WYOMING — A national company at the forefront of next-generation agricultural practices is putting down roots in West Michigan after being lured to the region in part by its legacy of manufacturing innovation.
A subsidiary of Belvidere, NJ-based Edible Garden AG Inc. (Nasdaq: EDBL) closed Aug. 30 on a nearly $2.9 million deal to acquire the assets of Greenleaf Growers Inc., greenhouse and wholesale commercial flower grower. The deal included cash and a $1.1 million promising note.
Edible Garden, which uses controlled environment agriculture techniques to produce organic leafy greens and herbs, cited the location’s proximity to supercenter retailer Meijer Inc.one of its distribution partners, as one of the draws to West Michigan, along with the region’s manufacturing roots.
CEO Jim Kras also noted the region’s growth culture, entrepreneurship and industry as contributing factors.
“People are staying here,” Kras told MiBiz. “You have a lot of really progressive, smart people in the area. You don’t have to go to the New Yorks or the LAs and pay an exorbitant amount to do something innovative like this.”
With a flagship location in New Jersey, Edible Garden Inc. operates state-of-the-art greenhouses to grow lettuce, cut herbs and potted herbs, which it distributes in local markets to more than 30 grocery retailers around the country.
The local transaction also included a 5-acre commercial greenhouse facility at 2900 Madison Ave. SE, where Greenleaf produced spring crops, fall mums and seasonal poinsettias. The operation will be renamed as Edible Garden Heartland.
Edible Garden General Manager Mike Sudbury, who will lead the Grand Rapids operations, said the “fantastic facility” will provide the company a platform to deploy its GreenThumb proprietary agricultural technology, which optimizes growing in vertical and traditional greenhouses while minimizing pollution-generating food miles .
“It has great bones,” Sudbury said of 2900 Madison. “We are excited to implement our technology and make something sustainable.”
With the deal Edible Garden also retained all of the local workforce and anticipates adding up to 40 additional jobs, Sudbury.
According to Kras, the company’s $14.7 million initial public offering on May 5 provided the funding needed to capitalize on growth opportunities like the deal for Greenleaf Growers.
“We took the company public with the mindset of really growing the business,” Kras said. “The IPO allowed us to do this.”
Kras also added that Grand Rapids is an ideal location for the company’s expansion as it works to serve customers with high-quality products and improve upon the controlled environment agriculture model. Edible Gardens also operates a similarly sized facility at its headquarters in New Jersey.
Controlled environment agriculture marries traditional horticulture with an engineering framework for optimized crop production. The model tightly controls lighting, temperature, nutrition, supplemental CO2 and airflow to yield more crops with less loss year round.
Kras likens the process as a manufacturing approach to agriculture.
“We look at it where we’re trying to deliver the same widget, even though we know it’s got inherent challenges as it relates to being perishable and temperature controlled,” Kras said. “We address it with that methodology and go to market that way.”
The firm expects the Wyoming facility will support $15 million to $20 million in annualized revenue over the next few years.
“It has some serious capacity,” Kras said. “It’ll take a while to get there, but it has some real capabilities. We will do more as we look to put in grow systems that really use the space.”
As well, Edible Garden plans to continue operating the horticultural business that had been a staple for Greenleaf Growers and historically generated approximately $2 million in annual revenue. Executives said the business gives the company a range of cross-selling opportunities within its network of customers.
Dallas-based M&A firm Generational Equity advised Greenleaf Growers owner Nicholas DeHaan on the deal. DeHaan had operated the company with his late father, John DeHaan III.
Once operational, the Edible Garden facility will join a number of companies in West Michigan that have deployed controlled environment agriculture techniques in recent years.
They include New York City-based square rootswhich opened a modular indoor farming facility growing leafy greens, herbs and other produce at the Gordon Food Service Inc. headquarters in Wyoming.
As well, Caledonia-based Revolution Farms LLC grows premium lettuce varieties and field greens year round at its fully automated facility at 2901 76th St. SE, which is capable of producing 20,000 to 25,000 pounds of produce each week.
“We are in a very exciting sector right now,” Kras said. “It’s bittersweet because it’s driven by climate change. We’ve had an eye on just doing it better, doing more with less.”
According to Worldbank, agriculture and food production contribute to 29 percent of all global greenhouse gas emissions. A report by the Food and Agriculture Organization of the United Nations noted that global demand for food will require 70 percent more agriculture production by 2050.
Experts cite controlled environment agriculture as a potential solution to meet global food demands while minimizing the negative climate effects from food production. The process reduces the need to import crops, eliminates the need for pesticides, automates harvesting to minimize waste, and uses up to 95 percent less water.
A 2021 report by Boston-based firm Lux Research designed controlled environment agriculture to reach a market value of $100 billion by 2030.
Pursuing sustainable goals
Despite the myriad benefits and industry growth potential, the controlled environment agriculture still requires significant energy to operate, which remains a significant concern among the sector’s proponents.
As Kras notes, running a 5-acre greenhouse in Michigan in the winter “costs a lot of money.” Edible Garden is forging partnerships with community and industry stakeholders to find solutions for this energy hurdle.
One such partner is Schneider Electric, a multinational company specializing in digital automation and energy management that consistently ranks high in indices of the world’s most sustainable companies.
“We are looking at not only solar but geothermal energy,” Kras said. “Schneider Electric will help us with the reporting and allow us to monitor how the facility is performing as well as what the CO2 output is. The energy cost just has to be addressed because it is a nonstarter for our competition.”
Edible Garden Heartland is also partnering with the University of Michigan‘s School of Environment & Sustainability and Erb Institute to work directly with students to develop and implement business-driven sustainability solutions in the controlled environment agriculture sector.
Erb Institute Associate Director Emily Keeler says the partnership with Edible Garden is a perfect fit for the institute’s mission to foster a more sustainable world through the power of businesses.
“A lot of people have the misconception that if you are making an impact, you have to go through a nonprofit. We do have students that go through that route, but we have a lot of students that are interested in the much broader impact that businesses can make,” Keeler said. “This particular project brings together the intersection of thought around business and sustainability.”
Kras says he hopes the innovation that comes from these partnerships creates new opportunities in the industry where energy costs can be prohibitive.
“I don’t want my competition to fail,” Kras said. “There needs to be a shift in how we grow products, and a rising tide lifts all boats.”