Virginia: A Growing Controlled Environment Agriculture Hub

Virginia is rapidly emerging as a prime destination for controlled environment agriculture (CEA) enterprises. The state has attracted notable businesses such as ISO Group, AeroFarms, Plenty, Gotham Greens, and Soli Organic, who have either initiated Virginia indoor farm operations or invested significantly, bolstering local employment and strengthening the economy. This influx is due to Virginia’s conducive business environment, skilled labor force, and superior transportation infrastructure. The agriculture sector in Virginia, a major contributor with an $82.3 billion economic impact and supporting 381,800 jobs, faces challenges due to a decrease in farmland from 13.5 million acres in 1960 to just 8.3 million acres today. Nonetheless, Virginia offers substantial tax savings for farmers through charitable contributions and conservation easements, which are vital for preserving Virginia’s agricultural heritage.

Key Insights

1. Dominant Agriculture Sector: As the cornerstone of Virginia’s economy, the agriculture industry, powered by livestock production and supported by Virginia vertical farms and indoor farming practices, plays a crucial role in economic output and job creation.
2. Urgent Land Conservation: The dramatic reduction of farmland emphasizes the necessity for conservation strategies in Virginia, where tax credits serve as essential tools for sustaining agricultural land.
3. Business Attraction: Virginia’s strategic benefits, including its location, tax advantages, and transportation network, make it an appealing choice for CEA businesses looking to take advantage of Virginia’s vertical farm and indoor farm opportunities.
4. CEA Growth: The investments by companies like ISO Group, AeroFarms, and Gotham Greens in Virginia vertical farms highlight the state’s burgeoning role in the CEA sector, enhancing its economic landscape and employment rates.
5. Governmental Support: The state’s programs and incentives, including those aimed at Virginia indoor farm and vertical farm operations, underscore Virginia’s commitment to advancing its agriculture and forestry industries.

Virginia’s Agriculture Industry and Land Conservation: Economic Impact and Challenges

Agriculture is Virginia’s largest private industry, with an annual economic impact of $82.3 billion, 381,800 jobs in the Commonwealth, and $43.8 billion in value-added impact. According to a 2021 economic impact study, livestock production accounted for 63% of farm cash receipts, with poultry, beef, and dairy constituting the most significant products. In addition, Virginia’s food, beverage, and fiber processors and manufacturers buy many agricultural commodity inputs from Virginia farmers. As a result, these industries have grown by 1,100 jobs over the last five years, making up 9.3% of the state’s gross domestic product.

Conservation Partners LLC reported that VDACS confirmed that in 2012, Virginia’s farmland had dwindled from its 13.5 million acres statistic in 1960 to just 8.3 million acres. The American Farmland Trust released a report in 2020, “Farm Under Threat: The State of the States,” which gave a threat ranking to each state based on that state’s land conversion rate versus policies in place to protect farmland. In 2019, USDA’s Economic Research Service Department noted that farm debt in the United States has continued to rise while the farm sector has declined. With recent years of high interest rates, poor crop yields, high input costs, and lower consumer demands, many farmers have reached a critical point in their financial health. Land conservation has become an essential financial tool, as charitable donations of land and conservation easements can entitle farmers to significant tax benefits such as federal and state income tax deductions and state land preservation tax credits. These tax credits can be sold to other Virginia taxpayers, allowing farmers to use the proceeds for farming operations or to help pay off debt.

A Strategic Location Serving Both The North East & South East

Virginia has emerged as a strategic location for companies due to several factors. First, the state boasts a highly educated and skilled workforce, supported by top-ranked universities such as Virginia Tech and the University of Virginia. This creates a talent pool that is attractive to businesses looking to locate in the area. Additionally, Virginia offers a business-friendly environment with low taxes and regulatory barriers. This enables businesses to operate efficiently and effectively while also keeping costs low.

Another critical factor in Virginia’s attractiveness to businesses is its access to transportation infrastructure. The state has a well-connected network of highways, railways, and airports, making it easy for companies to transport goods and access markets. This has been further enhanced by the state’s investment in the Port of Virginia, a primary gateway for international trade on the East Coast. Overall, Virginia’s vital transportation infrastructure helps businesses to be more competitive and efficient.

Lastly, Virginia’s geographic location and climate also contribute to its appeal. The state is situated on the East Coast, making it easily accessible to major population centers in the Northeast and Southeast regions. In addition, Virginia’s climate is conducive to agriculture and forestry, making it an ideal location for companies looking to source raw materials. This has contributed to the growth of industries such as food processing and advanced manufacturing in the state.

CEA Developments In Virginia

Virginia Vertical Farm

ISO Group has announced the establishment of its first US operations in Virginia with a $570,000 investment for an assembly and distribution facility in Chesterfield County. This project is expected to create 30 new jobs over the next five years. ISO Group’s decision to invest in Virginia is a testament to the state’s business-friendly environment and commitment to fostering innovation in various sectors.

