[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]


                    21ST CENTURY FOOD SYSTEMS: CONTROLLED 
                    ENVIRONMENT AGRICULTURE'S ROLE IN
                      PROTECTING DOMESTIC FOOD SUPPLY 
                      CHAINS AND INFRASTRUCTURE

=======================================================================

                                HEARING

                               BEFORE THE

                        COMMITTEE ON AGRICULTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 29, 2021

                               __________

                           Serial No. 117-15
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


          Printed for the use of the Committee on Agriculture
                         agriculture.house.gov

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-136 PDF                 WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------   
 
                        COMMITTEE ON AGRICULTURE

                     DAVID SCOTT, Georgia, Chairman

JIM COSTA, California                GLENN THOMPSON, Pennsylvania, 
JAMES P. McGOVERN, Massachusetts     Ranking Minority Member
FILEMON VELA, Texas                  AUSTIN SCOTT, Georgia
ALMA S. ADAMS, North Carolina, Vice  ERIC A. ``RICK'' CRAWFORD, 
Chair                                Arkansas
ABIGAIL DAVIS SPANBERGER, Virginia   SCOTT DesJARLAIS, Tennessee
JAHANA HAYES, Connecticut            VICKY HARTZLER, Missouri
ANTONIO DELGADO, New York            DOUG LaMALFA, California
BOBBY L. RUSH, Illinois              RODNEY DAVIS, Illinois
CHELLIE PINGREE, Maine               RICK W. ALLEN, Georgia
GREGORIO KILILI CAMACHO SABLAN,      DAVID ROUZER, North Carolina
Northern Mariana Islands             TRENT KELLY, Mississippi
ANN M. KUSTER, New Hampshire         DON BACON, Nebraska
CHERI BUSTOS, Illinois               DUSTY JOHNSON, South Dakota
SEAN PATRICK MALONEY, New York       JAMES R. BAIRD, Indiana
STACEY E. PLASKETT, Virgin Islands   JIM HAGEDORN, Minnesota
TOM O'HALLERAN, Arizona              CHRIS JACOBS, New York
SALUD O. CARBAJAL, California        TROY BALDERSON, Ohio
RO KHANNA, California                MICHAEL CLOUD, Texas
AL LAWSON, Jr., Florida              TRACEY MANN, Kansas
J. LUIS CORREA, California           RANDY FEENSTRA, Iowa
ANGIE CRAIG, Minnesota               MARY E. MILLER, Illinois
JOSH HARDER, California              BARRY MOORE, Alabama
CYNTHIA AXNE, Iowa                   KAT CAMMACK, Florida
KIM SCHRIER, Washington              MICHELLE FISCHBACH, Minnesota
JIMMY PANETTA, California            JULIA LETLOW, Louisiana
ANN KIRKPATRICK, Arizona
SANFORD D. BISHOP, Jr., Georgia

                                 ______

                      Anne Simmons, Staff Director

                 Parish Braden, Minority Staff Director

                                  (ii)
                                  
                                  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Costa, Hon. Jim, a Representative in Congress from California; 
  joint submitted statement on behalf of Matt Barnard, Co-Founder 
  and Executive Chairman, Plenty, Unlimited......................    49
Schrier, Hon. Kim, a Representative in Congress from Washington, 
  prepared statement.............................................     3
Scott, Hon. David, a Representative in Congress from Georgia, 
  opening statement..............................................     1
    Prepared statement...........................................     2
    Joint submitted statement on behalf of Matt Barnard, Co-
      Founder and Executive Chairman, Plenty, Unlimited..........    49
Thompson, Hon. Glenn, a Representative in Congress from 
  Pennsylvania, opening statement................................     2

                               Witnesses

Giscombe, Karim, Founder and Chief Executive Officer, PLANT-AG, 
  West Palm Beach, FL............................................     5
    Prepared statement...........................................     6
Verbakel, Edward, Chief Executive Officer, VB Greenhouse 
  Projects; Founder, Atrium Agri Group, Naaldwijk, South Holland, 
  NL.............................................................     8
    Prepared statement...........................................     9
Gadouas, Aaron Z., Managing Director, B.C. Ziegler and Company, 
  Chicago, IL....................................................    10
    Prepared statement...........................................    12
    Submitted question...........................................    53
Kelley, Jason E., General Manager, Global Strategic Partners and 
  Blockchain for Global Business Services, IBM, Austin, TX.......    14
    Prepared statement...........................................    15
Safrance, Kevin, Executive Vice Chairman, Mastronardi Produce 
  Limited, Mastronardi Produce--USA, Inc., Livonia, MI...........    19
    Prepared statement...........................................    20
    Submitted questions..........................................    53

                           Submitted Material

Rosenberg, David, Co-Founder and Chief Executive Officer, 
  AeroFarms, submitted letter....................................    50
Webb, Jonathan, Founder and Chief Executive Officer, AppHarvest, 
  submitted letter...............................................    51
Bowery Farming Inc., submitted statement.........................    52

 
21ST CENTURY FOOD SYSTEMS: CONTROLLED ENVIRONMENT AGRICULTURE'S ROLE IN
       PROTECTING DOMESTIC FOOD SUPPLY CHAINS AND INFRASTRUCTURE

                              ----------                              


                        THURSDAY, JULY 29, 2021

                          House of Representatives,
                                  Committee on Agriculture,
                                                   Washington, D.C.
    The Committee met, pursuant to call, at 10:01 a.m., in Room 
1300, Longworth House Office Building, Hon. David Scott of 
Georgia [Chairman of the Committee] presiding.
    Members present: Representatives David Scott of Georgia, 
Costa, McGovern, Adams, Spanberger, Hayes, Delgado, Pingree, 
Kuster, Carbajal, Khanna, Correa, Craig, Harder, Axne, Schrier, 
Panetta, Thompson, Austin Scott of Georgia, DesJarlais, 
LaMalfa, Allen, Rouzer, Kelly, Bacon, Johnson, Baird, Jacobs, 
Balderson, Mann, Feenstra, Miller, Moore, Cammack, Fischbach, 
and Letlow.
    Staff present: Josh Lobert, Ashley Smith, Ricki Schroeder, 
Patricia Straughn, Jennifer Tiller, and Dana Sandman.

  OPENING STATEMENT OF HON. DAVID SCOTT, A REPRESENTATIVE IN 
                     CONGRESS FROM GEORGIA

    The Chairman. Good morning. The Committee will come to 
order. I want to welcome everyone, and thank you for joining us 
today for this important and much-needed hearing entitled, 21st 
Century Food Systems: Controlled Environment Agriculture's Role 
in Protecting Domestic Food Supply Chains and Infrastructure. 
After opening brief remarks, Members will receive testimony 
from our witnesses today, and then the hearing will be open for 
questions. Members will be recognized in order of seniority, 
alternating between Majority and Minority Members, and in order 
of arrival for those Members who have joined us after the 
hearing was called to order. And when you are recognized, you 
will be asked to please unmute your microphone, and each person 
will have 5 minutes to ask your question or make a comment. And 
if you are not speaking, I ask that you remain muted in order 
to minimize any background noise.
    In order to get to as many questions as possible, the timer 
will stay consistently visible on your screen. This is a 
vitally important meeting. It comes at a time also, ladies and 
gentlemen, that we will have possible votes at 12:30. It is now 
10:00. That gives us 2\1/2\ hours, and then it will end. We are 
going to have a long series of these votes, so I am just asking 
everybody--we have a lot of people, a lot of interests, and we 
want to get everybody in, in time. And I want to start myself 
by giving a very brief opening statement.
    Ladies and gentlemen, this is so important. The future of 
our food supply is at stake, and today's hearing comes at a 
very pivotal moment in our nation's history, the future of our 
nation's food security, and we have a panel of very 
distinguished witnesses who specialize in innovative ways to 
make sure that we keep our nation's food secure. And what we 
are talking about comes under a new category, controlled 
environment agriculture, using cutting edge technologies.
    [The prepared statement of Mr. David Scott follows:]

 Prepared Statement of Hon. David Scott, a Representative in Congress 
                              from Georgia
    Good morning, and welcome to all of the Members and witnesses we 
have here today.
    Today's hearing is one that comes at a pivotal moment in our 
nation's history and is one that I am sure will provide critical 
insight on an important segment of our food supply system.
    Recently, Secretary of Agriculture Tom Vilsack made an excellent 
point--he said, ``In the pandemic, we found that our food system and 
our food supply system, while it is incredibly efficient, is not 
resilient.''.
    That exact point is something I hope we can cover today. I want to 
examine how we can better balance efficiency and resiliency and ensure 
that our food supply system is as abundant, affordable, and safe as 
possible.
    Today's panel of witnesses are experts and entrepreneurs in an 
exciting area of agriculture that this Committee has not spent a lot of 
time discussing. These witnesses specialize in controlled environment 
agriculture, and I look forward to them educating the Committee about 
their industry.
    While a global pandemic certainly magnified our food supply chain 
issues, one of the issues we can cover today is how to ensure a supply 
of fresh fruits and vegetables from all sources. Controlled environment 
agriculture has the ability to fill in gaps where there are food 
deserts, reduce emissions from transportation of produce, and very 
importantly, limit our reliance on imports to fill our needs for fresh 
produce.
    We have an opportunity today to be on the cutting edge of 
technologies and the ability to provide affordable food to more 
households that need it--something I hope we can all agree on.

    The Chairman. And so I definitely want to welcome all of 
you here, and with that I will turn it over to the Ranking 
Member for his opening statement.

 OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN 
                   CONGRESS FROM PENNSYLVANIA

    Mr. Thompson. Mr. Chairman, thank you so much. Good 
morning, and thank you to our witnesses for making the time to 
be with us today. I am eager to learn more about your 
contributions to this sector of our agriculture industry. As I 
have said before, I hope our Committee will move to hold 
hearings that explore the issues facing production agriculture, 
provide opportunities for oversight of the 2018 Farm Bill, and 
receive updates from officials in the Administration, including 
Secretary Vilsack. A hearing to review the state of the rural 
economy and our agriculture industry is long overdue, and I 
appreciate the Chairman's commitment to hold this hearing with 
the Secretary following the August work period.
    Thanks to innovation in agricultural technologies, American 
farmers, and ranchers, and foresters are not only conserving 
resources, but they are doing it while producing more food, 
feed, and fiber. Productivity relative to resource use for 
agriculture is up 287 percent in the United States since the 
1940s, while total farm inputs remain mostly unchanged, the 
most efficient and productive agriculture in the world. Our 
specialty crop producers have also been able to adopt 
innovative technologies over time to increase yields, while 
decreasing inputs. Examples of these innovations can include 
hydroponics, aquaponics, aeroponics, and other greenhouse 
production methods. While hydroponics, and these other methods 
of production in a controlled environment, are not new 
concepts, there is an increased interest in utilizing these 
methods to supplement traditional production agriculture to 
ensure Americans have year-round access to domestic fresh 
fruits and vegetables, and to decrease our dependency on 
foreign countries to supply those same products.
    The diverse panel of experts before us represent all 
segments of our hydroponic and other controlled environment 
methods of production, and I think this hearing presents an 
opportunity to learn more about their work, contributions to 
agriculture, and where we go to from here. As I said earlier, I 
believe these innovative production methods are meant to 
supplement production agriculture, not supplant. It takes all 
sectors of our agriculture industry working together to ensure 
that the United States can continue to have the safest, most 
abundant, and most affordable food and fiber supply in the 
history of the world, and controlled environment agriculture is 
a piece of that larger puzzle.
    I would like to thank our witnesses once again for being 
here with us, and I look forward to hearing your testimony. 
And, Mr. Chairman, with that, I yield back.
    The Chairman. Thank you, Ranking Member, and, without 
objection, I would like to insert into the record this 
statement brought to me by our distinguished colleague, 
Representative Barbara Lee of California. Thank you.
    [The statement referred to is located on p. 49.]
    The Chairman. With that, I now would like to welcome the 
distinguishing panel that we have. Before I get to that, the 
Chair would also request that other Members submit their 
opening statements for the record so witnesses may begin their 
testimony, and to assure that we have ample time for all of our 
questions.
    [The prepared statement of Ms. Schrier follows:]

 Prepared Statement of Hon. Kim Schrier, a Representative in Congress 
                            from Washington
    Thank you, Chairman Scott and Ranking Member Thompson, for putting 
together this hearing on such an exciting and innovative sector of 
agriculture.
    I recently had the opportunity to tour DeGoede Farms in my district 
and saw their Controlled Environment Agriculture (CEA) operation. 
DeGoede Farms is a greenhouse urban farming company that grows 
nutritious food, year-round, using greenhouse hydroponic farming 
systems in the Puyallup Valley in Washington State. Since 2016, they 
have been growing butter lettuce organically and hydroponically and 
they will soon be building a new 40,000 Square Foot greenhouse and 
expanding to more herbs and leafy greens.
    I was particularly excited to learn about the ways DeGoede's 
operation is working to farm sustainably. Hydroponic technology reduces 
their consumption dramatically. DeGoede Farms was able to increase 
their production of herbs and lettuce while using ten times less water 
and eight times less land than with traditional farming methods. The 
reduction in land usage is crucial in areas like Sumner, where the 
amount of traditional farmland is declining due to a boom in 
population. It is also vital in areas where zoning is a significant 
constraint on the development of CEA. While this is generally a local 
jurisdictional issue, I recently heard from Washington State University 
about the need for adaptive use zoning to convert old industrial and 
manufacturing spaces for highly efficient, sustainable CEA production.
    I also wanted to highlight three issues that DeGoede farms raised 
as being necessary for the development of the CEA industry and that I 
want to work with my colleagues to address:

  (1)  Access to labor.

