JANUARY/ FEBRUARY 2018
WESTERN GROWER SHIPPER
2018 CHAIRMAN OF THE BOARD CRAIG READE First Job Yields a Career
WESTERN GROWERS 92 ND ANNUAL MEETINGWRAP UP INDOOR VERTICAL FARMS: The Wave of the Future? ORGANIC GROWER SUMMIT First-time Event Draws Enthusiastic Crowd
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WESTERN GROWER SHIPPER JANUARY/FEBRUARY 2018 WGA.COM
8 2018 CHAIRMAN OF THE BOARD
WESTERN GROWER & SHIPPER Published Since 1929
Craig Reade: First Job Yields a Career 12 WESTERN GROWERS ANNUAL MEETING Reade Becomes Chairman; Cannabis Session Attracts Big Crowd 16 MORE FROM THE ANNUAL MEETING AgTech Startups Offered $2.25 Million During Competition 17 INDOOR VERTICAL FARMS: The Wave of the Future? 28 ORGANIC GROWER SUMMIT First-time Event Draws Enthusiastic Crowd 32 Using Technology to Limit Shrink 34 #MeToo Movement Demonstrates Importance for Sexual Harassment Training 36 The Evolution of Produce LTL From Inconvenient to Enabling DEPARTMENTS
Volume LXXXIX Number 1
To enhance the competitiveness and profitability of Western Growers members Thomas A. Nassif President Western Growers tnassif@wga.com Editor Tim Linden Champ Publishing 925.258.0892 tlinden@wga.com Contributor Cory Lunde 949.885.2264 slunde@wga.com Production Diane Mendez 949.885.2372 dmendez@wga.com Circulation Marketing 949.885.2248 marketing@wga.com Advertising Sales Dana Davis Champ Publishing 302.750.4662 danadavis@epix.net Stephanie Thara Metzinger 949.885.2256 sthara@wga.com
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President’s Notes
37
Financial Services
10
California Member Profile
38
Insurance Corner
19
Legislator Profile
40
Contact Us
24
Federal Government Affairs
41
Western Growers Connections
25
Agriculture & the Law
42
What’s Trending?
30
Science & Technology
Western Grower & Shipper ISSN 0043-3799, Copyright © 2018 by the Western Grower & Shipper is published bi-monthly by Western Grower & Shipper Publishing Company, a division of Western Growers Service Corp., 15525 Sand Canyon Avenue, Irvine California 92618. Business and Editorial Offices: 15525 Sand Canyon Avenue, Irvine California 92618.Accounting and Circulation Offices:Western Grower & Shipper, 15525 Sand Canyon Avenue, Irvine California 92618. Call (949) 863-1000 to subscribe. Subscription is $18 per year. Foreign subscription is $36 per year. Single copies of recent issues, $1.50. Single copies of issues more than three months old, $2. Single copies ofYearbook issue $4. Periodicals postage is paid in Irvine, California and at additional mailing offices. POSTMASTER: Send address changes to Western Grower & Shipper , PO Box 2130, Newport Beach, California 92658.
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TOM NASSIF | PRESIDENT AND CEO, WESTERN GROWERS PRESIDENT’S NOTES
This is Jerry’s Last Year, What’s Next? With several initiatives and numerous statewide and Congressional offices up for grabs, 2018 will be a busy political year. I recently wrote about Arizona Governor Doug Ducey, whose strong economic policies and sensible approach to regulation have set him on course for a successful reelection campaign.
California, as always, is a different story. Much has happened in California since 1975, and 37 percent of that time, Jerry Brown has been governor. Due to term limits, this year is definitely his last as the state’s chief executive, so it seems a good time to take a brief look back at his impact on our industry. During his first stint as governor, Brown famously espoused his canoe theory of politics: paddle a little on the left, then a little on the right, and go straight down the middle. However, as evidenced by his alliance with Cesar Chavez, support for the United Farm Workers (UFW) and signature on the landmark
quality regulators have imposed costly requirements on farmers while simultaneously seeking to reduce water availability from key rivers. I provide this abbreviated analysis not as a critique of the Governor, but as a means to set up the significance of the 2018 gubernatorial election. While it may seem that Brown is constantly paddling in the opposite direction of California farmers, he has proven reasonable in certain situations, and is usually open to debating the pros and cons. For all the well-deserved criticism, Brown does have a fundamental appreciation for agriculture and has often served as the only
Agricultural Labor Relations Act (ALRB), Brown banked his political canoe hard left his first go around, at least when it came to agriculture. After a period of political desert wandering, Brown reemerged—first as mayor of Oakland, then as state attorney general, and finally as Governor Part Deux—slightly less ideological and a bit more pragmatic. Indeed, during his first term in this second go-round, Brown steered his canoe on a somewhat straighter course. Shortly after coming into office, Governor Brown sent shockwaves through Sacramento when he vetoed card check legislation, the then-crown jewel of the UFW’s legislative agenda.
check—a backstop, to use a baseball reference—to the radical excesses of the majority in the California Legislature. The obvious question is whether the next governor might have a similar approach. This is the reason why Western Growers directors and staff have been so diligent in reaching out to the major candidates. To date, we have had substantial interactions with former Los Angeles Mayor Antonio Villaraigosa, State Treasurer John Chiang and Lieutenant Governor Gavin Newsom. Villaraigosa and Chiang have already addressed our Board of Directors in person, and Newsom will join us for our next
Based on our private conversations and public statements made by the current frontrunners, each of the candidates projects a desire to understand and help support agriculture, to different degrees.
