Jul 12, 2017Local lettuce production pursued with hydroponic touch
Jim Day describes the hydroponic vegetable industry as “a very fast growing and exciting sector.”
Day founded Suncrest USA on Jan. 1, 2012. As an entrepreneur, Day has launched several companies and has been active in greenhouse operations for more than 12 years. Day spent over 30 years in technology marketing, a career that began at Saatchi & Saatchi in New York City. His agency was engaged in branding and market strategy for mid-size firms and Fortune 500 companies in a dozen industries.
Day holds a bachelor of arts in chemistry and worked on his Ph.D. in biochemistry before pioneering an interdisciplinary master of science degree focused on organic agriculture, renewable energy and systems integration.
Day’s brother, Robert Day, is Suncrest USA’s co-founder, having managed up to 250,000 square feet of wholesale flower greenhouse operations in Texas. He has a horticulture degree from Cornell University, and brings a lot of experience to the table in greenhouse production.
“Our market research showed lettuce is very attractive as a fast turnover type crop, particularly in Salinas Valley or in Arizona, but there are challenges for the requirements of long hauling produce all over the country,” Jim Day said. “Marketing shows consumer demand is moving toward locally produced produce. The only way to create enough volume is to have local production facilities.”
Day said traditional vegetable growers sell “straight to distribution, who controls the commodity price point. Growers at the farm gate get the lowest part of the deal. Our business model is to have local greenhouses in hydroponics. We identify growers who already understand the growing process using greenhouses. We license the hydroponics technology to the existing grower who’s set up for high-volume production.
“We provide the specifications to retrofit an existing greenhouse, and invest in new greenhouses,” he said. “We train the grower. They usually don’t have great sales and marketing and distribution can be a bit of an issue. We buy most of their lettuce under license, we establish the market and brand, working with a couple of high end distributors. We have strong branding, premium pricing in the market and provide a revenue share back to the grower. That allows them to earn typically more.”
Suncrest USA studies the local population size and determines approximately how many greenhouses that population base can support.
“USDA statistics show the average American consumes 33 pounds of lettuce a year,” Day said. “The lettuce volume consumed by an urban area will give us a certain market penetration with premium quality lettuce.”
Day said Suncrest USA typically “prefers to go to places where there is a little more sunshine in the beginning, where the margins are better. Eventually, we will be looking at all locations. Our sequencing is to build out in the West. Our competitors in the eastern part of the U.S. are doing a good job. The culture of a community and how much it is focused on local produce is something we look at in terms of our consumer base.”
Suncrest USA does not pursue organic production, which has been a controversial element of greenhouse vegetable production in soil-less environments.
“The basic tenets of the organic branding, and the mindset of consumers choosing organic is primarily because of pesticides,” Day said. “Cultivating a better soil environment, like we do, is not a primary goal of the consumer. When you grow in hydroponics, it becomes very political. But when you look at Whole Foods, for them it’s all about local, not organic. “We put more focus on local. We do try to comply with organic procedures the best we can. There are no synthetic pesticides. I don’t feel strongly we need to be organic. We’ve had almost no pushback.”
Day considers “our primary competitor to be the field grower of lettuce. They own 98 percent of the market share for lettuce primarily in the Salinas Valley and Arizona. In the last three our four years, hydroponics has captured three or four percent of the market.”
Working closely with its growers has enabled Suncrest to help convert flower growers to hydroponic vegetable production.
“Cross training is relatively simple,” he said, pointing to Oku, of Pescadero, California, a family-owned cut flower operation established in 1902.
“Growers in Pescadero never grew vegetables in deep culture hydroponics. They were able to quite quickly move over,” he said.
Day said the biggest challenge is training regarding food safety issues, something the cut flower industry doesn’t face.
“Flower workers are not used to food safety issues,” he said. “They’re getting better at it, getting familiar with food safety manuals, logs and SOPS (food safety Standard Operating Procedures). We get them moving in the right direction.”
Suncrest is developing its own sales and distribution force, and is working with outside distributors on a “very selective” basis. It’s reaching out to restaurants, a major user of the company’s lettuce selections.
“We’re a fairly young company,” Day said. “We haven’t spread our wings yet.”
For more information, visit www.suncrestusa.com.