  (2)  Access to low interest loans via USDA rural development and FSA 
            programs.

  (3)  Better support in food safety programs through extension-
            education specifically focused on supporting CEA.

    Finally, I want to take the opportunity to quickly highlight the 
innovative work being done at Washington State University to promote 
CEA in urban and peri-urban areas of Washington. WSU is working with 
new and beginning farmers and ranchers to lower barriers to entry into 
both CEA and traditional agriculture, developing urban and peri-urban 
agriculture networks, and conducting valuable research and extension 
throughout Washington state.

    The Chairman. Now I am very delighted to introduce our 
witnesses. We are very delighted to have you here, our very 
distinguished panelists.
    Our first witness today is Mr. Karim Giscombe. Mr. Giscombe 
is the CEO and founder of PLANT-AG, located in West 
Philadelph--excuse me, West Palm Beach, Florida. He also serves 
as Chair of PLANT-AG--Plant for Tomorrow, and has extensive 
experience working in the investment banking industry, 
previously for Bank of America, and as a former Director for 
Merrill Lynch. Welcome to you, Mr. Giscombe.
    Our next witness is Mr. Aaron Gadouas. Mr. Gadouas is the 
Managing Director of BC Ziegler and Company Investment Bank 
located in Chicago, Illinois, and has worked for 30 years in 
public and corporate finance, extensively in green and 
renewable projects. Welcome.
    Our third witness today is Mr. Edward Verbakel. Mr. 
Verbakel is the CEO of VB Group, and co-founder of Atrium Agri 
Group, both located in the Netherlands. He has almost 30 years 
of experience designing and building controlled environment 
agriculture facilities in countries around the world.
    Our fourth witness today is Mr. Jason Kelley. Mr. Kelley 
serves as Managing Partner to IBM Strategic Partners in Austin, 
Texas. He manages a global team at IBM that is responsible for 
over 750 client engagements around blockchain. In addition to 
serving in corporate America, he has served our country as a 
very brave U.S. Army Airborne Ranger. Thank you.
    Our fifth, and final, witness today is Mr. Kevin Safrance. 
Mr. Safrance is the Executive Vice Chairman of Mastronardi, a 
fourth-generation family operated business in greenhouse 
productions located in Livonia, Michigan. Mr. Safrance has over 
2 decades of experience in the fresh produce industry, and I am 
so pleased to have such a distinguished international group on 
this panel to deal with this urgent issue. There is nothing 
more important than maintaining our food security. As we all 
know, we can do without just about everything else, but we 
cannot do without food. So thank you all for your 
participation.
    The timer will be visible on the screen, as I said, and it 
will count down to zero. And I know there are so many Members 
that want to get on, and we are going to move through this as 
quickly as we can. So let us start first with you, Mr. 
Giscombe. You are recognized for 5 minutes. Please begin when 
you are ready.

   STATEMENT OF KARIM GISCOMBE, FOUNDER AND CHIEF EXECUTIVE 
             OFFICER, PLANT-AG, WEST PALM BEACH, FL

    Mr. Giscombe. Good morning, Mr. Chairman. I would like to 
thank the Committee for the opportunity to address you here 
today. My name is Karim Giscombe. I am the Chairman and Chief 
Executive Officer of Plant Agricultural Systems. Today I speak 
on behalf of the people, which you as a Committee, and the 
broader Administration, serve, the American people. People who 
represent multiple generations and races, and who share a 
common thread, the believe that we can be our best, achieve the 
most, and expect the best, here in America. I also speak on 
behalf of a broader ecosystem of industry participants serving 
the fresh produce supply chain, who collectively cover not only 
all the roles from seed to plate here in America, but do so all 
over the world, and can provide valuable context and insight to 
the delivery of a 21st century food system.
    However, today those very things are at risk as COVID-19 
and adverse weather instances, such as the droughts being 
experienced in the Colorado Basin, continue to force our 
collective appreciation of the fragility of the essential 
services which enable the people, who then enable the economy. 
I am here because my children, just as every child in America, 
deserves fresh, nutritious, contaminant-free fruits and 
vegetables they can trust. I am here because no parent should 
have to come face to face with their child's mortality, 
especially not from the simple act of eating a salad, the way 
Lucas Parker's parents have had to. I am here because it is 
critical that you, our trusted lawmakers, fully appreciate the 
threat that is facing our way of life, the clear and present 
danger to our agricultural system, and act to protect our 
domestic food supply chains and infrastructure while stewarding 
our collective environmental impact.
    I am here because we can no longer ignore the obvious, no 
more than we can go back to simpler times, and we do not have 
time to over-think this situation. If we want to ensure no 
other country such as China, or Russia, or Mexico, or even 
Canada, can control our fresh produce supply, it is absolutely 
necessary to decrease our reliance on these imports, which 
currently top some 53 percent of consumption, and swiftly and 
with intention, increase the scale of controlled environment 
agriculture production in America.
    Sometimes looking back is necessary as to see far enough 
ahead to understand what the choices made today mean for 
tomorrow. This country has never forgotten the value of our 
independence as we grill hot dogs and hamburgers every July 4, 
and I ask everyone here, and watching, to think and tell me 
what you see when you hear the word hamburger. Truth is, that 
image does not need to be verbalized because we all know 
exactly what it looks like. Two of the ingredients synonymous 
with that image, lettuce and tomatoes, are statistically the 
most commonly consumed and purchased products in America, and 
more broadly the world. Today, sourcing them has become more 
and more challenging across the globe. The USDA just issued 
guidance this week regarding increasing food prices, and that 
is in line with global trends. Later this year, when lettuce 
prices skyrocket because of the California droughts, it is the 
American consumer, who you represent, that will be the ones 
impacted, again. This is but one of the reasons we are having 
and must continue this conversation.
    This conversation is about choice. First, the right of 
every person who eats a sandwich, salad, taco, wrap, slice of 
pizza, bowl of cereal with fruit in it, or who drinks a 
smoothie, at home, or from a food service retailer in this 
country, to trust their choice of product and to trust their 
choice of outlet or restaurant to be fresh, nutritious, and 
safe. The actions of the FDA, through the recent Food Safety 
Modernization Act (111-353), are to date the best steps towards 
enabling the trust of the consumer, but it is, and will only 
be, as effective as the infrastructure in place to support the 
mandates outlined in the New Era of Smarter Food Safety 
Blueprint. This is about the choice you, as lawmakers, must 
make to understand and acknowledge the role of the underdog in 
this story, controlled environment agriculture, as not only a 
necessary contributor, but the most viable solution if the 
American people want to trust their food again. This is about 
the choice to build the infrastructure necessary to enable 
American producers to have a viable platform to grow and expand 
their businesses and be competitive in an open market where the 
consumer speaks with their dollar as they do with their vote.
    So let us go back to where I started. This is about the 
people, the people you serve, everybody. Members of the 
Committee, you need look no further than the hard-working 
franchisees of Subway, the largest food service retailer in the 
world, with more than 30,000 locations, and listen to their 
highly publicized complaints about the corporation and the lack 
of quality and transparency of fresh lettuce they are forced to 
serve their consumers. How much longer before the other 
sandwich retailers encounter the same?
    In closing, I respectfully ask the Committee to consider 
the following. With what you now know, the urgency to protect 
our fresh produce supply chain should be beyond question, and 
your first choice is whether the American consumer will pay for 
it with their tax dollars, or enable the----
    [The prepared statement of Mr. Giscombe follows:]

   Prepared Statement of Karim Giscombe, Founder and Chief Executive 
                 Officer, PLANT-AG, West Palm Beach, FL
    Today, I speak on behalf of the people, which you as a Committee, 
and the broader Administration serve; the American people, people who 
represent multiple generations and races, and who share a common 
thread--the belief that we can be our best, achieve the most, and 
expect the best, here, in America. I also speak on behalf of a broader 
Ecosystem of industry participants serving the fresh produce supply 
chain, who collectively cover not only all the key roles from seed-to-
plate, here in America, but do so all over the world, and can provide 
valuable context and insight to the delivery of a 21st Century Food 
System.
    However, today, those very things are at risk as COVID-19 and 
adverse weather instances such as the droughts being experienced in the 
Colorado basin, continue to force our collective appreciation of the 
fragility of the essential services which enable the people who then 
enable the economy. I am here because my children, just as every child 
in America deserves fresh, nutritious, contaminate-free fruits and 
vegetables they can trust. I am here because no parent should have to 
come face-to-face with their child's mortality, especially not from the 
simple act of eating a salad the way Lucas Parker's parents have had 
to. I am here because it is critical that you, our trusted lawmakers, 
fully appreciate the threat facing our way of life, the clear and 
present danger to our agricultural system, and act to protect our 
domestic food supply chains and infrastructure while stewarding our 
collective environmental impact.
    I am here because we can no longer ignore the obvious, no more than 
we can go back to simpler times, and we do not have time to over-think 
this situation. If we want to ensure no other country such as China, or 
Russia, or Mexico, or even Canada, can control our fresh produce 
supply, it is absolutely necessary to decrease our reliance on these 
imports which currently top some 53% of consumption, and swiftly and 
with intention, increase the scale of Controlled Environment 
Agriculture production in America.
    Sometimes looking back is necessary as to see far enough ahead to 
understand what the choices made today, mean for tomorrow. This country 
has never forgotten the value of our independence as we grill hotdogs 
and hamburgers every July 4th, and I ask everyone here, and watching, 
to tell me what you see when you hear the word hamburger. Truth is, 
that image does not need to be verbalized, because we all know exactly 
what it looks like.
    Two of the ingredients synonymous with that image, lettuce and 
tomatoes, are statistically the most commonly consumed and purchased 
products in America, and more broadly, the world. Today, sourcing them 
has become more and more challenging across the globe. The USDA just 
issued guidance this week regarding increasing food prices, and that is 
in-line with global trends. Later this year, when lettuce prices 
skyrocket because of the California droughts, it's the American 
consumer who you represent that will be the ones impacted, again. This 
is but one of the reasons we are having and must continue this 
conversation.
    This conversation is about choice. First, the right of every person 
who eats a sandwich, salad, taco, wrap, slice of pizza, or a bowl of 
cereal with fruit in it, or who drinks a smoothie, at home, or from a 
foodservice retailer in this country, to trust their choice of product 
and to trust their choice of outlet or restaurant to be fresh, 
nutritious and safe. The actions of the FDA through the recent Food 
Safety Modernization Act (FSMA) are to-date, the best steps toward 
enabling this trust for the consumer, but it is and will only be as 
effective as the infrastructure in place to support its mandates as 
outlined in the New Era of Food Saf[et]y Blueprint. This is about the 
choice you, as lawmakers, must make to understand and acknowledge the 
role of the underdog in this story, Controlled Environment Agriculture, 
as not only a necessary contributor, but the most viable solution if 
the American people want to trust their food again.
    This is about the choice to build the infrastructure necessary to 
enable American producers to have a viable platform to grow and expand 
their businesses and be competitive in an open market where the 
consumer speaks with their dollar as they do with their vote.
    So let's go back to where I started today, this is about people; 
the people you serve; every body.
    Members of the Committee, you need look no further than the hard 
working franchisees of Subway, the largest foodservice retailer in the 
world, with more than 30,000 locations, and listen to their highly 
publicized complaints against the corporation regarding the lack of 
quality and consistency of the ``fresh'' lettuce they are forced to 
serve their consumers. How much longer before other sandwich retailers 
encounter the same.
    In closing, I respectfully ask this Committee to consider the 
following:

  1.  With what you now know, the urgency to protect our fresh produce 
            supply chain should be beyond question, and your first 
            choice is whether the American consumer will pay for it 
            with their tax dollars or to enable the financial 
            institutions representing private capital to utilize their 
            experience supporting essential infrastructure to do their 
            jobs within the socially responsible framework being 
            presented here.