Brown rejected other UFW-sponsored bills, including a punitive heat illness measure that would have paved the way for a rash of class action lawsuits. Unfortunately, in the current and final four-year term, and without another statewide election confronting him, Brown dealt California agriculture a devastating one-two punch by approving legislation that mandates massive hikes in minimum wage and overtime rates. On environmental policy, the record is similarly mixed. For example, at Brown’s insistence, renewal of the “cap and trade” system at the heart of the state’s greenhouse gas reduction strategy included provisions to aid the agriculture industry. Less helpfully, the Governor’s water
Board Meeting in March. Based on our private conversations and public statements made by the current frontrunners, each of the candidates projects a desire to understand and help support agriculture, to different degrees. Villaraigosa clearly understands the direct connection between California agriculture and the economic livelihood of his most significant voter base: Latinos. He supports efforts to increase our water supply and has expressed his desire to “look out for the interests of farmers.” Additionally, he has shown an independence from the unions that are so powerful in Democratic campaigns. As mayor, Villaraigosa clashed
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with government worker unions as the Great Recession forced cuts to public payrolls. He also publicly scolded the state’s teachers union for its role in protecting bad teachers. Newsom is quite vocal about the iconic value of California agriculture. As a business owner himself, he has acknowledged the regulatory challenges facing California farmers, stating that “we could do a lot better to make a point that agriculture matters and we care.” As lieutenant governor—a position with few official duties and little influence— Newsom hasn’t had much of a chance to influence the state’s policies. As he campaigns for governor, however, Newsom has embraced key positions of the progressive (or liberal) wing of his party, such as supporting a single- payer health care system. Chiang also supports the single-payer system, although he talks about it with caution, noting the need for a realistic scheme to pay for it; this financial acuity permeates his campaign as Chiang stresses his record as both state controller and treasurer. In his meeting with the WG Board of Directors, Chiang focused on fiscal management and mostly bypassed discussion about labor, water, regulatory demands and other major issues, leaving a great deal of uncertainty about the impact he would have on our industry if elected governor. Then there is the matter of the Republican candidates for governor. Many in our industry affiliate with the Republican Party, myself included, so it pains me to say that there is almost no chance a Republican can be elected here. California is a heavily Democratic state; indeed, by the November election, it is possible that registered Republican voters will have fallen from second place to third, as independent voters (deemed “No Party
Preference,” or NPP) increase their ranks. Nearly 45 percent of registered voters are in the Democratic column. Republican registration has fallen to 26 percent (from 34 percent just 10 years ago); independent/NPP registration now counts for 24.5 percent of the state’s voters and is increasing. Nearly twice as many California voters chose Hillary Clinton over Donald Trump in 2016. California has not voted for the Republican nominee in a presidential contest since 1988. Not a single Republican holds statewide office, the state’s 53-member delegation to the House of Representatives includes just 14 Republicans, and the state Legislature is controlled by Democratic supermajorities. As advocates for the best interests of our members and our industry, these are the realities we must confront as we prepare for a new governor. We can hope for, and will work toward, a rebalancing of California’s politics, but those efforts are probably best made within the realm of the Democratic majority. It is a near certainty that for the foreseeable future, California will be governed by that party. All of this is to say that we have engaged, and will continue to engage, these candidates in an effort to determine their vision for California, to educate them on the role the state must play in protecting and promoting our industry, and to lay the foundation for future access and influence regardless of who wins in November. California is already a challenging place for agriculture, and times seem to be getting tougher, but we are redoubling our resolve to fight the fight, and these early and sustained exchanges with Villaraigosa, Chiang, Newsom and others will give us our best chance of developing a meaningful and, hopefully, productive relationship with the next governor.
WESTERN GROWERS OFFICERS – 2018
CRAIG A. READE, Chairman RONALD RATTO, Senior Vice Chair RYAN TALLEY, Vice Chair STEPHEN F. DANNA, Treasurer CAROL CHANDLER, Executive Secretary THOMAS A. NASSIF, President DIRECTORS – 2018 GEORGE J. ADAM Innovative Produce, Santa Maria, California JOSEPH E. AIELLO Uesugi Farms, Inc., Gilroy, California KEVIN S. ANDREW Vanguard International, Bakersfield, California MIKE ANTLE Tanimura and Antle, Salinas, California ROBERT K. BARKLEY Barkley Ag Enterprises LLP,Yuma, Arizona STEPHEN J. BARNARD Mission Produce, Inc., Oxnard, California BRIAN BERTELSEN Cove Ranch Management, Reedley, California GEORGE BOSKOVICH III Boskovich Farms, Oxnard, California DON CAMERON Terranova Ranch, Helm, California EDWIN A. CAMP D. M. Camp & Sons, Bakersfield, California CAROL CHANDLER Chandler Farms LP, Selma, California LAWRENCEW. COX Lawrence Cox Ranches, Brawley, California STEPHEN F. DANNA Danna Farms, Inc.,Yuba City, California JOHN C. D’ARRIGO D’Arrigo Bros. Co. of California, Salinas, California THOMAS DEARDORFF II Deardorff Family Farms, Oxnard, California SAMUEL D. DUDA Duda Farm Fresh Foods, Inc., Salinas, California CATHERINE A. FANUCCHI Tri-Fanucchi Farms Inc., Bakersfield, California DAVID L. GILL Rio Farms, King City, California A. G. KAWAMURA Orange County Produce, LLC, Irvine, California ALBERT KECK Hadley Date Gardens,Thermal, California LORRI KOSTER Mann Packing Company, Inc., Salinas, California FRED P. LOBUE, JR. LoBue Bros., Inc., Lindsay, California FRANK MACONACHY Ramsay Highlander, Inc., Gonzales, California JOHN S. MANFRE Frank Capurro and Son, Moss Landing, California