“Local is the number one demand trend right now for produce, with half of consumers saying local is more important than organic,” said BrightFarms CEO Paul Lightfoot. “Many consumers will even switch grocery stores for a local offering,” making it a key driver of foot traffic that retailers cannot ignore, he added.
“Fresh produce also is increasingly in demand” as more consumers try to eat healthier and avoid processed foods, he said, adding this is placing more pressure on retailers to provide sufficient fresh food options year around, which can be challenging in regions with cooler climates that are not conducive to year-around growing.
To help grocery stores and vendors in urban areas or those with limited access to nearby farms meet consumers’ growing demand for local produce, BrightFarms builds and operates greenhouses near retailers or vendors in exchange for a signed long-term, fixed-price contract.
The contract gives retailers exclusive access to the food, which is grown close enough to stores that it can be on shelves the same day it is picked, Lightfoot said. This gives the retailer and BrightFarms a leg up on competition with long supply-chains, he added.
“You can taste the difference when food is only a day old” versus when it was picked a week earlier and maybe even ripened during transportation, he said. That taste will keep consumers coming back, he added.
Added benefits of hydroponic produce
Another upshot of the model for retailers is the produce is grown hydroponically so it is safer than conventionally farmed food, which is at risk of contamination from the soil and surrounding environment, Lightfoot said.
This includes protection from insect infestations, which means all of BrightFarms’ produce is pesticide free – another top-selling quality among current shoppers.
Because BrightFarms is “creating an environment that is perfect for plants in a way that can never be achieved in a field,” Lightfoot also noted it can be grown all year in a steady, sufficient supply.
Hydroponic, local farming also has a significantly lower environmental impact than conventional farming, Lightfoot said. He explained that the greenhouses use about 80% less water, 90% less land and 95% less shipping fuel than conventional produce farming.
A new business model for a new era
BrightFarms’ business model is new to food and agriculture, but was one of the key success factors for the solar energy industry, which Lightfoot said inspired him.
By securing long-term, fixed-price contracts to sell the produce grown in the greenhouses, BrightFarms is able to more easily secure funding to construct and operate the greenhouses at no cost to its retail partners, Lightfoot said. He also can keep prices for retailers low because he does not need to employ a sales staff.
That said, the arrangement still benefits local communities by creating more “green collar” jobs, he said.
Even though BrightFarms launched its current business model in 2011, it already has one greenhouse up and running and two more on the way. The greenhouse in Yardly, Penn., is fully operational and construction is underway for greenhouses in Virginia and near Chicago.
Lightfoot plans to continue expanding with retail partners in the Midwest and Northeast in the next three to four years. But, he says, the company will steer clear of the West Coast for now “largely because California already has terrific access to year-around produce, so we don’t have as much of an advantage.”
Although, he added, if the drought in the West continues he may rethink his approach since he uses much less water.
Reshaping retail
In addition to reshaping how grocers obtain fresh produce, Lightfoot also wants to help them change how they sell it.
He explains that he is working with retailers to create “local” sections in the produce department which will be separate from the organic and conventional sections. This too will be a draw to consumers who want local, help increase basket-sizes for retailers and drive additional demand for production, Lightfood said.
He added, overall the model is a win-win-win for consumers, retailers and BrightFarms.