  2.  To reaffirm your commitment to protecting the American people and 
            supporting the development of American industry.

  3.  And last, to realize that we cannot be afraid of new technology 
            or the small-minded perceptions of those who do not wish to 
            embrace progress, but must look at what is known as a 
            baseline on which to innovate. Given the challenges we in 
            America and the rest of the world now see as existential, 
            and the benefit of being able to remember a time when 
            people would have asked for faster horses instead of cars, 
            and the fact that today major global conglomerates like GM 
            and Mercedes are following in the stead of the once unknown 
            upstarts like Tesla and making the shift to all-electric 
            act in favor of progress.

    Because this generation and the ones that follow are depending on 
you to do so.

    The Chairman. I am sorry, your time has expired. We are 
going to be on a quick gavel today. Our Members are very 
anxious to get their questions in, and so much more could be 
added at question time. Thank you. And next we have Mr. 
Verbakel. And if I am mispronouncing any of the names, please 
forgive me, but I trust you, I am trying. Thank you.

         STATEMENT OF EDWARD VERBAKEL, CHIEF EXECUTIVE 
 OFFICER, VB GREENHOUSE PROJECTS; FOUNDER, ATRIUM AGRI GROUP, 
                  NAALDWIJK, SOUTH HOLLAND, NL

    Mr. Verbakel. Thank you very much for this introduction. 
First of all, I feel honored to be present here today, although 
from a distance. I would have liked to be there, but I am 
somewhat limited to be there in person. I am from the 
Netherlands. The Netherlands is known for agriculture since a 
very long time. We have to be specialized in trade because of 
our favorable climate and our scarcity of land, so what our 
industry has been doing over the past decades is focus on 
optimalization of everything that can be related to growing of 
fresh produce.
    I am second-generation in our company. My father founded it 
in 1966. He was one of the very first entrepreneurs in the U.S. 
market to start with greenhouse technology, in 1971 on Long 
Island, New York, and ever since we have been exploring your 
country, and been active in over 25 states, and what we see all 
the time is there is an immense production of agricultural 
produce, but the climate change is limiting you in providing an 
even supply of fresh food, and at the same time the consumer 
wants that fresh produce every day.
    So what we have been doing is focusing on what plants to 
serve best, what do they need to optimize growth, and we have 
been able to replicate some of the climate challenges that we 
have. If there is a shortage of light, we can add light. If 
there is a shortage of humidity or cooling, we can add that 
within a controlled environment. Those are all high 
technological solutions by which we can produce fresh food 365 
days, year-round.
    At the same time, we are also active in other continents, 
and what we see is a very striking comparison between 
countries, is that other countries, with all respect, are a 
little bit more progressed in applying these controlled 
agricultural environments than compared to the U.S. So there 
are many opportunities to continue and focus more on controlled 
environment agriculture solutions within the continental United 
States, and limit the import of produce coming from the north 
or from the south where possible.
    If we compare this to countries like China and Russia, we 
see that there is a high element of dedication to import 
technology and become more self-sustainable. We can do the same 
here on the U.S. side as well, but we need a bit more support 
also from government levels. And that is not only in effect 
making this possible in terms of financing, but also in terms 
of permitting, making available that--all of the local 
authorities involved are supporting those ideas.
    I think that there are many opportunities in the U.S. 
market to continue to feed the world, more specifically within 
the U.S. We are coming from a tiny little country. You have 
almost 17 times more inhabitants within the United States 
compared to our country, but at the same time our greenhouse 
surface, per capita, is much higher, and we see the same in 
other areas in the world.
    So I would like to close this by asking you to be more in 
support of controlled environment agriculture, and help the 
U.S. population to have access to safe and healthy food, and 
cope with all of the challenges that we have both in climate, 
reduce transport distance, make food available local--for local 
in a sustainable way by focusing more on the use of energy, the 
use of water--fresh water, where greenhouses, for instance, 
have 15 times less water consumption than compared to open 
field production, and I think there are many opportunities that 
lie ahead of us, so I would like to ask you to make this--
forward, and do this together. Thank you very much.
    [The prepared statement of Mr. Verbakel follows:]

  Prepared Statement of Edward Verbakel, Chief Executive Officer, VB 
   Greenhouse Projects; Founder, Atrium Agri Group, Naaldwijk, South 
                              Holland, NL
    Good morning to you all, and thank you for having me. My name is 
Edward Verbakel and I am CEO of VB Greenhouse Projects out of The 
Netherlands, and I am also one of the founders of the Atrium Agri 
Group, which is a multi-scope Infrastructure as a Service (IaaS) 
provider, of Controlled Environment Agriculture (CEA) developments. The 
group is comprised of some of the leading companies in the CEA services 
space. Regrettably I cannot attend in-person today, but thanks to 
technology, I can still participate in this historic moment. I refer to 
this convening as historic, because with almost 30 years of experience 
designing and building CEA facilities in countries all around the 
world, this is the first time I have witnessed government and private 
sectors coming together in a proactive manner to coordinate efforts to 
develop this type of infrastructure. My father was one of the very 
first from our country to realize Dutch greenhouse technology right 
here in the USA, since 1971 on Long Island, NY. For me it is an honor 
to provide you with relevant information. For this I commend you all. 
What is more common, is state-driven projects in countries much like my 
own where necessity demanded a solution, and in other instances where 
farmers looking to innovate, became early adopters because of the 
contrasting benefits to their conventional practices. In either 
scenario, what is constant is the role my firm and those like us have, 
and continue to play in providing the development and construction 
expertise for all types of projects in all climatic conditions. We can 
provide the best climate for growth.
    I have had the good fortune to see first hand the impact of this 
type of modern agriculture on countries and their economies. As we now 
find ourselves, a planet acutely focused on resource management and 
climate adaptation, I am certain that what I will share with you today 
will resonate and that the initiative taken thus far to advance this 
very important conversation, will culminate in your collective 
understanding and impetus to act to enable all participants in the 
fresh produce supply chain to work cooperatively to deliver a 21st 
Century Food System capable of meeting the demands of today, and 
tomorrow. I would be remiss not to speak to the skeptics towards the 
CEA segment, and say that the facts speak for themselves in all areas 
of consideration, namely Viability, Productivity and Sustainability.

  1.  Viability--the idea that CEA is a nascent industry segment is 
            inaccurate. Producers all over the world have for many 
            years (dating back to the 1970s) utilized varying levels of 
            greenhouse structures to protect and deliver high-risk 
            crops and delicate horticultural products. As with all 
            industries, technology has enabled innovation and growth in 
            all areas of greenhouse production. Additionally, the true 
            benefit has come from the collective growth in widely 
            varying geographies that have allowed for deeper 
            understanding of the environment(s) and how to adapt 
            structures and even products to optimize across all 
            processes.

  2.  Productivity--when compared with other forms of conventional 
            agriculture, what you will see is clear out-performance in 
            all areas by CEA. These areas include, energy saving, water 
            consumption, crop loss and yield per meter (or Square Foot, 
            which is your unit of measure). And this is before taking 
            into account the removal of seasonality which limits 
            traditional production cycles annually.

  3.  Sustainability--in this area, I like to start with the least 
            acknowledged fact about greenhouses, which is that they are 
            in fact reusable structures, and thus allow for 
            transferability, and an elongated useful life. Very few 
            industries can claim circularity of raw materials at such 
            scale. If we then look at resource utilization, the 
            highlight for many reasons is water use, which on average 
            can be upwards of 50-60 percent less than conventional 
            agriculture practices. Another key consideration is the use 
            of renewable energy which then allows for even greater 
            carbon offsets in relation to the use of artificial light.

    I would like focus your attention to what I believe to be a key 
component of this conversation, which is the fact that CEA as a sector 
largely exists, and has grown exponentially over the past 2 decades in 
response to adversity related to agricultural production, and the 
necessity to develop new ways of meeting the demands of food systems 
supporting a global population that is already twice what it was at the 
dawn of the industrial revolution, and growing, fast.
    We have entered into a new era of food production driven by 
developments in technology. This is particularly true in CEA. Whether 
be the engineering and introduction of new materials or the advances in 
climate management, crop monitoring or energy production, each have 
played a key role in making CEA production more accessible to supply 
chains and ultimately the consumers who they serve.
    Levels of automation of operating processes have also risen greatly 
in some production types such as lettuce, where in many instances there 
is little to no human interaction with the actual product, ensuring 
even greater levels of food safety than ever before. This is of 
particular relevance to the broader fresh produce supply chain that is 
most susceptible to risks than other areas.
    More so, it has become clear that the countries with the largest 
economies have or are fully embracing CEA as a core delivery mechanism 
to support their food systems.
    Those of us that have been around long enough, like to think of 
this industry as currently coming of age. Seeing new entrants to the 
market on multiple fronts, is exciting and at the same time sobering, 
because it is clear that there is still a long way to go, and in 
reality, which you will hear or have heard from my colleagues, there is 
a lot that is still missing, which inevitably limits the true potential 
of this type of infrastructure. One such area is that of capital. There 
is no escaping the significant capital expenditure necessary to develop 
CEA facilities, but this is in fact true of all infrastructure. As 
stated earlier, the value of CEA is realized at scale and subsequently 
where projects have experienced the greatest success is where the 
capital has been made available to not only build facilities, but build 
them with the focus on integrity and sustainability. No industry is 
devoid of a spectrum of costs, and what is germane to all is that the 
long (or intermediate) term benefits often outweigh the short term 
costs when properly evaluated. These costs are not merely hard costs 
for the physical infrastructure, but both hard and soft costs of the 
supporting infrastructure, be it digital or human.
    In closing, I would offer to this Committee one last attestation, 
which is that the factors driving the growth of Controlled Environment 
Agriculture have been consistent and the global outlook for future 
development is higher than it has ever been. Thank you again for the 
opportunity today.

    The Chairman. Thank you very much, Mr. Verbakel. And now we 
will turn to, for 5 minutes, Mr. Gadouas.