STEPHEN MARTORI III Martori Farms, Scottsdale, Arizona HAROLD MCCLARTY HMC Farms, Kingsburg, California JOHN MCPIKE California Giant, Inc., Santa Maria, California TOMMULHOLLAND Mulholland Citrus, Orange Cove, California KEVIN MURPHY Driscoll’s Inc.,Watsonville, California MARK NICKERSON PrimeTime International, Coachella, California THOMAS M. NUNES The Nunes Company, Inc., Salinas, California KEVIN E. PASCOE Grimmway Enterprises Inc., Bakersfield, California GARY J. PASQUINELLI Pasquinelli Produce Company,Yuma, Arizona STEPHEN F. PATRICIO Westside Produce, Firebaugh, California RONALD A. RATTO Ratto Bros. Inc., Modesto, California CRAIG A. READE Bonipak Produce, Inc., Santa Maria, California JOSEPH A. RODRIGUEZ The Growers Company, Inc., Somerton, Arizona WILL ROUSSEAU Rousseau Farming Company,Tolleson, Arizona VICTOR SMITH JV Smith Companies,Yuma, Arizona RYANTALLEY Talley Farms, Arroyo Grande, California BRUCE C.TAYLOR Taylor Farms California, Salinas, California JACKVESSEY Vessey and Company Inc., Holtville, California STUARTWOOLF Woolf Farming & Processing, Fresno, California ROBYRACEBURU Wonderful Orchards, Shafter, California
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2018 CHAIRMAN OF THE BOARD Craig Reade: First Job Yields a Career
By Tim Linden T hough Craig Reade’s dad was in the oil industry, he grew up around agriculture in the Central Coast and always knew he was destined to be in the farming business. “From the time I was 10 years old, I was driving a tractor on a neighbor’s farm and I knew that was what I wanted to do,” he said. Reade worked on farms in high school and college, majored in Ag Business Management at Cal Poly San Luis Obispo, and helped start a soil laboratory at nearby Betteravia Farms while still in college. Now, more than 35 years later, he is still at Betteravia Farms. Today, he is a managing partner along with the other third generation partners: Mitch Ardantz, Rob Ferini, Alain Pincot and Tommy Minetti. “We run operations while senior partners Henry Ardantz, Milo Ferini and Patrick Ferini bring the institutional experience and knowledge to the business while staying involved on a daily basis.” Reade’s entry into the farming business wasn’t totally by happenchance. His father’s family grows grapes in the southern San Joaquin Valley. When the elder Reade moved to San Luis Obispo to attend Cal Poly, he “met my mom who was a San Luis Obispo-born-and-raised gal and never returned to the family ranch.” But his dad was still passionate about farming and instilled that trait into a young Craig. “As I look back at my career, I owe special thanks to a handful of people in the ag industry that took an interest in me, supported me, which
afforded me an opportunity to follow a passion and become further involved with production agriculture. Families such as the Acquistapaces, Nishinos, Taniguchis, Ferinis and Ardantzes played keys roles in my success over the past 40 years and deserve a very special thanks.” When Craig looks at the company’s current soil lab and protocol and its handful of technicians and myriad of tests, he chuckles a bit at the early effort he was involved in starting in the 1980s. “We were doing very basic stuff—soil salinity, nitrate levels and pH levels. Much different than what we are doing today. We have a full lab complete with four full- time employees.” After several years of running that lab,
Craig began to work side by side with the farm’s general manager. He learned about ground preparation, planting and scheduling, and completely loves that part of the work. In those early years, he thought he would take the knowledge he was learning and eventually strike out on his own, but “I was treated so well here, I never left.” While his involvement in management has brought him indoors for a significant portion of his work day, what he enjoys best is checking the progress of the many crops that the firm has been producing since the 1930s. Today, the organization is a year- round producer of an array of crops with cauliflower, broccoli, head lettuce, celery
Craig and Christine and family
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and romaine serving as the core items. Those mainstays have been at the center of the company’s product list since that first crop was planted in the Santa Maria Valley 85 years ago. Today, with Betteravia Farms serving as the production entity and Bonipak Produce handling sales, cooling and shipping, the firm’s farming operations have expanded beyond Santa Maria to include a winter operation in Yuma, AZ. And Reade said the list of crops seemingly grows every year. The newest additions have been Brussel sprouts and artichokes along with a return to strawberry production. Cilantro, cabbage and leaf items are on the list and Betteravia Farms has also established an organic program over the last decade with the firm’s core crops being the foundation of that effort. Reade is well versed on the facts and figures of the firm he helps manage, but he is more interested in talking about the next generation in the family-owned business and how the technology of the future will solve today’s problems. “I really feel the next generation will play key roles in the way of advanced technologies that will get the right fix in place. Just in the past few years, I have personally witnessed great strides made in the way of automation. When looking for ways to improve through new technologies, it becomes very apparent that this new generation is the perfect fit. They get it and can take it even further with their innate understanding of hardware and software applications and the competitive challenge of advancement.” Reade said when he started a spiral notebook was used to keep track of what was going on in the field. Now smart phones and iPads have not only replaced the notebooks, but they are used to run the ranches and do analyses. He mentions that labor and water are major problems today but technology is being used to mitigate those issues. More efficient ways to irrigate, as well to plant and harvest the crops, are being developed at breakneck speed. For example, he mentioned an automatic lettuce thinner that Betteravia is now using. Four people can now do the work that previously needed a crew of 36. Reade is quick to point out that the company has a labor shortage so this new technology is not displacing workers. The workers doing this work can now move into more skilled positions and receive higher wages. “That’s a winner all the way around,” he says.
