August 16, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

AppHarvest and produce company Mastronardi have announced a new endeavor in the form of a joint venture that will further strengthen their existing relationship and reinforce their standing as pioneers in the agtech space.

From its location in Central Appalachia, AppHarvest’s 60-acre CEA facility (one of the largest in the world) is within less than a day’s drive to 70 percent of the entire U.S. population, lowering diesel fuel costs by 80 percent. The company’s tech-driven indoor farms grow high-quality produce using methods that use 90 percent less water than traditional field production (and 100 percent recycled rainwater), giving its non-GMO, chemical-free fruits and vegetables a competitive advantage against low-cost foreign imports.

Together with Mastronardi, a nationally recognized leader in the gourmet greenhouse industry, the companies have signed a non-binding letter of intent to create FarmCo, a unique venture for the development of a portfolio of controlled environment agriculture (CEA) facilities to increase the supply of fruits and vegetables, including leafy greens, to Mastronardi’s existing fresh produce marketing and distribution business.

“We are extremely pleased to be entering into this letter of intent with AppHarvest,” said Paul Mastronardi, president and CEO, Mastronardi Produce Ltd. “We have seen the demand for locally-grown produce skyrocket, particularly over the past 18 months as more people are cooking from home, and this partnership will allow us to significantly increase our ability to get more fresh, flavorful locally-grown produce to tables across America.”

As per the agreement, the two partners will contribute equity and assets exceeding $100 million to FarmCo’s formation. The new company will use the contributed equity from both companies to raise additional cash to fund the building of more than 750 acres of CEA facilities in the U.S.

“Mastronardi is the unquestionable leader in marketing and distributing CEA-grown produce to top grocers and restaurants in North America, and partnering more closely with them to fulfill the growing demand for quality local, fresh produce across the United States positions us together to make an even greater impact to establish a climate-resilient, sustainable food system to ensure food security,” adds Jonathan Webb, founder and CEO, AppHarvest.

A Public Scene

The relationship between AppHarvest and Mastronardi dates back to AppHarvest’s early days. In May 2019 GAI News shared that Equilibrium Capital was investing $82 million in AppHarvest for the construction of its high-tech CEA project in Morehead, Kentucky. At that point, AppHarvest and Mastronardi were already partners, with AppHarvest planning to distribute its produce to the top 25 grocers in the country through Mastronardi. 

“The 60-acre, state-of the-art facility will be one of the most sustainable, efficient and technologically advanced greenhouses of its kind,” said Paul Mastronardi, president and CEO Mastronardi Produce, at the time. “This is a significant milestone for Kentucky’s farming and food sectors.”

Since then, AppHarvest has been on the fast track, announcing the completion of its merger with SPAC Novus Capital to go public on the Nasdaq.

The business combination valued AppHarvest at $1 billion, and provided $475 million to the company, including $375 million fully committed common stock PIPE at $10 per share anchored by existing and new investors Fidelity Management & Research Company, Inclusive Capital, and Novus Capital Corporation, and others.

“We are excited to transition AppHarvest to a public company and raise nearly a half a billion dollars in the process,” said Jonathan Webb, founder & CEO, AppHarvest in September 2020, who went on to head up the newly-merged company. “This will allow us to pursue our mission of transforming agriculture. A mission that’s become even more important since the global pandemic exposed how a rapidly increasing reliance on imports jeopardizes food security.”

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan-stone@globalaginvesting.com.