STATEMENT OF AARON Z. GADOUAS, MANAGING DIRECTOR, B.C. ZIEGLER 
                    AND COMPANY, CHICAGO, IL

    Mr. Gadouas. Thank you for inviting me to participate in 
the discussion today. I appreciate the opportunity to provide a 
perspective on how capital is being deployed to develop 
controlled environment agriculture facilities in food system 
infrastructure. I would like to address three topics this 
morning; first, provide an overview based on what we are seeing 
in the marketplace of food system infrastructure, how it is 
being financed today. Second, summarize the limitations that 
private investors face in deploying capital towards this asset 
class; and third, suggest a path forward to unlock additional 
sources of capital based on our experience of what has worked 
in the past, and our knowledge on how these investments can be 
structured.
    It is clear that innovations in technology and processes 
are transforming food production and supply chain 
infrastructure. What was essentially a land-centered platform 
has diversified into controlled environment agriculture. A 
confluence of recent technology and demand for food safety and 
sustainable production has put us at an inflection point, where 
scalable food systems require large capital expenditures that 
ideally are financed just the way any industrial project is, 
namely, with a combination of equity and debt. What we are 
seeing today, however, is a significant flow of private and 
public equity capital being allocated to ag tech and controlled 
environment facilities. Private equity sources typically fund 
100 percent of the capital expenditures of an indoor facility.
    Equity as a sole source of capital is an exceedingly 
expensive plan of finance for large scale projects. It is true 
that there are many traditional economic developed tools out 
there, but they are not sufficient to finance the scale of the 
production and facilities that are necessary. The heavy lifting 
is almost entirely done by equity. Private equity can't do it 
by itself to provide all the capital that is needed, nor can 
the public equity markets, particularly SPACs, which you have 
seen a lot of, Special Purpose Acquisition Corps. They have 
become subject to regulatory scrutiny, that will likely curtail 
their use in the future.
    The financial institutions and capital markets clearly 
envision the promise of modernizing our food system 
infrastructure. In addition to food safety and accountability, 
the production of food on an environmentally sustainable basis 
is directly in alignment with integrating ESG values, that is 
environmental, social, and corporate governance values, into 
their investment portfolios. Investors want to participate in a 
systematic way. Why, then, are institutional investors, 
particularly fixed-income investors, staying on the sidelines? 
The reason for this is investors perceive the food system as a 
loosely defined jumble of food-related businesses. 
Institutional investors have difficulty organizing a credit 
framework because the food system is not currently viewed as an 
asset class.
    Industry participants and government can play a role to 
better define and empower the food system sector. The 
development of the clean energy and waste-to-energy is a good 
analogy for this. 15 years ago this sector was viewed as 
fragmented, poorly defined, and risky. Today investments in 
renewables are considered an established asset class. The same 
can be done here for ag infrastructure. Designating controlled 
environment agriculture as critical infrastructure is a good 
place to start with this.
    We can also identify a subset of investors within the fixed 
income capital markets that would be perfectly suited to be the 
lead investor in this new asset class. Certain mutual funds, 
managed accounts, and insurance companies that invest in high 
yield tax exempt bonds possess in-house expertise that can 
commit their capital to non-governmental projects that qualify 
for tax-exempt financing under the Tax Code. Perhaps more 
importantly, many tax-exempt investment funds have specific 
mandates to support projects that have social impact, that are 
consistent with ESG values, or finance facilities that are 
deemed to be publicly beneficial. This group of investors has 
access to deep pockets of capital, and will commit their 
attention.
    Here is an example. Credible investment candidates in the 
renewable space that are often too small to be of interest to 
corporate bond investors can be purchased by tax-exempt funds. 
Here is another very common example. An otherwise well-
structured deal, with limited operating history, as a project 
that would be viewed as a risky startup by corporate bond 
investors could be purchased and evaluated by a tax-exempt 
fund. This tax-exempt marketplace serves as an economic 
development tool that is unique to the U.S. capital markets, 
and provides a source of debt financing where other 
alternatives may not exist.
    Amidst the ideas and plans of innovators, industry 
participants, government, at the end of the day it is the 
financing that makes it all happen. We can accelerate the 
development of food system infrastructure in this country by 
establishing a platform to attract and unlock capital in this 
sector----
    [The prepared statement of Mr. Gadouas follows:]

Prepared Statement of Aaron Z. Gadouas, Managing Director, B.C. Ziegler 
                        and Company, Chicago, IL
    Thank you for inviting me to participate in the discussion today. I 
appreciate the opportunity to provide a perspective on how capital is 
being deployed to develop controlled environment agriculture facilities 
and food system infrastructure.
    I am the co-head of our firm's General Municipal and Structured 
Finance practice. Ziegler is an investment firm with an established 
reputation for financing projects in renewable energy, solid waste and 
wastewater treatment, and infrastructure. We serve public and private 
clients, and we have decades of experience and expertise in financing 
projects with debt securities including tax-exempt bonds. Over the past 
5 years we have witnessed tremendous growth in our business to provide 
private capital for ``green'' and environmentally sustainable projects 
such as waste-to-clean energy, recycling, and--most recently--food 
system facilities.
    I will address three topics this morning. First, provide an 
overview, based on what we are seeing in the marketplace, of how food 
system infrastructure is being financed today; second, summarize the 
limitations and challenges that private investors face in deploying 
capital towards this asset class; and third, suggest a path forward to 
unlock additional sources of capital based on our experience of what 
has worked successfully in the past and our knowledge of how such 
investments can be optimally structured.
    It is clear that innovations in technology and processes are 
transforming food production and supply chain infrastructure. What was 
essentially a land centered platform has diversified into controlled 
environment agriculture. A confluence of recent technology and demand 
for food safety and sustainable production has put us at an inflection 
point where scalable food systems require large capital expenditures 
that ideally are financed the same way as other industrial projects--
namely, with a combination of equity and debt. What we are seeing today 
is a significant flow of private and public equity being allocated to 
ag tech and controlled environment facilities. Private equity sources 
typically fund one hundred percent of the capital expenditures of an 
indoor facility. One of the largest indoor producers of leafy green 
vegetables recently announced a merger with a Special Purpose 
Acquisition Corp--a ``SPAC''--which is a transaction that involves the 
sale of shares in the public equity markets. At this time there are 
virtually no sources of capital other than equity that are teed-up and 
willing to move into food system infrastructure.
    Equity as the sole source of capital is an exceedingly expensive 
plan of finance for large scale projects. It is true there are a 
handful of traditional economic development tools utilized by local 
public and private authorities that support food system projects. They 
include tax increment financing, revolving loan programs, small 
manufacturing industrial development bonds and tax incentives. They 
have financed food arcades and farmer's markets, retail outlets, farm 
loan programs, and some food processing and cold storage businesses. 
But none of these tools are adequate to finance large scale food 
infrastructure projects. The heavy lifting is almost entirely done by 
equity. Private equity by itself cannot provide all the capital that is 
needed to build out all of the critical food infrastructure and 
essential services that will be needed. The same is true with the 
public equity markets, and SPACs in particular, as they have become 
subject to regulatory scrutiny that will likely curtail the formation 
of new SPAC entities, going forward.
    Financial institutions and the capital markets clearly envision the 
promise of modernizing our food system infrastructure. In addition to 
food safety and accountability, the production of food on an 
environmentally sustainable basis is directly in alignment with 
integrating ESG values (environmental, social and corporate governance 
values) into their investment portfolios. They want to participate in a 
systematic way. Why, then, are institutional investors--particularly 
fixed income debt investors--staying on the sidelines?
    The reason for this is investors perceive the food system as a 
loosely defined jumble of food-related businesses. Institutional 
investors have difficulty organizing a credit framework because the 
food system is not currently viewed as an asset class. Industry 
participants and government can play a role to better define and 
empower the food system sector. The development of the clean energy and 
waste-to-energy sector is a good analogy. Fifteen years ago, this 
sector was viewed as fragmented, poorly defined, and risky. Today, 
investments in ``renewables'' are considered an established asset 
class. The same can be done for food infrastructure.
    Designating Controlled Environment Agriculture as critical 
infrastructure is a good place to start. We can also identity a subset 
of investors within the fixed income capital markets that would be 
perfectly suited to be the lead investors in this new asset class. 
Certain mutual funds, managed accounts and insurance companies that 
invest in high yield tax-exempt bonds possess in-house expertise to 
evaluate and ultimately commit capital to non-governmental projects 
that qualify for tax-exempt financing under the tax code. Perhaps more 
importantly, many tax-exempt investment funds have specific mandates to 
support projects that have social impact, are consistent with ESG 
values, or finance facilities that are deemed to be publicly 
beneficial. This group of investors has access to deep pockets of 
capital and will commit their attention and money to projects that may 
not attract the attention of other bond investors. Here is an example: 
creditable investment candidates in the renewables space that are often 
too small to be of interest to corporate bond investors may be 
purchased by tax-exempt funds if the project qualifies for tax-exempt 
financing. Here is another common example: an otherwise well-structured 
deal with limited operating history that is viewed as a risky start-up 
by a corporate debt investor may be evaluated as a project financing by 
a tax-exempt fund. The tax-exempt marketplace serves as an economic 
development tool that is unique to the U.S. capital markets and 
provides a source of debt financing where other alternatives may not 
exist.
    The United States Code designates a number of private activities as 
``Exempt Facilities'' that qualify for tax-exempt financing. Such 
activities include solid waste recovery, small manufacturing 
facilities, multifamily housing, certain forms of mass transit, among 
others. Including Controlled Environment Agriculture as an Exempt 
Facility would define and formalize a new asset class, incentivize 
private capital deployment into a desired essential service and 
critical infrastructure, and diversity and expand the pool of 
affordable capital to project sponsors. It would also target the most 
obvious natural buyers of food system project finance debt--tax-exempt 
bond investors.
    Exempt Facility bonds have been acknowledged as an economic 
development tool in the United States for decades. Bond financing of 
qualified projects under the United States Code involves no financial 
outlay by any governmental or public body, no additional tax burden of 
any kind, and does not create an administrative burden on public 
resources or time. It is also noteworthy to point out that the 
standards will be high. Qualifying projects that are ultimately 
underwritten and purchased by debt investors are likely to share these 
characteristics: they may include a public-private partnership 
component; the project sponsors will incur financial risk, so that 
their interests will be aligned with investors and other stakeholders; 
the projects will have fully documented contractual support with 
creditworthy suppliers and customers; the production process and 
specifications of the physical plant will be thoroughly vetted by 
qualified third-parties; the business model will be validated by 
independent industry experts; and best practices for initial and 
continuing disclosure will be implemented. We have seen time and again 
the success of tax-exempt financing as an economic development tool. It 
can be utilized to develop a modern food system infrastructure as well.
    Amidst the ideas and plans of innovators, industry participants and 
government, at the end of the day it is the financing that makes it all 
happen. We can accelerate the development of food system infrastructure 
in this country by establishing a platform to attract and unlock 
capital suited to this sector by designating it as a critical asset 
class and enabling participation by sector-aligned investors to take a 
leading role.
    Thank you for your interest and attention. I look forward to a 
continuing dialogue.

    The Chairman. Thank you. You were right on time. And now we 
will hear from Mr. Kelley. Mr. Kelley, you are recognized for 5 
minutes.