The Betteravia executive is also quick to point out that he is not minimizing the efforts of generations of leaders and employees that have made the firm what it is today. “When I mention the next generation, I am in no way discounting or ignoring the contributions previous generations have made to our company’s ongoing success. Since the early ‘30s, we have prided ourselves with the culture we have created which is all about and around our people. We fully understand that hiring the right person for the right job and then getting behind them with company resources and moral support is most important.” Reade is equally excited about his year at the helm of Western Growers. He believes the next generation is not only the key for success at Betteravia and Bonipak but also at Western Growers and throughout the industry. He points to WG’s Future Volunteer Leaders effort and the Center for Innovation and Technology as programs that will propel the industry into a better future. He believes more work needs to be done to attract young people to the industry. He said advanced technology will play a big role, but there will still need to be people to walk the fields and tend the crop and make decisions about which crop should be harvested when. Reade noted that many companies, including Betteravia, do have a potential gold mine in their fields. He said many laborers have the ambition, the knowledge and the work ethic to be long-term key employees.
“Don’t forget your pool of existing employees. You have a lot of real talent from within that you can develop.” On a personal front, Reade is doing what he can to add to the agricultural labor force. He and his wife, Christine, have four young adults in the fold, each of whom appears to be headed for a career in agriculture or a related field. “Anthony is the oldest and the first to graduate from Cal Poly and is now working indirectly for the family business through a collaborative strawberry growing project. My second child, Lindsay, is nearing completion of her master’s program at Boise State University in Health Sciences. Andrew will be graduating this spring from Cal Poly in crop science, while my youngest, Lauren, will be a junior at Cal Poly continuing her study’s in ag communications.” As they move toward empty nesting, Craig and Christine Reade have kept up an active life style. He credits WG Past Chairman Larry Cox and his wife, Tina, with introducing the pair to fly fishing. Craig also enjoys mountain biking. And he is very much looking forward to his year as Western Growers Chairman of the Board. “I feel honored and privileged to have been involved with the Western Growers Association for the past 15 years and to now serve as its chairman. It’s a big responsibility that I take very serious and look forward to working very closely with WG’s leadership, board of directors and its wonderful staff.”
Lauren, Lindsay, Anthony, and Andrew
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CALIFORNIA MEMBER PROFILE
Jeff Huckaby CEO/President Grimmway Farms Bakersfield, California
Member Since 1986
It’s All About the Carrots
By Tim Linden G rimmway Farms began as a sweet corn growing operation in Orange County in the 1960s, morphed into the largest carrot grower in the world in the 1990s in Kern County, and is now also the largest organic grower of vegetables in the United States. All of this points to a diversified company with a wide portfolio of crops and services. That is true but longtime employee and Chief Executive Officer Jeff Huckaby said “it is still all about the carrots.” He added: “Carrots are massive for us. They are still a big presence. We do not mind being known as a carrot company.” And he explained that it’s not just a hard-to-shake reputation, it’s a fact. The success of the two founders, brothers Rod and Bob Grimm—both of whom died at a relatively young age—is well known and well chronicled. They started in Orange County in the 1960s with sweet corn acreage, added a farm stand early on and then fortuitously added carrots as a rotation crop for their sweet corn. By the 1980s, they had moved to Bakersfield and were well on their way to being carrot entrepreneurs. They perfected the production of baby carrots and helped launch a revolution in that category. Throughout the ‘90s, the company grew into the carrot powerhouse that it is today. Of the 70,000 acres of carrots under cultivation in the United States, Huckaby says production from about 40,000 of them are marketed by Grimmway Farms. It was in the 1990s that the company started to grow organic carrots, which the current CEO Huckaby admits was not wildly successful. “We did okay,” he says. The shifting from corn to carrots was obviously a pivotal moment in the firm’s evolution. Another such moment occurred in 2001 when Grimmway Farms purchased Cal-Organic Vegetable in nearby Lamont. “That was a big shift for us,” Huckaby said. He explained that ground used to grow organic carrots one
year, must be planted with rotational crops in years two and three, before returning to carrots in year four. With the purchase of Cal-Organics, Huckaby said Bob Grimm made the commitment to devote the company’s best land to the organic sector. They couldn’t use leased land as the crop rotation made it impossible to preserve the integrity of the organic certification without controlling every crop on that ground, every year. Huckaby, who was in charge of Grimmway’s organic carrot production, became general manager of Cal-Organic and the leader of the firm’s march into the organic world. Initially, the
Cal-Organic’s purchase gave Grimmway 30 vegetable crops to rotate with its organic carrot acreage. Huckaby said after a couple of years and crop rotations it became clear that the soil was being improved and so was the output. He said the organic carrots being produced were of higher quality than before and yields were much better.
