Dan Plant, Co-Founder and Co-President of Calgary, Alberta-based indoor farming company MVP Farms, is joining the Indoor Ag-Con 2019 Conference lineup’s BUSINESS TRACK, where he will be speaking on “Spotting A Great Location.”
When he and his business partner, Matt Vanderberg, first started searching for opportunities back in 2016, they set some key constraints.
“We came at this from an asset management perspective and, like anyone else, have an affinity for recession-proof businesses selling into deep markets. So, capital-intensive, controllable and predictable food production had a ton of appeal,” Dan explains. “But more importantly, we thought back to the time each of us had spent working on farms and hanging out with farmers. Again, the technology, facility construction, operations management are all super cool features of this venture, but it is the quality of produce and the direct connection to our customers, making them happy through fresh food that will sustain us for decades. We don’t want to work for another company ever again.”
“We are not going to rush into anything. And we are not going to do anything that isn’t technically superb,” Dan adds. “The demand for locally grown produce will only grow and the technology will only improve. It’s not to suggest that timeliness is irrelevant, it certainly isn’t, but we want to ensure that when we open for business that we have a system that is scalable, backed by superb production technologies and scientific expertise, and a business model that will allow us to expand regionally. And when I say scalable, that also includes a scalable business model—working with sales channel partners that have simple unencumbered access to the deep sources of demand. We’ve got funding in place for our first facility and are currently in the process of developing the grow and automation equipment.”
We checked in with Dan recently to learn more about thoughts around the industry, food safety regulations and future plans for his growing company.
Q.Overall, what is the vision of indoor farming in Canada vs the US?
A. We look at Canada and the US as one market for indoor farming. Though, obviously, we’d like to see the consistent and clear application of organic and food safety regulations. We can maybe see three stages to the implementation of an industry vision:
- The first, which has largely been accomplished, involves the experimentation and validation of potential business models and individual technologies. Much has been discussed over recent years, from the plantscraper to distributed networks of container farms to nutraceuticals and so on. Key lessons learned are starting to emerge. What’s becoming clear from observing the likes of Bowery, who we see as one of the standard bearers in this fledgling industry, is that a focus on system quality and integrity at the industrial scale and using automation can serve to appropriately balance crop quality versus economics. As an industry, we can cultivate these lessons to advance to the next stage, and start winning meaningful market share in cherry-picked markets.
- The second stage will likely be the product of two key narratives: innovation and scale. You may think that the first stage, the integration of LEDs and hydroponic systems with automation and control equipment involved serious innovation. It did, but it’s been fairly early stage stuff, proving the concept. There is a bigger potential. It is at the next stage that the industry will be able to start devoting serious resources to things like substrate re-usability and sustainability, plant genetics, optimized recipes and more advanced process flows that may even combine as a hybrid system indoor and greenhouses. Just yesterday, March 13th, David Kuack wrote about the need for improved plant genetics—the big guys like Bayer probably won’t devote serious resources in this direction until the industry reaches a certain size. The economics of each component of the production technology will be better understood to the point that they can be optimized. We may also move into more technically difficult and diverse crops. Again, as we’ve seen with Bowery and Aerofarms, we’re starting to move into the industrial-scale phase of the vision.
- For a glimpse of the third stage, and this may yet be five to ten years out, we can look to an operation like Sundrop Farms in Australia. Proximity to the local market only matters up to a point. If we consider the technology, market and environmental trends that impact the relative and absolute economics of conventional farming in California, and regional greenhouses and indoor farms, it seems reasonable to project a vision that we will see hybrid indoor-greenhouse farms local and regional to the major urban centres across North America. And, we should see these facilities drift outside of the peri-urban radius that is currently popular, with an increasing use of renewable energy. We can imagine industrial scale campuses with indoor farms and greenhouses producing a range of crops powered by a renewable energy microgrid. The vision, or the trajectory of this vision, is to keep working sequentially to keep improving the economics of the entire system, which will be largely driven by energy costs.
The vision for the industry can and will take many forms. Obviously, I’ve outlined a fairly fundamental and energy economics driven approach. Others may focus more on crop diversity or data science. Though these narratives need not be mutually exclusive.
