ROCHELLE – MightyVine, a local grower of hydroponic tomatoes, has secured bank financing for a major greenhouse expansion as it strives to meet rising demand from restaurants and retailers.
The deal with Rabo AgriFinance, a U.S. subsidiary of the Netherlands’ Rabobank, is significant because many commercial banks are reluctant to finance the nascent greenhouse industry, driving startups to take high-interest loans or give up equity to venture capitalists, MightyVine executives said late last week.
“There’s a lot of very expensive money out there, but it makes it very hard for a young business to succeed if you’re borrowing money that's two, three times the typical rates of commercial banks,” said CEO Gary Lazarski. “We’ve been able to secure financing to double in size at much more traditional rates.”
MightyVine, founded in 2015, plans to double its greenhouse footprint in Rochelle from 15 acres to 30 acres by next year. The company may have to nearly double its workforce of 80 employees as well to accommodate increased production of its year-round tomato crop, said Danny Murphy, head of sales and son of MightyVine Chairman Jim Murphy, whose investment firm, Grow Forward, backs the company.
The $16 million project is the second major expansion for MightyVine, which started as a 7.5-acre greenhouse and doubled in size in its first year.
The farm credit bank that previously provided financing didn’t have an appetite for such a rapid second growth spurt, but Rabo AgriFinance was more familiar with the risks given its relationship with the Dutch, who are at the forefront of greenhouse technology and financing, Lazarski said.
MightyVine partners with Royal Pride Holland, a Dutch hydroponic tomato grower, for seeds and training, and uses Dutch builder VB Greenhouses to construct its greenhouses. Both companies have relationships with Rabobank, a leading bank for the agriculture industry.
“The trust built on those relationships and the depth of industry knowledge Rabobank is able to share with its U.S. affiliates were crucial elements in putting in place financing terms that give MightyVine the best opportunity to succeed,” Jim Murphy said in a news release.
MightyVine is eager to scale so that it can assure retailers it can deliver a consistent product and satisfy rising consumer hunger for local, high-quality produce protected from the safety risks of growing food in the field, Lazarski said.
The company cannot meet demand now, he said.
That demand could ramp up even more as a result of tariffs on Mexican tomatoes — stemming from President Donald Trump’s threats of taxing all Mexican imports as well as a tomato-specific tariff of 17.5% that went into effect last month when the U.S. ended a 22-year agreement with its southern neighbor.
Produce buyers have been asking what MightyVine can commit to should Mexican tomato imports, which command the majority of the U.S. tomato market, be disrupted, Lazarski said.
“That presents to us greater opportunity,” he said.
MightyVine is among a small but growing number of commercial greenhouses growing hydroponic produce in Illinois, where the weather and lack of sunlight can make greenhouse growing challenging. It launched to give Midwest consumers a year-round local, premium alternative to tomatoes trucked in from Mexico, Canada and California, which are often picked before they’re ripe because they have to travel long distances, Daniel Murphy said.
MightyVine’s tomatoes, which stay on the vine longer until they achieve the perfect red, have gained a loyal following among prominent Chicago chefs and are now served in 300 local restaurants, Murphy said. They are also sold in more than 100 Walmarts, 15 Costcos, nearly all 187 Jewel-Oscos, and 53 Whole Foods across the Midwest. The typical retail price is $2 per pound, much more than the 60-cent price tag for the cheapest tomatoes but a dollar less than organic.
As the company works to expand into more Walmart and Costco stores as well as enter other local grocery chains, it is considering growing other tomato varietals or products retailers might desire, such peppers and mini peppers and cucumbers and mini cucumbers, Murphy said.
Though the heavy spring rains have slowed construction, the company aims to plant in the new greenhouse by August and harvest tomatoes by November or December.
MightyVine declined to disclose sales figures, but Jim Murphy said he expects to sell 75 million tomatoes next year. The company is profitable, he said.
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