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Today the company has a stable of 65 organic vegetables that are utilized in the crop rotation with its carrot production. But Huckaby said it is carrots that continue to be the focal point. Growth is determined by how much carrots are needed. “We have the ability to go out and increase our mixed vegetable production without increasing carrot production, but we don’t do that.” As goes carrots, so goes Grimmway. That path has produced quite a winner over the years. Huckaby said the firm has 42,000 of company-owned acres under organic production. It has come close to perfecting its crop rotation which includes onions, potatoes, broccoli and a host of other items, including cover crops that are tilled back into the field on a regular basis. This rotation, he said, improves the soil and results in the production of top notch organic crops on a continual basis. Huckaby believes that the decision made by Bob Grimm in 2001 to use only the best land has been the key to their success. He notes that other growers often find a piece of land that has been out of production for three years or more to launch their organic involvement as that reduces the time needed for certification. “But there’s a reason that land wasn’t being used,” he said. “And it’s usually because of bad soil.” Grimmway took its best land and produced its best crops. While 20 years of organic farming experience has helped Grimmway achieve close to yield parity between its conventional
and organic crops, Huckaby said it is still significantly more expensive to grow organic products, and the premium price they command is justified and needed. He said weeding costs are 10 times more in organic carrot production because there are no approved herbicides that can do the job chemicals can do on conventional land. And from a fertility standpoint, he said the work done with conventional carrots is cheaper and more effective. “Those two inputs alone are enough to justify the premium price.” Huckaby said that currently organic demand is outpacing supply so the premium is still in play. He indicated that without that premium it would be difficult to continue growing organic crops. For his part, Huckaby grew up on a farm, joined Bolthouse Farms after college as a farm manager and then several years later came to Grimmway to head up their organic farming division. He then took over Cal-Organic and became executive vice president of the firm after Bob Grimm passed in 2006. In 2016, Huckaby was elevated to the role of president/CEO. Grimmway Farms is still a family-owned operation with three children of the original founders currently working within the organization and being groomed for future leadership roles. Brandon Grimm has been active in Western Growers and went through the organization’s Future Volunteer Leaders Program.
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WESTERN GROWERS ANNUAL MEETING Reade Becomes Chairman; Cannabis Session Attracts Big Crowd
By Stephanie Thara Metzinger M ore than 550 attendees enjoyed networking socials, captivating educational breakout sessions and thought-provoking keynote speeches during Western Growers 92nd Annual Meeting in Las Vegas on October 29 – November 1, 2017. During the meeting, Craig Reade, CEO of Bonipak Produce, Santa Maria, CA, was officially inaugurated as the 2018 WG Chairman of the Board of Directors while David Gill of Rio Farms and Gill’s Onions was recognized as the 2017 Award of Honor recipient for his visionary leadership in the agricultural community. Guests pondered over the political musings of P.J. O’Rourke during the PAC Lunch, gained insights into millennials from Kristen Soltis Anderson at the Chairman’s Luncheon and laughed with comedian Jim Gaffigan during the Award of Honor Dinner. This year brought a collection of memorable breakout sessions: • Healthcare: A panel of state and federal healthcare experts discussed a variety of issues ranging from the state of play for the Affordable Care Act to the prospects of single payer healthcare.
• Immigration: Political insiders from the U.S. Chamber of Commerce, Cato Institute and AmericanHort touched on the prospects of immigration reform, the pros and cons of Chairman Goodlatte’s “The AG Act” bill and the strategy for moving an agricultural solution forward. • AgTech: Six startup companies with technology solutions for the fresh produce industry competed for real-time investments from S2G Ventures, a food and agriculture venture fund. Two companies—AgVoice and Hazel Technologies—walked away with a $2.25 million total investment offer. (See separate story.) • Building, Preserving, and Protecting Capital: The panel of financial and insurance experts helped guests unravel the mystery of the economic outlook, equity markets, and private equity opportunities for ag. • Top Chef: The always popular Top Chef workshop featured two phenomenal chefs who demonstrated using everyday fresh produce in gourmet meals. One of the most popular breakout sessions was surrounding the topic that is garnering many questions and concerns lately: cannabis. With the adult use of cannabis now legal in California as of January 1, 2018, the workshop examined the emerging state regulatory and marketplace structures for cannabis. Additionally, this standing-room only session delved into the risks and challenges legal cannabis presents both for entrepreneurs looking to seize the opportunity of the burgeoning new industry and for producers of fresh produce concerned about competing for limited resources such as labor and water. Employer liability was also discussed and the challenges cannabis production presents in that arena. Western Growers Vice President and General Counsel Jason Resnick led the lively and passionate discussion between Lori Ajax, chief of the California Bureau of Cannabis Control; Henry Wykowski, general counsel at the California Cannabis Industry Association, Aaron Johnson, partner at L+G, LLP Attorneys At Law; and Jeff Brothers, co-founder of FLRish, Inc. From beginning to end, the workshop engaged each of the attendees through compelling stories of cannabis use to the risks employers may face as the drug becomes legal in California. Johnson quickly captured the audience’s attention by sharing his personal story of how a severe neck injury triggered an addiction to painkillers. He was not able to quit his opioid habit until he learned that he could control the pain with a small dose of marijuana daily. He indicated that the injury caused—and still continues to cause—so
Sammy Duda (right) hands over the Chairman’s gavel to Craig Reade
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much pain that without the use of cannabis, many of his daily activities would be difficult to accomplish. “Small doses of cannabis can be beneficial to you. It was and still is for me,” said Johnson. He, along with Wykowski, went on to discuss how there have been proven studies that demonstrate how cannabis treatment has provided relief to many suffering from diseases such as Alzheimer’s and type 2 diabetes. As the afternoon continued, panelists highlighted the challenges of trying to regulate a drug that is legal in several states, but not yet legal on the federal level. A significant challenge of getting involved in this new industry can be navigating through the nuances of regulations that are constantly changing. For example, Internal Revenue Code Section 280E prevents marijuana businesses from being able to qualify for deductions since cannabis is still considered a federally-banned controlled substance. However, there have been a couple of Tax Court cases in which the court allowed deductions for certain non- marijuana products sold at dispensaries. “If you want to get into this [cannabis] industry, partner with someone who’s already involved and understands all the nuances,” advised Brothers, who started a Salinas-based cannabis cultivation company long before the drug was even legal in California. “Don’t rush in!” Ajax then shared how the California Bureau of Cannabis Control understands the frustrations about complying with two different set of laws and was working to develop a regulatory scheme by the January 1 implementation date. Growers listened intently hoping to glean as much information as possible about this new crop. For some, the session was to learn how to take advantage of the opportunities that growing marijuana could present, but for others, it was learning how to mitigate the risks. WG President & CEO Tom Nassif asked the question that was top of mind for many of Western Growers members, “What will the effect of cannabis production be on agriculture in California in terms of resources such as water and labor?” Brothers stated how the the cannabis industry impacts agriculture can’t yet be determined, but stressed that “the cannabis workforce isn’t seasonal like traditional agriculture. Our labor is full time and permanent.”
