GREENHOUSE PRODUCE 5

Johnathan Webb, founder and chief executive of AppHarvest, stands at the site where the company's 60-acre greenhouse will be built, in Morehead, Ky. The greenhouse, the largest in the United States, will use recycled rainwater, create more than 200 jobs, and will begin shipping 45 million pounds of fresh produce annually, primarily tomatoes, to grocery stores when it opens. 

MOREHEAD, Ky. — Proximity to big markets is crucial for the fresh produce business.

So when AppHarvest, a 2-year-old startup, was looking for a site for a greenhouse, it picked a 366-acre field in Rowan County just outside this university town in eastern Kentucky.

The greenhouse, the largest in the United States, is just a day’s drive from almost 70% of American consumers, including those who love fresh tomatoes.

Next summer, when AppHarvest begins production at its $97 million building, 285 employees will start shipping 45 million pounds of fresh produce annually, primarily tomatoes, to grocery stores from Atlanta to New York, and as far west as Chicago and St. Louis.

For the greenhouse to be cost-effective, size was as important as location. The 60-acre, 2.76 million-square-foot building will be big enough to lower costs on materials, production and distribution.

“I asked the engineers, ‘How big can we possibly be to operate efficiently and effectively?’ ” said Jonathan Webb, AppHarvest’s 34-year-old founder and chief executive. “We have to compete with produce coming from 2,000 miles away.”

The mammoth project will use Dutch greenhouse technology, which focuses on sustainable crop production, to meet the rising demand for American-grown tomatoes. The greenhouse uses digital monitoring, sun and LED lighting, recycled rainwater and nonchemical growing practices. It also responds to a host of cultural concerns about food safety, freshness, environmental quality and energy consumption.

Other food growers have the same idea. AppHarvest is part of a wave of new greenhouse construction changing vegetable production in the eastern United States.

Kentucky Fresh Harvest is building a 30-acre, $13.5 million greenhouse near Stanford, Kentucky, about 100 miles southeast of Morehead, to grow cherry tomatoes. Mucci Farms, a Canadian company, just opened the first of three large greenhouses for tomato production on a 75-acre farm in Huron, Ohio. Mastronardi Produce, another Canadian grower, last year finished a 20-acre greenhouse for vegetables in Wapakoneta, Ohio. The company owns six others in the United States.

AppHarvest is intent on meeting the rising demand for fresh tomatoes in a market increasingly supplied by imports from Mexico and Canada. The two countries account for more than half of the $3 billion U.S. fresh tomato market.

But production in the United States is declining, according to the Department of Agriculture. Land devoted to fresh tomato production in Florida, a major producer, has fallen to around 30,000 acres, down from 39,400 acres at the start of the century, according to the agency. Similar reductions have occurred in California, North Carolina and other states.

Webb, the son of a Kentucky machinery dealer who was raised in nearby Lexington, said he always planned to build something big in Kentucky. Years of research, and the state’s abundance of land and water, drew him to agriculture.

This colossal plot in Morehead is only the first step in Webb’s ambitious plan. The next is to be so successful that other greenhouse growers follow AppHarvest to the state.

His hope, he said, is to rejuvenate the state’s economy, devastated by the collapse of the coal industry, with a “sustainable produce hub” that would turn Kentucky into “the agtech capital” of the United States. Webb also plans to build huge AppHarvest greenhouses in other eastern Kentucky communities.

That goal is achievable. Greenhouses provide a controlled environment that allows vegetables to be grown year-round. Tomatoes grown in greenhouses accounted for 32% of the domestic supply in 2017, the latest year for accurate figures, according to a report published in March by the Agriculture Department. The same year, Kentucky farmers grew tomatoes in 1.1 million square feet of greenhouses on more than 300 farms.

“It’s not going to be just AppHarvest,” Webb said. “The whole region will be lit up with vibrancy and excitement. The same thing you see in New York and San Francisco.”

In May, Webb persuaded the managers of Equilibrium Capital’s Controlled Environment Foods Fund to invest nearly $100 million to build the greenhouse. He raised millions more from the ValueAct Spring Fund and from venture capital firm Revolution’s Rise of the Rest Seed Fund to finance the company’s engineering, administration, staff and startup operations.

Kentucky invested $1.9 million in a new road and other infrastructure. “That area used to be tobacco,” said Ryan Quarles, commissioner of the state Department of Agriculture. “It’s an area now that’s eager for new technology. We like his vision.”

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