        STATEMENT OF JASON E. KELLEY, GENERAL MANAGER, 
 GLOBAL STRATEGIC PARTNERS AND BLOCKCHAIN FOR GLOBAL BUSINESS 
                   SERVICES, IBM, AUSTIN, TX

    Mr. Kelley. Thank you, Chairman Scott, and Ranking Member 
Thompson. I am IBM's General Manager for Global Strategic 
Partners and Blockchain. I manage teams around the world 
responsible for more than 1,000 blockchain client engagements, 
with large companies like Dole and Walmart, and small farms, 
such as those that Representatives Pingree, LaMalfa, and 
Hartzler are familiar with. Like a number of you 
Representatives, I am also a veteran, having had the privilege 
of serving our country as a U.S. Army Airborne Ranger. It is a 
pleasure today to testify on blockchain, and its potential to 
vastly reduce the cost and complexity of food safety, whilst 
adding trust and security. Blockchain can enable transparency, 
shared visibility, accountable monitoring of production and 
reclamation, with more effective food safety and sustainability 
practices. My testimony will further explain blockchain and 
share more about its value.
    Blockchain is a secure, cloud-based technology. It is a 
shared, immutable ledger for recording transactions and 
tracking assets transparently among a trusted invited network. 
Each permissioned participant has an exact copy of the ledger. 
All information a member wants to share: the who, the what, 
when, and where, even the condition of a transaction, such as 
temperature of a food shipment is recorded as a data block on 
the ledger, which is propagated throughout the network. Each 
block is connected to the blocks before and after it, forming a 
chain of data blocks, if you will, that track an asset from its 
source to its consumption. Each block is linked together with 
encryption, securely preventing any alteration without 
detection and permission. With this, all permissioned 
participants, such as a supply chain, have trusted, up to date, 
transparent information.
    Blockchain, however, is not a panacea. Instead, it can 
provide substantial improvements over the status quo, enabling 
greater trust and security, better efficiencies and resiliency, 
as well as improved sustainability. Today's partial digital and 
paper documentation across an increasingly complex network of 
food suppliers, distributors, and retailers makes 
accountability slow, security questionable, and threats 
increased. As a result, food recalls cost about $30 million per 
incident, and compromises all those things that we like to have 
with consumer trust.
    Blockchain provides immediate, shared, and completely 
transparent information to the specific person who is 
permissioned to see it. Simply put, it promotes trust. If a 
food safety issue is reported--if any issue is reported, those 
using blockchain would immediately know who is impacted, and 
the potential actions they could take. This can improve 
efficiencies and resiliency. According to the UN, 1.4 billion 
tons of perishable food is wasted each year due to 
inefficiencies. That is \1/3\ of all processed food. Blockchain 
could eliminate time wasted in audits and reconciliations since 
participants know the origin, real time location, and status of 
their food products. Further, integrating artificial 
intelligence with blockchain provides retailers with insights 
to proactively remove products before an issue even occurs, and 
predict inventory needs, flattening the demand spikes and 
lulls. Enabling a blockchain that tracks product loss, waste, 
and expiration dates could save over $150 billion annually in 
food waste.
    As I close with sustainability, blockchain can enable 
sustainability practices to help reduce the ecological 
footprint and food supply challenges that we have day to day. 
Farmers, greenhouses, and producers could easily share audits, 
certificates, and documentation validating their sustainable 
and ethical practices. Distributors, transporters, and 
retailers could be better informed to make sustainable choices. 
With blockchain and AI, they can get suggestions on the most 
sustainable shipping methods, routes, and local sourcing 
opportunities. So, with blockchain, a trusted way to share 
data--which it is--consumers can confidently know the origin of 
their food, and how green and clean it just may be. 
Traceability, security, and sustainability go hand in hand. 
Blockchain can enable that, and even more. So thank you, Mr. 
Chairman, Ranking Member Thompson, and the Committee for this 
time I have had to speak with you today. I welcome your 
questions.
    [The prepared statement of Mr. Kelley follows:]

    Prepared Statement of Jason E. Kelley, General Manager, Global 
 Strategic Partners and Blockchain for Global Business Services, IBM, 
                               Austin, TX
Introduction
    Good morning, Chairman Scott, Ranking Member Thompson, and 
distinguished Members of the Committee. Thank you very much for the 
opportunity to testify before the Committee on this important topic.
    My name is Jason Kelley, and I am IBM's General Manger for Global 
Strategic Partners and Blockchain for Global Business Services, and in 
addition to serving in corporate America, I've also had the great 
privilege and honor to serve my country as a U.S. Army Airborne Ranger. 
Today, I have the pleasure of managing a global team at IBM that is 
responsible for over 750 client engagements around blockchain. These 
transformative projects include supply chain, financial services, 
government, healthcare, travel and transportation, insurance, chemicals 
and petroleum, and more.
    Within the food industry, IBM uses blockchain technologies to 
reimagine data transparency with a new level of digital interactions in 
the food supply chain ecosystem. Our partners today include not only 
household names like Dole and Walmart, but also small farms, like the 
ones in California where the majority of our leafy greens originate. 
These food suppliers share common goals: deliver fresher, safer food to 
consumers and ensure unsafe food is quickly identifiable and traceable. 
We are also pleased to work with others that share our vision for 
transforming food safety through responsible technology. PLANT-AG, who 
is also testifying here today, is one of those clients.
    The challenges that have risen during this pandemic greatly 
heighten the need to enhance America's ability to adopt a more 
collaborative digital, traceable, and safer food system. That is why I 
appreciate the Committee's desire to explore blockchain technology--
especially its applications beyond cryptocurrency and financial 
technology--because blockchain has the potential to vastly reduce the 
cost and complexity of food safety. With blockchain, we can enable open 
transparency for tracking the movement of food, monitoring the 
processes of production and reclamation, and administering the 
enforcement of effective food safety and sustainability practices.
    Today, I come before you to share those experiences and how the 
right digital infrastructure can enable a more resilient, sustainable, 
and safer food supply chain. My testimony will cover what blockchain is 
and what it is not; its key benefits, including greater trust and 
security, better efficiencies and resiliency, and improved 
sustainability; and, examples of it in use today.
What is blockchain?
    Businesses--and government--run on data. The faster it's received 
and the more accurate it is, the better. Enter blockchain, a secure 
cloud-based technology that is ideal for securely delivering data when 
multiple entities need it, and where and how they need it most. 
Blockchain provides immediate, shared, and completely transparent 
information to the specific, trusted person who is permissioned to see 
it.
    IBM defines blockchain as a shared, immutable ledger for recording 
transactions and tracking assets with transparency, which builds trust. 
Tracking assets is inclusive of the assets themselves, as well as the 
ability to have transparency in securely tracking orders, payments, 
accounts, produce, and the associated data across industries, 
geographies, and more.
    Each member invited to be part of the blockchain network has an 
exact copy of the ledger. Any information of a transaction that a 
member wants to share--the who, what, where, when, how much, and even 
the condition of a transaction, such as the temperature of a food 
shipment--is recorded as a ``data block'' on the ledger, which is 
propagated throughout the network.
    Each block is connected to the ones before and after it. These 
blocks form a chain of data that can track an asset as it moves from 
place to place or ownership changes hands. The blocks confirm the exact 
time and sequence of transactions, and the blocks link securely 
together to prevent any block from being altered or being inserted 
between two existing blocks.
    Importantly, no participant can change or tamper with a transaction 
after it's been recorded to the shared ledger. If a transaction record 
includes an error, a new transaction must be added to reverse the 
error, and both transactions are then visible.
    Therefore, all permissioned participants in an interaction have a 
trusted, up-to-date ledger that reflects the most recent transactions 
and these transactions, once entered, cannot be changed.
    Blockchain's power to transform is that it enables co-development 
of a shared copy of the truth. What a group can achieve together far 
exceeds what any individual member can achieve by themselves. 
Furthermore, to speed this sharing of information, a set of rules--
called a smart contract--can be stored on the blockchain and executed 
automatically.
    Smart contracts are simply programs stored on a blockchain that run 
when predetermined conditions are met. They typically are used to 
automate the execution of an agreement so that all participants can be 
immediately certain of the outcome, without any intermediary's 
involvement or time loss. They can also automate a workflow, triggering 
the next action when conditions are met.
Blockchain is neither bitcoin nor a panacea
    While most people who have heard of blockchain associate it with 
the cryptocurrency bitcoin, that use case is not what I'm talking about 
today. While bitcoin does run on blockchain technologies, it is 
important to understand that not all blockchain technologies are the 
same. For example, bitcoin operates with a network of pseudonymous 
participants, where shielding one's identity is the outcome.
    The blockchain I am discussing is one built on open standards 
technology that is designed to be used as a trusted network to handle 
interactions between known parties. By way of comparison, the Internet 
uses a protocol (TCP/IP) to direct network traffic, which provides part 
of the backbone necessary to allow users to access the application 
layer (websites and platforms). Similarly, blockchains serve as the 
backbone protocol of new peer-to-peer network arrangements that allow 
for a wide range of uses, from cryptocurrency-based transactions, like 
those made possible by bitcoin, to supply chain management and 
verification.
    While blockchain is not a panacea for all the challenges presented 
by food trust and safety issues, a digital infrastructure based on 
blockchain protocols can provide substantial improvements in value over 
the status quo. It can provide a trusted capability for transparency 
and timely sharing of secure data.
    Furthermore, the sharing of trusted, secure data with provenance 
from multiple stakeholders that blockchain enables can also be 
critically helpful to accelerate trustworthy artificial intelligence 
(AI) applications. Blockchain's immutable, transparent digital record 
offers greater insight into the framework behind the AI, reducing 
possible distrust and mystery that some ascribe to the technology. It 
also creates greater trust in the development of AI as the data used to 
train the AI models can be decentralized, verified, and transparent. 
Accordingly, integrating AI on a digital infrastructure built on 
blockchain can help unlock further value over the current status quo.
Blockchain benefits--greater trust and security, better efficiencies 
        and resiliency, and improved sustainability
    That value and the use case I am discussing today is how blockchain 
could help advance end-to-end food traceability and, ultimately, 
transparency to drive consumer protection and trust. It can do this by 
enabling:

  1.  Greater trust and security

  2.  Better efficiencies and resiliency

  3.  Improved sustainability
Greater trust and security
    An ecosystem of trust is critical for all participants in the food 
supply chain, from source to consumption. This includes a very 
expansive and collaborative value chain of farmers to distributors, to 
logistic partners, to retailers, to the family sitting down at their 
table to eat. For example, food recalls are an immense safety problem 
and a threat to profitability. Last year, Food Safety magazine counted 
337 food safety recalls in the U.S.\1\ Companies surveyed put costs at 
up to USD 30 million per incident,\2\ stemming from direct costs, plus 
such indirect costs as penalties, lawsuits, lost sales, and brand 
damage. In addition to the societal and business impact, huge stocks of 
food are wasted and consumer trust is crushed.
---------------------------------------------------------------------------
    \1\ Food Safety Magazine: A Look Back at 2019 Food Recalls--https:/
/www.food-safety.com/articles/6487-a-look-back-at-2019-food-recalls.
    \2\ SF&WB: Evaluating the real costs of a food product recall--
https://www.snackandbakery.com/articles/92105-evaluating-the-real-
costs-of-a-food-product-recall.
---------------------------------------------------------------------------
    Tracing food across the supply chain takes days, if not weeks, as 
companies struggle to find and manage a mix of digital and paper-based 
food data documentation across a complex and growing network of 
suppliers and distributors.
    With a digitized food system infrastructure, network participants 
could have access to tools and data to improve food safety and become 
proactive contributors to bettering the food system as a whole. 
Further, with permissioned blockchain, the members of this members-only 
network can rest assured that they are receiving accurate and timely 
data and that their confidential blockchain records will be shared only 
with network members that have specifically been granted access. And, 
consensus on data accuracy is required from all network members, and 
all validated transactions are immutable because they are recorded 
permanently. No one, not even a system administrator, can delete a 
transaction or make an edit without their action and identity being 
known.
    This means that if a food safety issue is reported, it would 
immediately identify who is impacted and who should take action. One 
example would be our work with PLANT-AG, where our blockchain platform 
could capture and share seed and farming level data for fresh produce 
with PLANT-AG's instrumented greenhouse facilities to enable better 
visibility and trust.
Better efficiencies and resiliency
    Inefficiency in the food system is a pervasive problem worldwide, 
made more apparent by the COVID-19 crisis, which has stressed the 
global supply chain.\3\ With so many participants, there are endless 
opportunities to lose efficiency and profits. Inefficiencies negatively 
affect consumer pricing, the carbon footprint, food waste, and expected 
freshness. According to the United Nations, 1.4 billion tons of 
perishable food is wasted each year due to inefficiencies found with 
the food supply chain.\4\
---------------------------------------------------------------------------
    \3\ BCG Henderson Institute: Tackling the 1.6-Billion-Ton Food Loss 
and Waste Crisis--https://www.bcg.com/publications/2018/tackling-1.6-
billion-ton-food-loss-and-waste-crisis.
    \4\ Supply Chain Digital: Billions of tons of food wasted in global 
supply chain--https://supplychaindigital.com/logistics-1/billions-tons-
food-wasted-global-supply-chain.
---------------------------------------------------------------------------
    With a distributed ledger that is shared among members of a 
network, time-wasting record reconciliations are eliminated. While one 
unexpected event could cause a cascading array of supply chain 
disruptions, blockchain can mitigate this through ``smart contracts.'' 
As shared earlier, a smart contract can be automatically triggered when 
pre-defined business conditions are met. This gives near real-time 
visibility into operations and the ability to take action earlier 
should there be an exception.
    Using blockchain, all food system participants could know the 
provenance, real-time location, and status of their food products. 
Further, integrating AI on the blockchain, retailers could receive 
recommendations on what products to recall from store shelves because 
of expiration and maintain inventory visibility during demand spikes, 
for example by automating re-ordering when certain demand thresholds 
are met. Armed with better data on a blockchain, companies could also 
use AI to develop more accurate supply and demand forecasting models, 
localize the sourcing of ingredients and restructure contracts. 
Enabling a blockchain system that tracks product loss, waste, and 
expiration dates could save $150 billion annually in food waste.\5\
---------------------------------------------------------------------------
    \5\ IBM: 7 Benefits of IBM Food Trust--https://www.ibm.com/
blockchain/resources/7-benefits-ibm-food-trust/.
---------------------------------------------------------------------------
Improved sustainability
    Across the globe, consumers are demanding to know more about their 
food--where it came from, the effect of its production methods on the 
environment, and how workers and animals were treated in the process. 
In fact, 54 percent of consumers say it's at least somewhat important 
that the food they buy is produced in an environmentally sustainable 
way.\6\ Sustainability is no longer a bonus; it's imperative for both 
the consumers who demand it and for future business models.
---------------------------------------------------------------------------
    \6\ Food Insight: Interest in Sustainability, Plant-Based Diets 
Among Trends in IFIC Foundation's 2019 Food & Health Survey--https://
foodinsight.org/interest-in-sustainability-plant-based-diets-among-
trends-in-ific-foundation-2019-food-and-health-survey/.
---------------------------------------------------------------------------
    A digital food supply chain powered by blockchain enables new 
levels of trust and transparency across the food ecosystem, increasing 
awareness of sustainability opportunities and practices during each 
step of the food chain. For example, farmers, producers, and other food 
actors can automatically digitize and easily share audits, 
certificates, and other records, proving that they utilize and promote 
sustainable and ethical practices. And, distributors, transporters, and 
retailers can be better informed to make sustainable choices. Using AI 
on the blockchain, applications can suggest the most sustainable or 
cost-effective shipping method and recommend local or alternative 
sourcing.
    Furthermore, the cost of unsustainable food practices creates 
unnecessary investment and expenditures. ``True Cost Accounting'' sheds 
light on the price of unsustainable food practices. Unsustainable 
sourcing and biodiversity loss, due to unsustainable production 
methods, result in hidden costs. Research shows that consumers 
unknowingly pay twice as much for their food due to such costs. With 
the global population expected to boom from seven to ten billion by 
2056, companies are looking for ways to decrease their ecological 
footprints and blockchain can help.\7\
---------------------------------------------------------------------------
    \7\ IBM Focus on Sustainability--https://www.ibm.com/downloads/cas/
R8VDMJ4Y.
---------------------------------------------------------------------------
Blockchain at work--examples of improved supply chains
    In 2017, IBM built digitalized supply chains or ``food trust'' for 
our clients based on blockchain technologies. This experience has shown 
that when using blockchain, we can track Walmart's leafy greens, 
Nestle's Gerber-branded sweet potato, apple and pumpkin baby foods, and 
more. We can trace these foods to their origins in seconds versus 
traditional methods that can take a week or longer. This trust now 
includes more than 100 growers, producers, and sellers, including 
grocery giants Walmart and Albertsons.
    Look at the seafood supply chain--it's rippled with inaccuracies. 
According to research by the environmental advocacy group Oceana,\8\ as 
many as one in five of the fish samples tested were mislabeled.
---------------------------------------------------------------------------
    \8\ National Geographic: What is seafood fraud?--https://
www.nationalgeographic.com/environment/2019/03/study-finds-seafood-
mislabeled-illegal/.
---------------------------------------------------------------------------
    Blockchain is helping to bring order and transparency to one of the 
world's most complex supply chains--as close to 80 percent of the 
seafood Americans eat is either imported out-right, or it has been 
exported and re-imported for processing. Working with Hampton Bays, New 
York-based Manna Fish Farms, IBM is building a traceability network for 
sustainably-raised aquacultured fish and shellfish on blockchain.
    Furthermore, this digital platform could help reward the fisherman, 
sustainable aquaculture farms, and their trusted networks for their 
efforts. Before blockchain, there was no way to prove that you got your 
catch onto ice a little faster than your peers, or that you used more 
sustainable methods. Now, there is.
    Blockchain can help advance end-to-end food traceability and, 
ultimately, transparency to drive consumer loyalty, protection and 
trust.
Conclusion
    Let me close with my appreciation again to this Committee for 
exploring how digital infrastructure can accelerate improvements in our 
food supply chain. I have also spoken to leaders at the U.S. Food and 
Drug Administration and support their efforts to find and implement 
tangible strategies to modernize the food industry. The U.S. Department 
of Agriculture is also making positive strides, including a blockchain 
traceability ``farm to store'' pilot with Walmart and IBM.
    We applaud all of these conversations and many others we are having 
with farmers, fishers, distributors, transporters, retailers, 
regulators, and other stakeholders in the food supply network. We are 
happy to support these conversations as we believe blockchain is a 
game-changer for food safety.
    Again, thank you for the opportunity to discuss such an important 
topic.

    The Chairman. Thank you. Thank you very much. And now Mr. 
Safrance, you are recognized for 5 minutes.

          STATEMENT OF KEVIN SAFRANCE, EXECUTIVE VICE 
  CHAIRMAN, MASTRONARDI PRODUCE LIMITED, MASTRONARDI PRODUCE--
                     USA, INC., LIVONIA, MI

    Mr. Safrance. Good morning. Thank you, Chairman Scott and 
Ranking Member Thompson, for holding a hearing to discuss this 
extremely important topic of controlled environment 
agriculture, or CEA, and for inviting Mastronardi Produce to 
appear before you and share our perspective story.
    Mastronardi Produce is a fourth-generation family operated 
business devoted to providing high quality fresh fruits and 
vegetables to people across North America and beyond. As a 
pioneer and industry leader in greenhouse farming, Mastronardi 
prides itself on producing consistently flavorful produce in an 
environmentally and worker-friendly manner. We are the largest 
CEA farming and distribution operation in North America. Our 
direct workforce represents approximately 4,000 jobs across the 
U.S. We have farms in five states--Michigan, New York, Maine, 
Ohio, Colorado--and cooled distribution facilities in another 
five states--Pennsylvania, Michigan, Texas, Florida, and 
California. You have called this hearing today to examine the 
contribution CEA farming can make to protect domestic food 
supply chains and infrastructure. We believe CEA farming is the 
key to sustainably and efficiently strengthening America's food 
supply chain and would like to offer several key thoughts on 
this.
    First, because of the unique way in which a range of fruits 
and vegetables can be grown indoors, CEA farming enables more 
produce to be grown closer to stores and retailers that serve 
American consumers. Increasing domestic CEA farming would 
significantly help to address the problem of relying on more 
and more imports to feed America. Currently more than \1/2\ of 
all fruits and nearly \1/3\ of all vegetables are imported to 
the U.S., including 61 percent of all tomatoes. To balance this 
trend, the U.S. must embrace CEA, which is widely used in 
Europe, Canada, and Mexico, to meet growing consumer demand. 
Much of the rest of the world is far ahead of us in achieving 
domestic food security through CEA acreage, as there is 
approximately 520,000 acres of CEA in Europe, 50,000 in Mexico, 
compared to only 6,000 in the United States.
    Second, CEA farming permits the grower to control and 
monitor virtually all of the elements of the environment, from 
the nutrients that plants receive to advanced computer systems, 
with hundreds of thousands of data points to control and adjust 
humidity, temperature, light, climate, and other environmental 
factors. Environmental sustainability is at the forefront of 
many conversations these days, and it is always a primary 
consideration of CEA farmers. CEA greenhouses use ten times 
less water and require ten times less land than conventional 
farms. They also significantly reduce the produce sector's 
carbon footprint since they can be built in specific areas to 
shorten distances from greenhouses to customers. They use 
integrated pest management systems to minimize the use of 
pesticides and have pioneered a traceback food safety system to 
reduce food-borne illnesses.
    Third, the primary barrier to sustaining and expanding CEA 
operations in America is that we, like many other firms, lack a 
stable workforce to help us with operations and harvesting. 
Despite our farms being climate controlled, and the day-to-day 
work being done without being subject to harsh elements, CEA 
farms, again, similar to many other farms, struggle to attract 
and maintain a stable workforce, despite our efforts to eagerly 
seek out and hire qualified domestic workers. Whenever we are 
unable to find those qualified workers, we are forced to turn 
to contractors or the H-2A Program. The program, however, has 
grown cumbersome and unreliable for this modern and sustainable 
type of farming, that, frankly, wasn't contemplated when the H-
2A Program was first developed. In fact, during the pandemic, 
we grew more food than we were able to even harvest with our 
current workforce, which meant we were forced to throw food 
away, rather than harvest it and sell it or donate it.
    The U.S. has an opportunity to meet growing consumer demand 
with expanded U.S. production of fresh produce, and Mastronardi 
is proud to add its name to a long list of businesses and 
organizations asking Congress to act on the issue of 
agricultural labor, which will in turn help our domestic food 
supply chain. We urge Committee Members to continue to work 
with your counterparts in the Senate to pass the Farm Workforce 
Modernization Act (H.R. 1603), but also to address the unique 
needs of our segment of the industry as part of that reform 
legislation. This will unleash a new era in American 
agriculture, one that grows far more of our produce 
domestically on environmentally controlled farms that provide 
lower cost, higher quality, and, most importantly, reliable 
produce that American consumers demand to live healthier lives.
    I want to thank this Committee for the chance to discuss 
our business, and the remarkable opportunities controlled 
environmental agriculture presents to the United States. CEA 
farms and the fruits and vegetables they produce will allow us 
to meet the challenge of feeding a growing population with 
healthier foods.
    [The prepared statement of Mr. Safrance follows:]