The labor topic continued as John D’Arrigo of D’Arrigo Bros. Cos of California inquired about the use of the drug impairing employees at work. Many ag employers are concerned about their employees’ ability to properly function in jobs that require them to use heavy machinery, such as operate tractors or run equipment in the production plants. “How do we know if an employee is high or if they just have marijuana in their system from their use weeks before? Should employers implement a zero- tolerance policy?” asked D’Arrigo.
Though the answer to how long the drug can stay in your system is still inconclusive because it can vary from person to person, Johnson chimed in with his personal views, “The choice is up to the employer. But if I wanted to work for your company and you had a zero-tolerance policy, I wouldn’t be able to apply.” When the session concluded and the nearly 100 attendees started to exit the room, more in-depth conversations amongst the guests at Western Growers Annual Meeting about cannabis were just beginning to form.
Lettuce, Braising Mix A growing trend and market which uses a blend of different mustard varieties and arugula. Our dealers can help you develop a custom braising mix for your specific market or growing region. Also used for multiple picking in home gardens. This very healthy alternative to lettuce blends is becoming very popular.
Growers on the cutting edge of today‘s market trends ask for Seeds by Design when looking for Organic, Heirloom or Hybrid vegetable seeds. 4599 Mc Dermott Rd. , P.O. Box 602 Maxwell, CA 95955 Phone : (530) 438-2126 Fax : (530) 438-2171 www.seedsbydesign.com
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Welcome Reception
Welcome Reception
Top Chef Session
Top Chef Session
Board of Directors Meeting
Health Care Session
Comedian Jim Gaffigan Award of Honor Dinner
David Gill and family Award of Honor Dinner
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Building, Preserving and Protecting Capital Session
Immigration Session
PAC Luncheon with PJ O’Rourke
AgSharks Session
Cannabis Session
Membership Awards presented at the Masquerade Ball
Masquerade Ball
Tee it High, Let it Fly Golf Tournament
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WG ANNUAL MEETING AgTech Startups Offered $2.25 Million During Competition
By Stephanie Thara Metzinger W hen the clock hit 4:00 p.m. on Tuesday, October 31, 2017, six startup companies fiercely pitched their technologies to a panel of investors and farmers in hopes of receiving generous investment offers and ample acreage to pilot their innovations. Two startups left with monumental offers while others left with partnerships that will be key to the companies’ ability to scale. The inaugural AgSharks™ event kicked off during Western Growers (WG) 92 nd Annual Meeting in Las Vegas, making it the first agricultural technology competition to offer real-time investment opportunities and decision-making in front of a live audience. With JV Smith Companies President & CEO Vic Smith piloting the event as moderator, six startups using technology to help solve issues faced on the farm presented their product to a panel of ag leaders and financial investors. These judges then inquired more about the product and feasibility of use. “If you have an employee standing next to your 500-pound piece of equipment, what sort of safety precautions do you have so that the employee doesn’t get run over or harmed?” asked Ryan Talley of Talley Farms to representatives from Augean Robotics, who invented a robot that follows pickers in the field. Talley was one of six judges determining the viability of the ideas. The others were: WG Directors Rob Yraceburu of Wonderful Orchards LLC and Edwin Camp of D.M. Camp & Sons; and Sanjeev Krishna, Chuck Templeton and Matthew Walker from S2G Ventures, a key sponsor of the event. In addition to feedback from the judges, the audience had the opportunity to use the Annual Meeting app to rate if they would “buy, try or deny” the technology. When the presentations concluded and the audience survey results were tallied, the room fell silent as the judges deliberated on which companies would receive equity investment offers. The AgSharks called up Bruce Rasa, CEO of AgVoice, and offered a convertible note investment of $200,000 at a $3 million cap. Rasa then rebutted, emphasizing the importance of how the company is developing the world’s first voice and data management system that allows ag professionals the freedom to work hands-free while on-the-go. Rasa triumphed and left the stage with an offer of a $250,000 convertible note at a $4 million cap.* “AgSharks helped bring us one step closer to our vision of giving any farmer, rancher and grower the ability to push a big button on their phone and have their voice records convert to data,” said Rasa. “This event is a first of its kind and is crucial to cultivating innovative solutions that focus on changing the system, not fixing the symptom.” Fueling the enthusiasm of the crowd, the judges made an
