CubicFarms secures customer and manufacturing partner in Campbell River
CEO Dave Dinesen on his company’s $4.4M deal with NTE Discovery Park.
The plot of Vancouver Island land where CubicFarms indoor growing modules will soon be cropping up was supposed to be a liquified natural gas distribution facility. But – as is currently the trend in global business – plans changed. This left that site, a former pulp mill in Campbell River, in need of a new purpose. Fortunately, as a potential home for new industrial development, it had a lot going for it – including already-installed power and logistical infrastructure.
According to CubicFarms CEO Dave Dinesen, that’s the genesis of a recently announced deal in which NTE Discovery Park has agreed to not only purchase 26 CubicFarms modules for CAD $4.4 million but to manufacture them too.
Dinesen says the NTE deal is the start of a symbiotic partnership between the two companies that allows Langley-based CubicFarms to boost production, and enables NTE to diversify its oil and natural gas operations.
CubicFarms is a local chain agricultural technology company developing tech to increase regional food access by maximizing crop yields. The company’s tech is 52 times more land-efficient than traditional farming, according to Dinesen. “So, one CubicFarms module would grow the same as an entire football field of land,” he previously told Jim Gordon of MarketOne Minute.
“There's really two sides to the relationship,” explains Dinesen. “So one, they are going to become a manufacturing partner for us. And secondly, they are going to be a customer in that they are buying systems and operating those at that site. So they've agreed to buy 26 machines to start with, and then they'll be expanding that to 126 shortly thereafter, which is probably the right amount for that sort of Vancouver Island region. It'll be a meaningful resource to grow food locally.”
This type of relationship may not have always been possible. But Dinesen says oil and gas and resource companies are starting to see local food production as a utility. “It needs to happen all the time. It gets used all the time. And so, I think that’s the right way to look at localized food production. That happens 12 months a year out of a facility that’s used nearby. That’s exactly what we should be doing.”
In addition to diversifying business lines, John Tang, CEO of NTE Discovery Park, sees the collaboration as a way to localize food production and support the community through jobs. “Building and operating vertical farms in Western Canada has a dual purpose of providing communities with better access to delicious fresh food year-round without importing 90 percent of it over long distances,” he says, “thereby reducing the carbon footprint of food delivered to consumers.”
For Dinesen and CubicFarms, the deal’s benefits go beyond securing a new customer. This manufacturing agreement mitigates the company's potential supply chain constraints, as its manufacturing facilities were previously based solely in China. Ultimately, the firm will now be better able to “meet increasing demand for our technology and leading controlled environment agriculture platform,” Dinesen says.
The global agritech market is projected to hit $41 billion by 2027, according to Research & Money Markets. To capture part of it, CubicFarms has raised millions to plough into R&D over the past two years. In addition, the company hired Edoardo de Martin, former general manager of Microsoft Vancouver, as its new chief technology officer last year, and has since promoted him to the role of president of the firm.
Last month, CubicFarms announced the closing of a $10.6 million overnight marketed offering, with plans to spend the proceeds on R&D and business development.