    Prepared Statement of Kevin Safrance, Executive Vice Chairman, 
 Mastronardi Produce Limited, Mastronardi Produce--USA, Inc., Livonia, 
                                   MI
    Good morning. Thank you, Chairman Scott and Ranking Member Thompson 
for holding a hearing to discuss this extremely important topic, and 
for inviting Mastronardi Produce to appear before you and share our 
perspective and story. My name is Kevin Safrance. You may be familiar 
with our company's main fresh fruit and vegetable brand, Sunset and 
sub-brands, Campari', Wild Wonders', Flavor 
Bombs', One Sweet', WOWTM berries, and 
others, found on the largest retailer shelves throughout the U.S. These 
and many other fruit and vegetable varieties are grown right here in 
America in sustainable, state-of-the-art, highly efficient indoor 
farms, using modern farming technology many now refer to as Controlled 
Environment Agriculture, or CEA.
    Along with my brother-in-law our Chief Executive Officer and 
President, Paul Mastronardi, the Mastronardi family has the honor of 
appearing before this Committee today to discuss the benefits of 
Controlled Environment Agriculture. As became painfully clear over the 
past year and a half, the United States has a fragile domestic food 
supply chain and infrastructure that require investment, not just to 
carry us through challenges but to take care of Americans in good times 
and bad. Currently, more than half of all fruits are imported to the 
United States and nearly \1/3\ of all vegetables are imported. This, 
while American farms--especially highly efficient CEA farms--have the 
ability and desire to increase America's food supply from farming done 
right here in our country. In fact, during the pandemic and at other 
times, we grow more food than we are able to harvest with our current 
workforce, which means that we are forced to throw food away rather 
than harvest and sell or donate it. We believe CEA farming is the key 
to quickly, sustainably, and efficiently strengthening America's food 
supply chain. We simply need more workers to help us get the job done. 
With an enhanced workforce, we are confident we can make a rapid and 
significant contribution to the strength of the nation's food supply.
    Mastronardi Produce is a fourth-generation family operated business 
devoted to providing high-quality fresh fruits and vegetables to people 
across North America and beyond. As a pioneer and industry leader in 
greenhouse farming, Mastronardi prides itself on producing consistently 
flavorful tomatoes, peppers, cucumbers, berries, and leafy greens in an 
environmentally and worker-friendly manner. Our direct workforce 
represents approximately 4,000 jobs across the United States making 
Mastronardi the largest CEA farming and distribution operation in North 
America. This includes farms in Coldwater, Michigan; Oneida, New York; 
Madison, Maine; Wapakoneta, Ohio; and Brush, Colorado. Mastronardi is 
also proud to have approximately 1 million square feet of cooled 
distribution facilities throughout the country located in Jonestown, 
Pennsylvania; Livonia, Michigan; Laredo, Texas; Lakeland, Florida; and 
Castroville, California.
    Our geographic footprint allows us to reach American consumers 
within hours of our farms and distribution facilities. Mastronardi 
serves the top retailers and major food service companies in the United 
States. This supply chain provides consumers with a consistent and 
reliable supply of flavorful, nutritious produce.
    In the 1920's, Paul's great grandfather, Armando Mastronardi 
established Mastronardi's farming roots when he moved to North America 
and purchased a field farm. It was Paul's grandfather--Umberto--who 
traveled to the Netherlands and witnessed first-hand the benefits of 
growing produce in a protected greenhouse environment. This led to 
Umberto constructing the first commercial greenhouse in North America. 
Umberto's son--Don--unexpectedly took over the Mastronardi business at 
age 25 and expanded its distribution operations into Detroit, Michigan 
in the early 1970's. Paul, grew up in the business learning how to make 
boxes and harvest fruit from an early age. Paul soon realized that 
consumers sought after more readily available flavorful tomatoes, which 
greenhouse farming methods provide. Mastronardi's innovative 
realization led to the first greenhouse grown grape tomato. We pride 
ourselves on innovation in all aspects of the business, including 
industry leading advancements in top-seal packaging that reduced 
plastic use more than 20%, and increase use of sustainable compostable 
packaging.
    You've called this hearing today to examine the contribution CEA 
farming can make to Protecting Domestic Food Supply Chains and 
Infrastructure. We would like to offer several key thoughts on this.
    First, because of the unique way in which a wide range of fruits 
and vegetables can be grown indoors, CEA farming enables significant 
amounts of fresh fruits and vegetables to be grown closer to the stores 
and retailers that serve American consumers. This is vitally important 
considering the transportation and shipping issues experienced by many 
during the pandemic, as well as the damaging effects of climate change 
and inclement weather. Security of the domestic food supply can only be 
accomplished with a significant expansion of CEA farms in the United 
States. Much of the rest of the world is far ahead of the U.S. in 
achieving domestic food security through CEA acreage. There are 
approximately 520,000 acres of CEA in Europe and 50,000 in Mexico, but 
only 6,000 in the U.S. most of which does not contain updated advanced 
technology. As we see a drastic imbalance of CEA produce acreage, we 
also find the U.S. relying more and more on imports to meet the present 
and increasing consumer demand for fresh fruits and vegetables. Nearly 
\2/3\ of fresh fruits and \1/3\ of vegetables are imported into and 
consumed annually in the U.S.1-2  For certain categories of 
vegetables, like tomatoes, more than 60% are imported. To balance this 
trend, the U.S. must embrace CEA, which is widely used in Europe, 
Canada, and Mexico, to meet growing consumer demand.
---------------------------------------------------------------------------
    \1\ https://migration.ucdavis.edu/rmn/blog/post/?id=2498 (tomatoes 
61%).
    \2\ https://migration.ucdavis.edu/rmn/blog/post/?id=2569.
---------------------------------------------------------------------------
    Second, CEA farming permits the grower to control and monitor 
virtually all of the elements of the environment, from the nutrients 
the plants receive to advanced computer systems with hundreds of 
thousands of data points to control and adjust, humidity, temperature, 
light, climate and other environment factors. Storm and irrigation 
water are collected, used, and then recycled resulting in a fraction of 
use compared to traditional farming. This means food production can 
continue even when nature might like to stop it.
    Further, we use an integrated pest management system to minimize 
the use of pesticides. For example, we use ladybugs and other insects 
to control harmful pests, and we bring in bees to the greenhouse for 
pollination.
    We also pioneered a traceback food safety system enabling us to 
identify the date, specific crop location, and team member who 
physically harvested the produce.
    Environmental sustainability is at the forefront of many 
conversations these days, and it is always on the forefront of our 
minds as CEA farmers. Government agencies, companies, and non-
governmental organizations need to embrace more efficient, 
environmentally sustainable systems predicated on technology. CEA is 
paving the way for the U.S. to maintain domestic food security in a 
climate conscience manner. CEA greenhouses use ten times less water and 
require ten times less land than conventional farms, and significantly 
reduces the carbon footprint as a result of shorter distances from 
greenhouses to customer. That means CEA farms don't just help us to 
secure the nation's food supply; they also help us to sustain the 
nation's water supply and land supply and care for our planet. At a 
time when many in our country are sadly facing water shortages on top 
of the nation's supply chain problems related to food, these additional 
benefits of sustainable CEA farming cannot be underscored enough.
    As I mentioned earlier, however, the primary barrier to meeting the 
need here in America is that we, like many other farmers, lack a stable 
workforce to help us with the harvest.
    Today's modern CEA farms are incredibly efficient. One greenhouse 
worker can harvest the equivalent to 37 traditional field farmworkers. 
Despite our farms being climate controlled and the day-to-day work 
being done without being subject to the harsh elements, CEA farms 
struggle to attract and maintain a stable workforce. We eagerly seek 
out and hire qualified domestic workers. Whenever we are unable to find 
those qualified workers, we are forced to turn to contractors or the H-
2A program. The program, however, has grown cumbersome and unreliable 
for this modern and sustainable type of farming that frankly wasn't 
contemplated when the H-2A program was first developed. For example, 
CEA farming requires facility cleanout, sanitation, and crop 
preparation processes that did not exist in 1986 when the H-2A program 
was created. A 50 tomato plant--which you can find any day on our 
farms during harvest--was not contemplated by the authors 35 years ago. 
These innovations beckon us to modernize and update the system, not 
just so we can partner with more H-2A workers, but so we can fix the 
domestic food supply chain and feed Americans with food grown right 
here in America.
    The U.S. has an opportunity to meet growing consumer demand with 
expanded U.S. production of fresh produce, but only if the labor 
situation is addressed. Mastronardi is proud to add its name to a long 
list of businesses and organizations asking Congress to act on the 
issue of agricultural labor. We urge Committee Members to continue to 
work with their counterparts in the Senate to pass the Farm Workforce 
Modernization Act, but to address the unique needs of our segment of 
the industry as part of that reform legislation. By updating the rules 
that allow us to responsibly use the H-2A program, we will be able to 
unleash a new era in American agriculture. One that grows far more of 
our produce domestically, on environmentally controlled farms that 
provide lower cost, higher quality produce that American consumers 
demand to live healthier lives.
    In closing, I want to thank this Committee for the chance to 
discuss our business and the remarkable opportunities Controlled 
Environment Agriculture present to the United States. CEA farms and the 
fruits and vegetables they produce will allow us to meet the challenge 
of feeding a growing population with healthier foods. Mr. Chairman, 
this concludes my opening testimony.
    I look forward to answering any questions you might have.