In terms of a vision for MVP, the starting point is to get meaningful market share in Western Canada and sustainable respect of key strategic channel partners. There have been a few failures in vertical farming in our region so we have some work to do. Foodservice, e-commerce and meal-kit delivery are attractive because of accessibility and the willingness to innovate. That’s a partial outline of the starting point. From there, the vision is to incrementally expand, continuously investing in operational excellence, improved crop quality and lower direct operating costs—working as close as possible, in direct partnership, with our channel partners and end customers.
Q.What do you see as the main differences with regard to Indoor Vertical Farming in food production and cannabis production?
A. It is critical to sell the produce as green and healthy and fresh as possible.
We are to a certain extent working uphill right now as some of the early entrants to vertical farming produced poor quality greens with a non-existent shelf-life. This is defeating the purpose. Fresh and local food enthusiasts also prefer natural and organic sun and soil based plants. We must leapfrog any thresholds or preferences by producing a superb product while stressing the quantifiable health and environmental benefits, with regard to things like water use and sustainability. Moving toward a zero carbon footprint must be part of our mission as indoor farmers. Field agriculture carbon costs include machinery, fertilizer, farm vehicles, transcontinental transportation costs and much else. Once we’ve achieved a superior product quality and nutrient profile, we will need to do the hard work to identify and quantify the real relative costs.
The notion of functional foods is being discussed more and more. I suppose this is quite similar in concept to cannabis—the science behind each strain is part and parcel of the marketing strategy. A similar potential is on the table for indoor farmers. We can alter the environment and fertigation to enhance the nutrient profile. Spread with their TechnoFarm operation in Japan had been marketing their lettuces as having 5-10x the beta-carotene relative to conventional production. This is probably an indication of the direction we may be going—how indoor can differentiate itself with a nutritionally superior product offering. Though perhaps we will see a backlash against this flavor of environmental modification that GMO has endured. It’s hard to say right now.
Perishable and Non-Perishable
I don’t know much about cannabis production, but there is at least one key difference that I have learned from linkedin cannabis groups. And the difference applies, I would argue, not between food and cannabis, but between perishable and non-perishable. Cannabis can be dried and stored. If lettuce didn’t degrade over time there would hardly be a case to produce locally. The low-cost food crops coming out of California and Mexico could be stored. Local growers, indoor or otherwise, would have a near impossible time competing with distant growers apart from a very niche market that highly values local products.
But, as with greens the environment can be controlled to create a specific product with THC:CBD ratios that meet specific medicinal and recreational profiles. This can already be seen in products similar to what nordic oil sell, nordic Oil is one of Europe’s leading CBD brands and they work with CBD rich oil. Cannabis varieties are being branded related to their effects. Each brand must be consistent in quality, which requires strict environmental control that is simply not possible in the open field. The same applies to leafy greens and other crops with specific nutritional profiles that will be produced indoors in the future. Those who are entering into the CBD product business need to know their stuff about Private Labeling CBD Products so that they’re fit to enter the market.
Indoor growers, with the ability to 100% control all agronomic variables can in principle win the quality game all day. For indoor growers of any crop, cannabis or arugula or basil, a big part of the strategy should rest on the production of a scientifically superior product—take advantage of the technology as much as possible.
Q.What’s new/next for your company
A. We’ve spent the past two years evaluating third-party technologies and systems, including the long-term potential for value creation of indoor versus greenhouse, and team- building. We recently made the call to focus, at least in the immediate term, on a fully-automated indoor system producing leafy greens for our regional market. There is lots of potential—other crops, markets, brand building, business models—but nothing matters until we get the fundamentals right.
We are therefore focused on two things:
–Working with our dedicated science and technology partner to design, build and implement our first profitable production facility in Calgary, using as much off the shelf technology as possible
–Building deep and direct relationships with our potential customers. As exciting as the technology can be, we are most fired up about the relationships and connections that working in food in a local market can offer.
Q.What would you like to get out your participation in Indoor Ag-Con ?
A.As always, we are looking to learn, especially from folks who know more than us—which should be almost everyone. It’s an obvious thing to say, but we are particularly interested in connecting with smart folks driving cutting-edge R&D.
At the same time, it’s a heavy lift to move up the learning curve on every subject that falls under the heading of indoor farming. There is a complicated suite of technologies and the operations touch on things like manufacturing, food safety and distribution. We are also looking to learn about best practices, even for something as seemingly simple as packaging equipment.
For more information on MVP Farms, visit https://mvpfarms.ca/