Plenty and Driscolls announced their collaboration to establish a $300 million facility in Virginia in September 2022. The campus will concentrate on R&D techniques for vertical farming to enhance crop output, notably for tomatoes, strawberries, and leafy greens. This initiative, which might produce more than 20 million pounds, will boost the state’s economy and food security.

AeroFarms has also opened a new vertical farming facility in Virginia, covering an area of 140,000 square feet and employing 158 people. The facility will supply fresh produce to the mid-Atlantic region, creating new job opportunities and contributing to the state’s agriculture industry. After its bankruptcy filling, the company decided to keep its Danville operations while selling its New Jersey flagship R&D center.

Several companies are also repurposing data centers into vertical farms, such as Beanstalk, which invested over $2 million to repurpose a 71,000-square-foot data center facility, creating 29 new jobs. Another company, Babylon Micro-farms, participated in a project with MSC Cruises to provide hydroponic cabinets on cruises and supply fresh, locally produced food to restaurants on board. These initiatives demonstrate the potential of vertical farming to revolutionize how we produce and consume food while creating new job opportunities and contributing to the economy. The company has also partnered with Virginia Venture following its $8M funding round to scale and further expand the reach of its solution.

Virginia Indoor Farm & CEA

Virginia’s indoor farm & CEA development is prevalent as highlighted by some of the recent activity recorded in the state:

In October 2022, Soli Organic Inc., a soil-based indoor farming company, completed its Series D funding round, raising almost $125 million. CDPQ, a global investment group, led the round with participation from European investment firm Movendo Capital, B.V. The company’s existing investors, S2G Ventures, Cascade Asset Management Company, and XPV Water Partners, also contributed to the round. Goldman Sachs & Co. LLC served as Soli Organic’s exclusive placement agent for the funding round. Soli Organic provides 100% USDA-certified organic produce to its customers.

Gotham Greens, a leading urban agriculture and greenhouse company, recently finalized its acquisition of FresH2O Growers, a hydroponic greenhouse grower in Stevensburg, Virginia. The acquisition was made possible following the completion of Gotham Greens’ $310 million funding round. The 540,000-square-foot facility produces leafy green salad products sold in grocery stores across the Mid-Atlantic region. The acquisition is expected to strengthen Gotham Greens’ regional market position and expand its product offerings. In addition, the acquisition aligns with the company’s mission to provide fresh and sustainably grown produce to communities across the United States.

Virignia’s Indoor Farming technology supplier, AGEYE has acquired the HYVE brand from DASCOM Americas, which includes sales, installation, and support roles for HYVE systems. The partnership aims to combine the strengths of AGEYE’s AI technology with HYVE’s scalable, automated vertical farming systems, aiming to revolutionize farming operations. AGEYE’s turnkey solution seeks to simplify the journey to success for growers, reducing complexity, and accelerating the operational setup.

A Growth Supported By The State & Its Programs

To raise awareness about the importance of next-generation agriculture to the Commonwealth of Virginia, Governor Glenn Youngkin has designated March as Virginia Controlled Environment Agriculture Month. Controlled Environment Agriculture (CEA) is a farming method incorporating technological advancements in growing techniques, such as hydroponics, aeroponics, aquaponics, and fogponics. CEA enables produce to be cultivated in different settings, including indoor farming, vertical farming, greenhouses, and protected cropping environments. The celebration will involve visits by officials to various operations across the state to acknowledge the contributions of CEA to Virginia’s agricultural industry and establish the state as a leader in the future of farming.

The Virginia government provides grants to local governments for projects that meet specific criteria. The project must create new capital investment and jobs in Virginia to be eligible for a grant. The project must also involve producing “value-added agricultural or forestal products,” At least 30% of the agricultural or forestry products to which the facility adds value must be grown within Virginia. The grant amount is limited to $500,000 unless the project is deemed to have statewide or regional significance. These grants aim to support and promote the growth of Virginia’s agricultural and forestry industries and create new opportunities for investment and employment within the state.

The Governor’s Agriculture and Forestry Industries Development Fund (AFID), established ten years ago to provide desperately needed resources to agriculture, the largest private sector industry in Virginia, was discussed by Stephen Versen, project manager for agriculture and forestry development during the precedent CEA summit east in Danville as reported by Cardinal News. AFID employs roughly 334,000 people, has an annual economic effect of $70 billion, and receives $1.5 million in governmental funding. The state has funding available to assist CEA, including grants for up to $1 million, workforce development, and global marketing. According to the company’s head grower David Lopez Restrepo, VDACS has supported Babylon MicroFarms, helping them connect with the supermarket and service sectors to sell their product. The state’s assistance has also aided Greenswell Growers, a sizable indoor greens producer.