Meeting with greenhouse operator

Report on meeting with Michele Keller – operator of La Bore Farms in Faribault

I met with Michele on Friday, February 9, 2007 to discuss greenhouse produce. La Bore Farms has provided greenhouse lettuce to Just Food since it opened in December 2004.

I made it clear to Michele that the Twin Cities Co-ops are in the first stage of an exploration that could lead to some sort of arrangement for equity in a produce greenhouse that would supply them. I wanted to be honest that one outcome could be a decision to form an entity that would operate a green house that might compete with La Bore Farms to some extent. Another outcome could be a collaborative activity that would provide capital to a producer in consideration of guaranteed access to supply. With that backdrop the conversation was an interesting mixture of candor and reserve.

Some facts about Michele and La Bore Farms:
Current size is 42’ x 132’ of greenhouse space – about 1/8 acre. She said that her yield is equivalent to that of 20 acres of non-greenhouse production. I believe that is a combination of 2 factors – she gets 12 crops/year versus ~3 crops per year for non-greenhouse. I suspect that she is also able to farm more intensely using hydroponics nutrient film technique.
Water from her well is reused 10 to 14 times before it is dumped on to her adjoining hay field. No water used in her farming flows from her property.
She uses 3 heating systems – solar, LP-heated water piping under the beds, LP forced air if it’s really cold.
Her Co-op clients are Hampden Park, Just Food, Seward, and Mississippi Market (I’m not certain about this one). Linden Hills would like to carry her product but she is sold out.
Other clients include several restaurants in Northfield.
Michele has a strong commitment to sustainable agriculture although she will never be organic since hydroponic farming inherently requires chemicals to nourish the plants. On the other hand her pest management methods make no use of chemicals – even ones permitted in organic farming.
There are a couple other greenhouse operators in the area – a very small and seasonal basil growing operation near Stillwater (but in Wisconsin) and a very large one (Bushel Boy with 30 acres of greenhouses) near Owatonna.
The farm is covering expenses after 3 years of operation but she isn’t paying herself.
Capital was raised by bank loan based on her husband’s employment in the computer industry. Michele doesn’t generate any off-farm income.
La Bore Farms is incorporated and currently has one equity holder – she and her husband. She would consider an equity investment with these provisions: Michele and her husband retain control (at least 51% of ownership) and she has an opportunity to buy back ownership.
She would like to expand operations in the next few years to increase volume and variety of produce. She would like to add peppers next, then tomatoes and strawberries.
Access to capital is what will pace her rate of expansion.
She would add renewable energy via a wind turbine (39KW @ $10,000 to $15,000) before her next expansion.
Another greenhouse similar to her existing plant is ~$500,000 with most of the cost being what’s inside – not the structure itself since it is simply metal tube hoops and plastic.
She is averse to becoming a big operation like Bushel Boy and said she has no desire to sell to Whole Foods or supermarkets.
She would be willing to discuss a relationship whereby Co-op equity investment at a modest rate of return would be tied to a supply contract with some degree of protection of supply to investors although she would not be willing to drop Hampden Park Co-op which was her first co-op even if they were not an equity investor.

I was very impressed by Michele – her candor and direct communications, her depth of knowledge based on academics and experience as an employee of USDA, her success with La Bore Farms, her commitment to sustainable agriculture and the overall congruence of her values with cooperatives.

My initial impression is that we ought to take this conversation a step further at the appropriate time.