announcement that took everyone by surprise and had the audience nearly falling off their seats with excitement. Smith invited Aidan Mouat, CEO and co-founder at Hazel Technologies, Inc, to the stage to converse further with the judges. The company develops inserts that fights spoilage and slows the aging process of fresh produce. Learning that 70 percent of the audience voted to “buy” Hazel Technologies’ product, the Sharks decided to offer the start-up company an equity investment of $2 million. “We are grateful that Western Growers and S2G gave us this platform to show how Hazel Tech increases returns, reduces labor cost, and opens new markets for grower-shippers,” said Mouat. In addition to the offers made to AgVoice and Hazel Technologies, the start-up companies who pitched their technologies—Augean Robotics, Farm Dog, Food-Origins and iFoodDecisionSciences—walked away with connections that can lead to pilot programs or sales. “AgSharks is an unprecedented event demonstrating the full potential of Western Growers’ innovation efforts,” said Tom Nassif, WG president & CEO. “AgSharks brought together growers, investors and agtech startups in a single forum to prioritize and fund technology that will help solve agriculture’s most pressing issues and move the industry forward.” AgSharks is the latest WG effort to support agtech startups in accelerating the introduction of unique products and services to the market. In December 2015, WG opened an agtech incubator—the WG Center for Innovation & Technology—in Salinas, CA, to provide startups with the resources and mentoring needed to get their companies and technologies up and running. The center now houses 51 startups, including five of the six startups who competed in AgSharks. Startups involved with WG and the WGCIT are afforded the opportunity to participate in groundbreaking events, such as AgSharks. “We are thrilled to have partnered with Western Growers which brings trust and access to local and regional farmers providing over half the nation’s fresh produce,” said Krishnan, managing director of S2G Ventures. “By providing capital to the entrepreneurs at Hazel Technologies and AgVoice, S2G and Western Growers support innovation on the farm and in the supply chain to improve farmer productivity and profitability.” * The cap is the maximum price at which the note will convert. AgVoice is still in the early stages of growth and when it reaches the next round of growth, the convertible note will transform into a percentage of the company.
16 Western Grower & Shipper | www.wga.com JANUARY | FEBRUARY 2018
INDOOR VERTICAL FARMS: The Wave of the Future?
By Cory Lunde O n November 1, 2017, the National Organic Standards Board (NOSB) voted—by the narrowest of margins— to allow growers utilizing container, hydroponic or aquaponics production to keep their organic certification. While the NOSB is advisory in nature, with the staff of the National Organic Program and other USDA officials making the final call, this vote is significant in that it maintains the organic integrity of growing practices employed in many non-traditional, urban farming-type scenarios, including vertical farming. Vertical farming touts the use of vertical space—from the floor to ceilings that can be several stories high—to reduce inputs and increase outputs, leading to “more food per square foot of land.” Predictably, the indoor environment can be managed to yield year-round production. Indoors, out of the elements, the problems of pests and weeds can be virtually eliminated, with a corresponding near-elimination of the need for chemical applications. Water and nutrients can be applied and adjusted in controlled amounts at precise times. And portability—the ability to place vertical farms closer to population centers—lessens the carbon footprint generated getting food from field to fork. Although not without its growing pains—as evidenced by the spectacular failures of Atlanta-based Podponics and Chicago-established FarmedHere, once the largest vertical farm in the U.S.—what began as a niche segment of the agriculture industry has developed into a fast-evolving, increasingly viable method of production. Look no further than Plenty, a young Silicon Valley startup that is currently building a 100,000 square foot vertical farm outside of Seattle, WA, the first of what the company envisions to be many full-scale indoor farms near every major city in the world. Venture capital is paying attention, as Plenty has the backing of SoftBank, a tech-investment fund led by Japanese billionaire Masayoshi Son, and Bezos Expeditions (yes, as in Jeff Bezos of Amazon fame), who recently bet $200 million on Plenty’s global rollout plans. Plenty claims their indoor vertical farms can produce crops at yields far greater than traditional farms, citing the statistic that a 50,000 square-foot room—about the size of an acre—can
produce two million pounds of lettuce a year. They boast the ability to grow Whole Foods quality produce at Walmart prices, which makes the recent Amazon-Whole Foods connection even more intriguing. And they label their produce “super organics” or “beyond organics,” as there are no pesticides or chemicals used to grow their crops. Other players in the vertical farming game are also receiving big-time funding from big-time investors. For instance, New Jersey-based Bowery has raised more than $30 million from GGV Capital (formerly Google Ventures) and others. Another New Jersey startup, AeroFarms, has reeled in over $140 million from the likes of Goldman Sachs and Prudential. With all of the capital flowing into indoor vertical farming, should traditional farms be worried about increased competition in the marketplace? Yes, and no. But mostly no, according to Jim Pantaleo, general manager of Urban Produce, an upstart vertical farming company nestled amidst a maze of industrial and office buildings in the heart of Irvine, CA. On 1/8 th of an acre of space, Urban Produce can grow the equivalent of 16 acres of organic wheat grass, up to 10,000 pounds per month, which is supplied to a host of retail and foodservice companies, including a range of global cold-pressed juice clients.
