MOREHEAD, Ky. — Proximity to big markets is crucial for the fresh produce business.
So when AppHarvest, a two-year-old start-up, was looking for a site for a greenhouse, it picked a 366-acre field in Rowan County just outside this university town in eastern Kentucky.
The greenhouse, the largest in the United States, is just a day’s drive from almost 70 percent of American consumers, including those who love fresh tomatoes.
Next summer, when AppHarvest begins production at its $97 million building, 285 employees will start shipping 45 million pounds of fresh produce annually, primarily tomatoes, to grocery stores from Atlanta to New York, and as far west as Chicago and St. Louis.
For the greenhouse to be cost-effective, size was as important as location. The 60-acre, 2.76-million-square-foot building will be big enough to lower costs on materials, production and distribution.
“I asked the engineers, ‘How big can we possibly be to operate efficiently and effectively?’” said Jonathan Webb, AppHarvest’s 34-year-old founder and chief executive. “We have to compete with produce coming from 2,000 miles away.”
The mammoth project will use Dutch greenhouse technology, which focuses on sustainable crop production, to meet the rising demand for American-grown tomatoes. The greenhouse uses digital monitoring, sun and LED lighting, recycled rainwater and nonchemical growing practices. It also responds to a host of cultural concerns about food safety, freshness, environmental quality and energy consumption.
Other food growers have the same idea. AppHarvest is part of a wave of new greenhouse construction changing vegetable production in the eastern United States.
Kentucky Fresh Harvest is building a 30-acre, $13.5 million greenhouse near Stanford, about 100 miles southeast of Morehead, to grow cherry tomatoes. Mucci Farms, a Canadian company, just opened the first of three large greenhouses for tomato production on a 75-acre farm in Huron, Ohio. Mastronardi Produce, another Canadian grower, last year finished a 20-acre greenhouse for vegetables in Wapakoneta, Ohio. The company owns six others in the United States.
AppHarvest is intent on meeting the rising demand for fresh tomatoes in a market increasingly supplied by imports from Mexico and Canada. The two countries account for more than half of the $3 billion American fresh tomato market.
But production in the United States is declining, according to the Department of Agriculture. Land devoted to fresh tomato production in Florida, a major producer, has fallen to around 30,000 acres, down from 39,400 acres at the start of the century, according to the agency. Similar reductions have occurred in California, North Carolina and other states.
Mr. Webb, the son of a Kentucky machinery dealer who was raised in nearby Lexington, said he always planned to build something big in Kentucky. Years of research, and the state’s abundance of land and water, drew him to agriculture.
This colossal plot in Morehead is only the first step in Mr. Webb’s ambitious plan. The next is to be so successful that other greenhouse growers follow AppHarvest to the state.
His hope, he said, is to rejuvenate the state’s economy, devastated by the collapse of the coal industry, with a “sustainable produce hub” that would turn Kentucky into “the agtech capital” of the United States. Mr. Webb also plans to build huge AppHarvest greenhouses in other eastern Kentucky communities.
That goal is achievable. Greenhouses provide a controlled environment that allows vegetables to be grown year-round. Tomatoes grown in greenhouses accounted for 32 percent of the domestic supply in 2017, the latest year for accurate figures, according to a report published in March by the Agriculture Department. The same year, Kentucky farmers grew tomatoes in 1.1 million square feet of greenhouses on more than 300 farms.
“It’s not going to be just AppHarvest,” Mr. Webb said. “The whole region will be lit up with vibrancy and excitement. The same thing you see in New York and San Francisco.”
The greenhouse was designed and built by Dalsem, a family-owned company founded in the Netherlands in 1932 that has supplied greenhouses for vegetable and flower production in 52 countries. The agreement to build AppHarvest’s facility, the largest greenhouse Dalsem ever manufactured, prompted top Dutch government officials to attend the signing ceremony earlier this year.
In July, AppHarvest signed a $15 million contract with Philips, the Dutch electronics company, for the LED system that will provide optimal lighting conditions for maximum plant growth. At night, AppHarvest’s 366-acre field, surrounded by Rowan County’s dark, forested landscape, will glow like a bright glass city. The company is negotiating with the Eastern Kentucky Power Cooperative to supply the greenhouse with solar power.
The greenhouse will also use advanced cultivation practices. All of its irrigation water — 360,000 gallons a day — will be supplied by rain collected from the greenhouse roof that drains into a 10-acre pond capable of storing almost 46 million gallons, or a three-month supply in case of drought, the company said. All of the water will be recycled, with no discharge into streams or groundwater. AppHarvest will add nutrients straight to the roots of plants raised in charcoal beds.
The company will control pests and diseases with nonchemical, biological methods. For instance, two species of tiny wasps, Encarsia formosa and Eretmocerus eremicus, will be introduced to control white flies, a nemesis of greenhouse production.
Mr. Webb’s vision, and his skill in selling it, attracted robust support from the state, venture capitalists, vegetable marketers and Dutch greenhouse and electronics manufacturers.
In May, Mr. Webb persuaded the managers of Equilibrium Capital’s Controlled Environment Foods Fund to invest nearly $100 million to build the greenhouse. He raised millions more from the ValueAct Spring Fund and from the venture capital firm Revolution’s Rise of the Rest Seed Fund to finance the company’s engineering, administration, staff and start-up operations. Rise of the Rest, a $150 million fund established in 2017 by Steve Case, co-founder of AOL and chairman of Revolution, typically invests $100,000 to $1 million in local start-ups through pitch competitions, according to its website.
“We just believed no matter what obstacles came up with AppHarvest, this is the guy who could get it done,” said J.D. Vance, author of “Hillbilly Elegy” and managing partner of Rise of the Rest. “You want to invest in people who won’t run away at the first sign of trouble.”
Kentucky invested $1.9 million in a new road and other infrastructure. “That area used to be tobacco,” said Ryan Quarles, commissioner of the state Department of Agriculture. “It’s an area now that’s eager for new technology. We like his vision.”