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As grocery bills soar, local startups plant seeds of ‘food sovereignty’ for Canadians

March 8, 2023

Cultivatd and Fieldless Farms’ rise comes as food supply chains are under growing scrutiny amid a rapid escalation in the prices of everything from produce to meat.

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Amid skyrocketing food costs that have put Canada’s biggest grocery store chains under the microscope, Eric Levesque’s vertical farming brokerage is seeing a bumper crop of new business. Levesque is CEO of Cultivatd, a Cornwall startup that helps to arrange the sale and purchase of indoor farms, vertical farming systems and other agriculture services. The firm, which earns most of its income from commission fees, has signed partnerships with 65 of the agriculture industry’s biggest tech suppliers from around the world. Just over a year after landing US$3 million in seed capital, Cultivatd is closing on another funding round that’s expected to bring in several times that amount. “It’s been pretty crazy for us here,” says Levesque, who founded Cultivatd two years ago with business partner Eric Bergeron. “It’s definitely hit a vein in the industry, and that’s why we’ve been able to grow so quickly.” Cultivatd’s headcount has doubled to 20 over the past 12 months as the company scrambles to keep up with the flood of global interest in non-traditional agricultural methods such as vertical farming. Levesque says vertical farms that use methods such as hydroponics to grow crops without soil consume up to 95 per cent less water than traditional agricultural operations and could be vital to feeding a global population that’s expected to rise from eight billion to more than 10 billion in the next two decades. “Everybody wants a vertical farm and nobody knows where to start,” he says. “This space is about to grow exponentially over the next five years.” The startup’s rise comes as food supply chains are under growing scrutiny amid a rapid escalation in the prices of everything from produce to meat. Food inflation has been especially crushing for lower-income Canadians, with grocery prices in January up 11.4 per cent compared to a year ago. That’s nearly double the overall rate of inflation, which was 5.9 per cent that month. The issue has grabbed the attention of Canadian authorities. Last October, the federal Competition Bureau announced it was launching a study into competition in the grocery sector. Meanwhile, the CEOs and presidents of Canada’s largest grocery store chains – Loblaw Cos. Ltd., Metro Inc. and Empire Co. Ltd. – were set to testify before the House of Commons agriculture committee Wednesday evening as part of its study on food inflation. Soaring food costs have been blamed on a number of factors, including extreme weather and events such as the war in Ukraine that have disrupted supply chains. Local agtech entrepreneur Jon Lomow says food inflation is a symptom of a “lack of food sovereignty” in Canada, where an estimated two-thirds of all produce consumed annually is imported. “We are susceptible to big shocks in the supply chain as a country,” says Lomow, founder and CEO of Ottawa-based Fieldless Farms. “That’s why we (Fieldless Farms) exist.” The four-year-old company produces two types of hydroponically grown lettuce at a 20,000-square-foot, climate-controlled indoor farm in Cornwall that runs on renewable energy. Fieldless Farms’ pesticide-free greens are now available in more than 40 Farm Boy stores in Ontario as well as Massine’s Your Independent Grocer and McKeen Metro Glebe in the capital. Lomow says retailers can’t keep the locally grown greens in stock. “We sell every leaf we grow,” he says. “Clearly, the demand is big.” After landing $17.5 million in venture capital in 2022, Fieldless Farms is now tripling the size of its growing facility to 60,000 square feet. Lomow wouldn’t disclose how much lettuce the company produces, but he says output is expected to rise tenfold by the end of the summer as the operation becomes more automated and greater economies of scale kick in. Still, inflation has eaten into the business’s bottom line in the same way it’s hitting consumers hard. The price of packaging, for example, has nearly doubled in the past year, Lomow says. But so far, Fieldless Farms hasn’t passed those extra costs on to customers – in part, Lomow explains, because its products don’t have to travel as far to supermarket shelves as imported lettuce and his company is “more efficient” in its use of nutrients than many other producers. “Packaging is a tough one,” he concedes. “We’re working on solutions to get around that.” The company recently received $2.5 million in funding from the Federal Economic Development Agency for Southern Ontario. Lomow says the cash infusion was “very much needed” to help combat the effects of rising inflation on the business, which has about 35 employees and is not yet profitable. “(Inflation) does impact us in a serious way,” Lomow says. “But we are able to manage it, I would say, a little better than (producers of) imported products.” Over at Cultivatd, Levesque says the firm is close to launching two funds, one in Canada and one in the U.S., to help finance new vertical farming operations. The veteran entrepreneur says it’s all part of Cultivatd’s push to become a “head-to-toe” service provider that helps clients choose technology partners, backs new agricultural ventures and works with customers on the ground to help them operate their farms more efficiently. “This is kind of the next progression for us,” Levesque says. “We are anticipating some very, very big revenue to come.” – With additional reporting from the Canadian Press