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“No, we’re not a threat to traditional farming,” Pantaleo states affirmatively as he scrubs his hands and dons a safety net before opening a heavy door to reveal his high-density, vertical-growing system. Once inside, under the bright pink LED lights, Pantaleo’s sharp, inquisitive eyes and wide, expectant grin seem better situated in a Las Vegas nightclub than an urban farm. Pantaleo found indoor vertical farming almost by accident, as he was searching for a meaningful second career following two decades in the software-licensing business. After a friend introduced him to a vertical farm in Hawaii, Pantaleo became “hopelessly smitten with the world-changing possibilities vertical farming offered.” Then and there, he dedicated himself to learning everything he could about indoor vertical farming, and has since found an opportunity to apply the skills from his previous life to his newfound passion with Urban Produce. “We’re not coming after anyone’s market share,” Pantaleo continues, offering a reassuring smile. “Indoor vertical farming is still a nascent industry with not enough players and not enough capital.” However, Pantaleo does believe that outdoor farmers can learn lessons from the production systems employed in indoor farming. “At its core, vertical farming is about precision agriculture, using science and technology to increase yields while reducing inputs,” Pantaleo explains. While traditional farming has made significant strides in conservation and efficiency in recent years, Pantaleo notes that the industry is still very resource heavy. “I know we can do things to make the industry, as a whole, even more sustainable. Agriculture and ultimately humans can greatly benefit when
technology and science are applied at its highest levels,” he asserts. Like the Ghost of Christmas Yet-to-Come, Pantaleo points to the success of indoor vertical farming in other, often resource- starved countries such as the Netherlands, Singapore, which has less than 250 acres of arable land, and Japan, which is still reeling in the wake of the 2011 tsunami that resulted in the meltdown of the Fukushima Nuclear Power Plant and widespread radiation contamination of the island nation’s farm land. Since Fukushima, the number of Japanese vertical farms has almost tripled, from approximately 75 to more than 200. Led by Dr. Toyoki Kozai, the father of Japanese indoor farming and president of the Japan Plant Factory Association, the country has leveraged the tech prowess of several of its major companies, like Panasonic and Fujitsu, to reconstitute old semiconductor facilities into giant factory farms. One such Japanese plant factory, Spread, is capable of harvesting 20,000 heads of lettuce every day. For Pantaleo, the ultimate success of indoor vertical farming, both here and around the world, will come down to capital and intelligence; businesses securing both the financial resources and management capabilities needed to build sophisticated growing systems and expand market opportunities. But, even as this budding industry begins to sink its roots (pun intended), Pantaleo believes the role of vertical farms will never be to replace traditional farmers. Instead, he says, “It should be viewed as complementary to traditional farming, as a way to help the industry to meet the challenges of feeding more people, potentially 10 billion by 2050, with dwindling resources and increasing climate uncertainties.”
18 Western Grower & Shipper | www.wga.com JANUARY | FEBRUARY 2018
LEGISLATOR PROFILE Representative KEN CALVERT from California’s 42 nd Congressional District, encompassing parts of western Riverside County
By Western Growers staff B orn and raised in the city of Corona, California, in the western-most part of Riverside County, Congressman Ken Calvert witnessed the growth explosion of his hometown and the surrounding areas over the last several decades. The lifelong Riverside County resident, who currently represents the state’s 42 nd Congressional District and serves on the powerful Committee on Appropriations in the U.S. House of Representatives, watched the area transform from a largely rural one to a congested urban satellite where traffic has become one of the biggest issues to most who live there. The 42 nd congressional district is not new territory to Calvert. He has represented the area in one way or another since he was first elected in 1992. Redistricting required him to change the districts he previously served, bouncing him from the nearby 43 rd and 44 th congressional districts, respectively, to where he is now. His district, which is part of the Inland Empire, and encompasses such cities as Corona, Murrieta and Temecula, once thrived with agriculture. From the turn of the 20th Century until the 1970s, the area was dominated mostly by citrus, heavy concentrations of dairy farms and vineyards that produced table grapes, raisins and wine. In fact, for more than 75 years, Corona was known as the ‘Lemon Capital of the World,’ housing industry giant Sunkist, and its 700 employees who grew and processed lemons and citrus products. During a recent interview, Calvert recalled the importance lemons had on the area, saying of him and his family, “We used to put lemon on and in everything.” Eventually, agriculture’s hold on the region gave way to the demand for housing and other development, falling victim to Southern California’s population boom and the ensuing urban sprawl in the 1970s. Though sprawl never killed agriculture in that part of the Inland Empire, it certainly dictated what ag remained in the area. The focus is now on more higher-priced products, such as the wine that comes out of places like Temecula and Murrieta in the southern part of Calvert’s district. Despite the shift, agriculture is still a focus of Rep. Calvert’s efforts in Congress. As chairman of the Interior and Environment Appropriations subcommittee, and as a member of the Energy and Water Development Appropriations subcommittee, he overseas a variety of issues that directly and indirectly affect agriculture. One of Calvert’s earliest efforts in Congress was on behalf of
the wine industry. Grape growers were battling Pierce’s Disease (PD), a grapevine-killing malady spread by a pest called the glassy-winged sharpshooter that scourged California's wine industry. According to the California Department of Food and Agriculture (CDFA), the first threat posed by this disease “occurred in Temecula, Riverside County in August of 1999, when over 300 acres of grapevines infested with the glassy- winged sharpshooter were infected with [Pierce’s Disease] PD and [were] ultimately destroyed.”
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