2nd December 2022
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AppHarvest Opens Its Berea, Ky., Facility & Announced a USD 30M Loan From Mastronardi Produce

AppHarvest Berea Farm

AppHarvest, Inc. (NASDAQ: APPH, APPHW), opened its Berea, Ky., 15-acre high-tech indoor salad greens farm featuring a touchless growing system with autonomous harvesting and announced a USD 30M loan from marketing partner Mastronardi Produce secured by the AppHarvest Berea farm. Consistent with its strategy to secure attractive long-term financing for its assets, AppHarvest also intends to pursue sale-leaseback financing for its Berea farm.

The secured financing is being delivered in two tranches of USD 15 million each, the first of which occurred on Oct. 25 and the second is anticipated four weeks later. The loan will incur an interest rate of 7.5% with interest paid in kind until the loan matures.

At 15 acres – or nearly 654,000 square feet – the AppHarvest Berea farm is expected to be the world’s largest high-tech indoor farm for autonomously harvested salad greens with a cutting-edge touchless growing system. The hands-off system is automated from pre-seeding to packaging including onsite washing to help improve both food safety and efficiency for the “Queen of Greens®” washed-and-ready-to-eat salad packs. The farm is designed to grow about 35 million lettuce plants at a time, which go from seed to maturity in about three to four weeks depending on the variety.

The AppHarvest Berea controlled environment agriculture (CEA) facility was proclaimed officially open today as Kentucky Governor Andy Beshear, U.S. Representative Andy Barr, and AppHarvest Founder & CEO Jonathan Webb used handheld harvesters to cut down a strip of crispy and juicy greens grown in the farm’s touchless system. The farm is opening on a phased approach, beginning with five acres and then bringing on additional productive acreage over time. AppHarvest began the first commercial shipments of salad greens earlier this month.

“Our top customers increasingly request CEA-grown produce for its reliable quantity and consistent quality—especially in terms of flavor, texture, color, and shelf-life—and its more sustainable growing methods. This deeper relationship with AppHarvest positions us to grow together efficiently to meet the increasing demand by expanding our local footprint and delivering on our long-standing ‘fresh from the farm’ commitment to customers,” said Mastronardi Produce CEO Paul Mastronardi.

“AppHarvest is deepening its relationship with Mastronardi Produce under the ‘Queen of Greens®’ packaged salad brand. Securing non-dilutive sources of capital to fund our growth has been the team’s priority, and we expect this financing through Mastronardi to improve cash flow as we continue to scale operations,” said AppHarvest Founder & CEO Jonathan Webb. “Working closely with Mastronardi, the AppHarvest team has set new precedents in the CEA sector by quadrupling our number of farms in such a short time. With the Berea opening, we now have two farms shipping produce to national customers, and our 30-acre Somerset berry facility also is expected to ship in the next few weeks. We expect Morehead to start its third harvest and to start planting our 60-acre Richmond tomato farm in November.”

The AppHarvest Berea growing environment leverages sunshine and rainwater and is automated for lighting, humidity and temperature. The farm uses a closed-loop irrigation system, which enables expected water savings of up to 90 percent compared to open-field farming and allows for precision dosing of nutrients, resulting in far less use of fertilizer compared to open-field farming while avoiding pollution from agricultural runoff. The closed-loop system also aids in integrated pest management —using good bugs to take care of bad bugs and early detection and prevention—to avoid the use of harsh chemical pesticides. The adaptive spacing design of the troughs in the touchless growing system further minimizes any potential pest exposure.

The packaged salad market in North America was estimated to be about $5.9 billion in 2021 and growing. As traditional lettuce-producing areas in California and Arizona experience ongoing drought and other severe weather conditions wreak havoc on crop yields, AppHarvest believes its CEA approach producing more predictable yields with less water and other resources will be critical in providing fresh fruits and vegetables that are affordable.

According to USDA reports, the value of U.S. fruit and vegetable imports rose to a record level in 2021 and has been projected to keep increasing in 2022. Changing weather patterns—ranging from mega-drought in the Southwest of the U.S. to more frequent flooding to catastrophic wind events—are making it harder than ever for open-field farmers to predict the duration of their growing seasons and to have conditions that result in a quality harvest. Major food retailers have demonstrated increasing interest in high-tech indoor farms for their ability to de-risk fruit and vegetable production with a more climate-resilient, more sustainable year-round growing solution that uses far fewer resources. Europe, a pioneer in the industry, is estimated to have nearly 520,000 acres of CEA production compared to an estimated 6,000 acres in the United States.

Image credit: AppHarvest

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