Webb is quick to point out that AppHarvest’s operations are more than a matter of steel and glass structures and hydroponics systems. “We’re trying to build an ecosystem,” he tells me. That’s one reason AppHarvest is locating its facilities near universities, with which the company can have a knowledge-sharing relationship. 

Even more important is the impact AppHarvest’s work has on the surrounding communities. Morehead sits in the foothills of the Appalachian Mountains, and is in an area that has for generations relied on the coal mining industry for jobs. Coal mining has been in decline for years, a situation further accelerated by the COVID-19 pandemic. As of May 2020, there were more coal industry mine closures and job losses than at any point since the presidency of Dwight Eisenhower 60 years ago.

“Many of us knew what was happening with the decline of the coal industry,” says Webb, a Kentucky native. He adds that the “vacuum that was created because of the rapid decline of the coal industry was a big reason as to why we looked to be located where we are.”

But great challenge, he says, can expose great opportunity, and morale in the community surrounding AppHarvest is “incredibly high” because the company’s efforts are creating jobs and therefore livelihoods for residents. 

That human element of AppHarvest’s story is, he admits, hard to translate into investor-speak. “What we’re able to do here and how quickly we’re able to move and how much communities want us to be here on the ground, you can’t put that in a pitch deck or capture it in financial means,” he says.

Equally important to communicate is why we need the efforts of those in the controlled ag space.

Most indoor ag companies, from Gotham Greens to AeroFarms to Plenty, highlight the more well-known benefits of controlled-environment farming: 90 percent less water usage, 40 percent less energy consumption. Less talked about are the reasons indoor ag is so crucial right now. The UN has already warned that we only have about 60 harvests left in our top soil. Plowing and over-tilling have increased erosion by 10 to 100 times natural rates, and that’s to say nothing of deforestation, overgrazing, and pesticides that add to soil degradation. Throw in a human population predicted to reach nearly 10 billion people by 2050, and traditional agriculture’s toll on both the earth and the food system start to look a little less abstract and far more disconcerting.

“We have to free up land and water to the wild,” says Webb. “This is a topic we’re not talking about nearly enough.” 

Controlled ag, he says, plays a critical role in this process, and is in many ways the third wave of sustainable infrastructure, after alternative energy and electric cars. Like the other two areas on that list, controlled agriculture will continue to evolve over time as one piece of the overall agricultural system. 

What it will look like in even just a few years remains to be seen. The last several months have seen huge investment dollars and a lot of different companies trying different methods around controlled-environment agriculture, from vertical farming in reclaimed shipping containers to high-tech rooftop greenhouses to planting farms in grocery stores. 

For Webb, analyzing whether one method is superior to another shouldn’t be the focus right now. The point is, companies are building solutions in response to a global problem with profound environmental and humanitarian consequences. 

“We can debate all we want but at some point we have to move,” he says. “At some point you have to leave the analysis behind. At some point you have to build something.”