FarmedHere, a commercial-scale hydroponic farm in Bedford Park, had lofty goals of expanding to cities across the U.S. and beyond. The company was “on the precipice of international expansion,” then-CEO Matt Matros said in July 2015.
Early last year, Matros announced a $23 million, 60,000-square-foot indoor farm that was to be the linchpin of a new development in a blighted area of Louisville, Ky.
But plans fell apart. Faced with onerous operational costs and increasing competition in the Chicago market, Nate Laurell, who took over as CEO last January, decided over the summer to pull the plug on the Louisville farm.
And as of Monday, FarmedHere, a pioneer of the new wave of commercial urban farms in the Chicago area, is closing its 90,000-square-foot Bedford Park facility for good.
“It was a difficult decision. This whole thing has been a hard decision to make. But we continue to be big believers in the (local food) space,” Laurell said.
Though the farm is closing, it’s not the end of the line. Here Holdings, parent company of FarmedHere, is shifting its focus and resources to making food products — such as juices, salad dressings and spreads — under the Here brand, which will be made at the company’s food processing plant in Carol Stream. The goods will be made with produce from local farms, such as tomatoes from Rochelle-based MightyVine, in partnership with Local Foods, a Chicago produce distributor.
Laurell and other investors believe the new direction will be success. But the rise and fall of FarmedHere, founded in 2011 and considered a national leader in indoor farming, provides a sobering example of how difficult the urban farming business can be.
Last year, FarmedHere arrived at a crossroads: Grow large enough to offset the considerable labor and energy costs — or instead focus the business on making branded products, Laurell said. Ultimately, the company decided return on investment looked significantly better by giving up the farm.
“The more I learned about the reality of farming, it led to a change of strategy,” Laurell said.
Some of the 30 or so FarmedHere workers will find employment at the Carol Stream facility; others will be laid off, said Laurell, who said he couldn’t provide exact numbers at this point.
FarmedHere’s salad dressings, basil and microgreens are sold at stores throughout the Chicago area, including Whole Foods, Mariano’s and Pete’s Fresh Market. Here Holdings is in conversations with retailers now about selling the new Here-branded products that will be rolling out in the first and second quarters of the year, Laurell said.
“They really grew some fantastic products. They did a beautiful job,” said Steven Jarzombek, vice president of produce for Mariano’s, adding he expected Mariano’s would continue to partner with Here Holdings going forward.
Despite the challenges, urban farming continues to grow. In recent years, competitors like Gotham Greens, BrightFarms and MightyVine have opened indoor farming facilities in the Chicago area — part of the “local food” movement that’s enthralled consumers and chefs across the U.S.
Such companies also can provide a source of jobs and economic development, which was the hope for the planned West Louisville FoodPort. FarmedHere agreed to occupy more than half of the development, said Stephen Reily, the Louisville developer who formed the nonprofit Seed Capital Kentucky for the project.
The project, touted by the Louisville mayor and Kentucky governor, was approved for up to $400,000 in tax credits.
Once FarmedHere pulled out, Seed Capital couldn’t find a feasible way to move forward with the project, Reily said. More generally, he said, the setback reflected the gap between the excitement surrounding indoor farming and the much harsher current reality for the still-budding industry.
“There are not a lot of success stories yet,” Reily said.
Reached by phone, Matros mostly declined to comment, referring questions to Laurell. Founder of the Protein Bar fast casual chain, Matros has moved on and is preparing to launch a new coffee company called Limitless High Definition Coffee & Tea in Chicago’s Fulton Market district.
“I don’t know that it didn’t work,” said Matros, of FarmedHere. “We just changed entities. … I know all this stuff is positive.”
In July, FarmedHere merged with 87P, a food processing plant in Carol Stream that makes juices, to form Here Holdings, a Delaware entity, Laurell said.
Prior to the failed Louisville expansion, Mark Thomann led FarmedHere as CEO, from April 2014 to July 2015. Thomann, an entrepreneur known for restoring old brands through his River West Brands firm, said he was drawn to the mission of FarmedHere after being diagnosed with cancer.
“I got sick and really wanted to fix a broken food system,” Thomann said.
The end of the farm is bittersweet for Thomann, who, like Matros, is an investor in Here Holdings. He believes it will be a greater success financially in its new iteration. But he also still feels personal ties to FarmedHere and believes in the future of indoor farming.
“There’s a lot of good that FarmedHere did for indoor farming and hopefully lessons learned will prove beneficial for businesses that come after,” Thomann said.
For Steve Rodriguez, the change in business model will mean a shift in his life direction. A graduate of the Chicago Botanic Garden’s Windy City Harvest urban farming program, Rodriguez has worked for FarmedHere since 2012, working his way up from washer to crop manager.
Rodriguez described working at FarmedHere as an overwhelmingly positive experience and lamented parting ways with some of his co-workers.
“For us to get shut down like that, to me, it kind of broke my heart,” Rodriguez said.
Next, the 29-year-old father of four young children will go to work at the Carol Stream facility — doing what exactly, he’s not sure. But he’s ready to work his way up again, if he has to. For the forseeable future, he’s done with urban farming.
“I have to find another way. I’m not going to go through this again,” Rodriguez said. “As much as I love farming, my family comes first.”
Twitter @GregTrotterTrib