    The Chairman. Thank you very much, and I appreciate all of 
the just simply outstanding testimonies that each of you have 
given. Now we will go to questions with Members, and I will ask 
a couple, then I will turn it over to the Ranking Member, we 
will go to Members.
    First of all, let me ask Mr. Giscombe, what is PLANT-AG? 
How does it work?
    Mr. Giscombe. Thank you, Mr. Chairman. PLANT-AG, as we like 
to call it----
    The Chairman. You might want to move your microphone closer 
to your voice.
    Mr. Giscombe. Can you hear me okay?
    The Chairman. Yes, now we can hear you.
    Mr. Giscombe. Sorry about that.
    I was saying PLANT-AG is a distributed network production 
system based on the simple principle of bringing the production 
facilities for controlled environment agriculture near--more 
close to the population dense centers, metropolitan statistical 
areas. Because of this technology, as Mr. Safrance said 
earlier, we are now able to do significantly more with 
significantly less land space. By simply moving from further 
away, which is what the traditional distribution networks look 
like, to being in closer proximity to where people who are 
consuming this on a day-to-day basis are, we stand to not only 
increase production, limit the amount of natural resource 
depletion, and most importantly, increase the level of quality 
of that produce that is coming to the consumer.
    The Chairman. And so would it be a good understanding of 
what PLANT-AG does that you are able to help us with food 
security by using technology, and the latest scientific 
processes, to be able to grow food inside, without the natural 
light, or rain?
    Mr. Giscombe. Yes, Mr. Chairman. The beauty of controlled 
environment agriculture is that you are eliminating a lot of 
that variability. In fact, I would say statistically you reduce 
about 96 percent of the risk of the contaminants from the 
airborne pathogens and bacteria. You are also no longer 
susceptible to any kind of weather conditions, no more than we 
sitting in this room today are susceptible to the humidity 
outside in D.C.
    The Chairman. Thank you very much. Now, Mr. Gadouas, in 
your testimony you mentioned something that I want you to 
explain a little further. We were talking about financial, and 
equity, and then you made this statement describing this 
financial situation in ag. You called it a loosely defined 
jungle. What do you mean by that? Please turn your microphone 
on.
    Mr. Gadouas. Is that better? Yes, here we go.
    The Chairman. Yes. May--come a little closer. We want to 
really hear what you have to say here. Go ahead.
    Mr. Gadouas. What investors are really looking for is an 
asset class which has some institutional meaning, and right now 
the food system is not really widely known amongst 
institutional, particularly fixed-income investors. There is a 
combination of food production. There is food distribution. 
There is social-type programs out there which provide food to 
the needy. There is food research. All of this right now, 
because it is so littly known with portfolio managers, 
insurance company managers, pension funds, and so forth, it has 
been very, very difficult educating them.
    So the point here is that by designating an asset class, 
particularly something which has an industrial capacity to it, 
something which is a capital expenditure, something that can be 
financed, as intangible, that would be doing the same thing 
that we did 15 years ago, with the analogy of renewable energy. 
It was just as little known, just as little defined, but by 
having examples where there are multiple sources of capital to 
provide that kind of funding for large capital expenditures, 
that will solidify in an investor's mind what a new asset class 
is called food infrastructure.
    The Chairman. Thank you very much. And now, Ranking Member, 
I will turn to you for your questions.
    Mr. Thompson. Well, Mr. Chairman, Thank you very much. 
Thanks for this hearing. One of my most recent visits--well, 
actually, it was probably in 2020, now that I think about it, 
at this point, to a farm operation, farm market, was Yarnick's 
in Indiana County. They are traditional agricultural 
production, but they are able to supplement it and extend their 
season using hydroponics, and also having a controlled climate 
right in the middle of that production agriculture. It was 
pretty impressive, actually, very impressive. So I appreciate 
all of our witnesses here today.
    Mr. Safrance, as we know, through adopting new practices 
and innovative technologies, our farmers, ranchers, and 
producers have made it possible to have the safest, most 
abundant, most affordable food and fiber supply in the history 
of the world. And while there is always room for improvement, 
and that with agriculture, I think we all agree American 
agriculture is science, technology, and innovation, always has 
been. Kind of rude and crude and rudimentary at first, but very 
sophisticated today. I strongly disagree with those who say the 
only way to fix our food system is to completely start over. 
Mr. Safrance, as the Executive Vice Chairman of one of the 
companies really leading greenhouse growing in North America, 
what are your thoughts on that statement?
    Mr. Safrance. Yes, I don't believe the supply chain is 
broken at all. I feel that we should focus on what we are not 
doing correctly and celebrate what we are doing correctly. I 
think the biggest problem we have in our supply chain right now 
is availability of product. Currently, in our industry we are 
importing a lot from different countries, and if there are 
border issues, or other issues in other countries, then these 
products don't show up on time, and that creates empty store 
shelves.
    I can tell you, from our experience, we have five 
distribution centers across the United States. If we have the 
product in our building, we can get an order in the morning, we 
can ship it out that afternoon, and have it delivered the next 
day almost 100 percent of the time.
    Mr. Thompson. Very good. As I was listening to testimony, I 
heard a few witnesses mention how getting access to capital is 
one of the biggest limiting factors of entry into controlled 
environment agriculture. I think access to capital, obviously, 
is a big issue across all aspects of the food supply chain, 
certainly for those young and new and beginning farmers we know 
it is a big issue as well. So getting access to credit and 
capital is not just an issue in a controlled environment 
agriculture industry, but it is something that producers 
experience across the entire agriculture industry. Mastronardi 
Produce has been involved in the greenhouse growing industry 
for four generations now. Mr. Safrance, how has Mastronardi 
been able to gain access to the capital needed to build not 
just the greenhouses, but the distribution facilities across 
the United States without the use of exempt facility bonds, 
like our other witnesses were calling for today?
    Mr. Safrance. Yes. In our history, everything we have done 
has been just traditional bank financing and/or equity off our 
balance sheet.
    Mr. Thompson. Very good. I think, just because we are on a 
tight timeframe, Mr. Chairman, I am going to yield back the 
balance of my time.
    The Chairman. Very good.
    Mr. Thompson. Keep it efficient.
    The Chairman. Thank you. I appreciate that, Ranking Member. 
You are a good man. Now we will recognize Mr. McGovern of 
Massachusetts for 5 minutes.
    Mr. McGovern. Well thank you, and thank you to all of our 
witnesses, and Chairman Scott. Sometimes, talk about supply 
chains and efficiencies quickly become jargony, and I worry 
people may lose the forest for the trees. I appreciate that our 
witnesses for today did a great job explaining what may be a 
new topic for some people, in that vein I would like to take a 
minute to kind of center the conversation.
    We are talking about building a resilient food system. That 
means strengthening local food systems, expanding opportunity 
for farmers, ensuring justice for farmworkers, and guaranteeing 
access to nutritious food essentially as a human right. And I 
think it is really important that we take a holistic approach 
to food security so that we can fulfill the goal of trying to 
end hunger in this country once and for all. In fact, and my 
colleagues maybe are tired of me talking about this, but I have 
been pressing this Administration, the Biden Administration, to 
convene a White House Conference on Food, Nutrition, Health, 
and Hunger, because we need to tie everything together. It is 
not just one thing, it is a whole bunch of things.
    And, Mr. Giscombe, I appreciate that you put things in 
perspective in your testimony. You said that you were here 
because your children, just as every child in America, deserves 
fresh, nutritious, contaminant-free fruits and vegetables that 
they can trust, and I couldn't agree more. I would like to ask 
you to expand on this a little bit. How can CEAs help end 
hunger in America? And, one of the most important things about 
food security is realizing that any hunger is not just about 
quantity, it is about quality as well. And the second question 
would be, can you elaborate on how CEAs could expand access to 
fresh food?
    Mr. Giscombe. Thank you, Congressman. First and foremost, I 
would say CEA cannot end hunger in America. What CEA can do, as 
you so appropriately stated, is supplement the other elements 
of agricultural production in the United States of America to 
better equip the overall supply chain to be more efficient and 
effective in the delivery of fresh, high quality, contaminant-
free, and nutritious products.
    One of the key things about controlled environment 
agriculture is the last comment I just made. By moving indoors, 
you eliminate the majority of the risk to airborne pathogens 
and bacteria, which are the leading causes of food-borne 
illness in America. Every year--actually, going back to 2011, 
there has been more than six million cases of outbreaks--I am 
sorry, of contaminations and illnesses caused from that, and it 
is devastating. So when you think about--if we have the 
opportunity to simply leverage this specific kind of platform 
as a part of the broader collective of agricultural production, 
that is the first step, in our belief, to moving towards being 
able to address hunger. Did I answer your question, 
Congressman?
    Mr. McGovern. Yes, thank you. Yes, I know, and I know we 
are on a tight schedule here, so I want to be very quick, but 
we talk a lot about food insecurity, but we also have to add 
that there is nutrition insecurity as well, and as we battle 
issues like food insecurity and hunger, we also have to pay 
close attention to the importance of nutrition as well. But, I 
appreciate the perspectives that all of you have presented here 
today, and this is an important hearing. Yes, Mr. Giscombe?
    Mr. Giscombe. I just wanted to add one more thing. Going 
back to nutrition, it is probably not commonly known that when 
a fresh produce item travels more than 4,500 miles, it loses 
upwards of 50 percent of its nutritional value. So when you 
think about it, if what we are focused on is delivering higher 
quality, more nutritious products, one of the first steps has 
to be to limit the distance that item has to travel to get to 
its consumption.
    Mr. McGovern. I think that is a good point. Somebody, one 
time, explained to me that a tomato coming from the West Coast 
to Massachusetts, where I live, and with all the shipping, and 
the refrigeration, and all the stuff that it went through, I 
felt bad for the tomato that was in the grocery store. But in 
any event, I think that is a very good point, and I thank you. 
I yield back my time.
    The Chairman. Thank you very much, Chairman of our Rules 
Committee, Mr. McGovern. Thank you, and you are right, you have 
been a longtime champion of fighting hunger, now I will 
recognize Mr. Austin Scott of Georgia.
    Mr. Austin Scott of Georgia. Thank you, Mr. Chairman, and I 
appreciate you having this Committee hearing. I do think it is 
good that we are talking about the number of miles that a 
tomato, or any other fresh fruit or vegetable travels before it 
is actually able to make it to the shelves of our local grocery 
store. I want to ask, if I could, Mr. Safrance, you have 
greenhouse operations in Canada, the U.S., and Mexico, if I 
understand your testimony correctly. Is that accurate?
    Mr. Safrance. We own greenhouses in Canada and the United 
States, and a small partnership in Mexico, and we have growers 
that work for us in all three countries on a supply basis.
    Mr. Austin Scott of Georgia. Okay. And you have greenhouses 
that are as large as 4 acres, is that correct?
    Mr. Safrance. Yes. We have some that are much larger than 
that.
    Mr. Austin Scott of Georgia. Really? So how large would 
your largest greenhouse be if you don't mind?
    Mr. Safrance. In a single facility, 64 acres.
    Mr. Austin Scott of Georgia. Sixty-four acres? And that is 
one greenhouse, or is that multiple greenhouses on 64 acres?
    Mr. Safrance. That would be one facility composed of two 
ranges of 32 acres.
    Mr. Austin Scott of Georgia. Wow. That is a big greenhouse.
    Mr. Safrance. Yes. Yes, it is large.
    Mr. Austin Scott of Georgia. So where I come from in south 
Georgia, most of my fruit and vegetable growers, they have 
greenhouses, and they grow out the plant, but then you take 
this plant, which is, as you know, would be significantly 
smaller than one tomato, and you transplant it then into the 
fields. If I understand your operation, though, you are 
actually growing the whole plant, and the vegetable, out in 
your greenhouses, is that correct?
    Mr. Safrance. Yes, that is correct.
    Mr. Austin Scott of Georgia. So do you do any 
transplanting, or is all of yours totally internal to the 
greenhouses?
    Mr. Safrance. Yes, no, everything we do is indoors.
    Mr. Austin Scott of Georgia. Okay. Well, my kids love your 
Sugar Bombs--is it Sugar Bombs?
    Mr. Safrance. Yes.
    Mr. Austin Scott of Georgia. Yes. And my wife makes me buy 
them when I go to the grocery store too, so I eat them too, so 
you have great products.
    Mr. Safrance. Thank you.
    Mr. Austin Scott of Georgia. I guess my concern is, when we 
talk about the fact that we are importing, if you will, 61 
percent of the tomatoes that are eaten in this country. What is 
your wage rate in Mexico versus your wage rate in the United 
States?
    Mr. Safrance. Yes. I don't operate the greenhouses in 
Mexico, so I am not 100 percent sure. I believe the wage rate 
in Mexico is probably around $14 or $15 a day. Our greenhouses 
in the United States pay roughly a base wage of $13 to $15 an 
hour, and with the piece rate, many people are achieving more 
than $20 an hour.
    Mr. Austin Scott of Georgia. All right. So you are $14 to 
$15 a day in Mexico?
    Mr. Safrance. I mean, that would be an average of all the 
growers in Mexico, I would say.
    Mr. Austin Scott of Georgia. Okay. And so this is something 
that I think, when we talk about the sustainability, and the 
food supply chain, why are 61 percent of the tomatoes that we 
consume in the United States actually transported thousands of 
miles to make it to the grocery store? And one of the things 
that concerns me, that our growers are fighting in the U.S., is 
that $15 an hour wage in Mexico versus, as you said, most 
people that are working in the fields make a good bit more than 
that because they are paid by production, and so there is a 
reason that they come to America to work. And they work very 
hard. I have worked in the butterbean fields myself when I was 
a younger man, and I didn't make $15 an hour back then. It was 
whatever the minimum wage was at the time. But the wage 
disparity between the U.S. and Mexico, to me, seems to be one 
of the reasons why our produce has to travel so far to make it 
to the shelves. Would you agree with that?
    Mr. Safrance. No, I don't agree with that, actually. I 
think a lot of it has to do with growing seasons and proper 
growing climates.
    Mr. Austin Scott of Georgia. Okay.
    Mr. Safrance. Some of the areas in Mexico have the best 
areas of climate to grow, much like California, year round.
    Mr. Austin Scott of Georgia. I am almost out of time. I 
apologize for interrupting you, I really do. So I am in south 
Georgia, so my growing season is effectively the same as 
portions of Mexico, and--Mr. Chairman, my time has expired, but 
I appreciate the hearing. I am concerned about the U.S. 
producers, and what they have to compete with coming from 
foreign countries, and the lower costs of operations in foreign 
countries.
    The Chairman. Thank you, Mr. Scott. And now I recognize the 
gentleman from California, Mr. Costa, for 5 minutes.
    Mr. Costa. Thank you very much, Mr. Chairman, for your 
leadership, and for this hearing today. I think focusing on 
protecting America's domestic food supply chain, as you and I 
discussed before, is a national security issue, and therefore 
it is critical that the House Agriculture Committee indicate 
how we need to focus on innovation as we move forward. The 
sustainability of our domestic food supply is critical, and I, 
for one, believe that we should take an all of the above 
approach, and I appreciate the testimony of our witnesses here 
today.
    Let me make a note, the Chinese Government, and our last 
colleague talking about remaining competitive, they spend $3 
billion a year on innovation to modernize their agriculture. We 
have $3 million, $3 billion for China, we do $3 million for our 
support within the USDA. That is not being competitive. Put 
simply, America is not keeping up on research and development, 
our capacity for these investments that are absolutely 
necessary, and we are neglecting, as a result, our food 
security.
    President Lincoln, in 1862, July 2, signed the Morrill Act 
to create land-grant universities. That was infrastructure. 
That was boldness. That was vision. In California we are 
utilizing some of this cutting-edge technology on innovative 
agriculture using our research universities, but also the 
private-sector. I want to highlight Plenty, a company in 
California, which I visited their vertical agricultural 
investments. Plenty, so named because they want to produce 
additional food supply to America. Plenty, meaning plenty more 
food for America. I would like unanimous consent, Mr. Chairman, 
to submit their testimony here for the record.
    [The statement referred to is located on p. 49.]
    The Chairman. Unanimous consent granted.
    Mr. Costa. Thank you. In highlighting this effort, I want 
to note that they have developed a pilot project effort that I 
witnessed last year, and this year they are building a very 
large project in Compton, California. And their plan is, like 
other of our witnesses here today testified, to create these 
kinds of vertical growth facilities in major cities in America 
that will provide jobs, and provide additional high-quality 
food that--because you control the environment, and I farm 
some, and farming is risky. And, there are some factors you 
just can't control out on the farm, and that is the weather. 
But the ability to grow these products in a controlled 
environment I think is critical, and that is really what 
controlled environment agriculture stands for, CEA, controlled 
environment agriculture. And so these technologies are critical 
for the future sustainability of putting food on America's 
dinner table every night, and that is the goal.
    Now I have a couple of quick questions, because this 
effort--and I urge all my colleagues to view in your area where 
vertical growth agriculture is taking place under controlled 
environment agriculture circumstances, because I think there 
are public-private partnerships that are critical. Mr. Gadouas, 
you talked about exempt facility infrastructure to help fund 
significant capital expenditures. We are talking about market 
tax credits. Where do we help provide the financing to 
encourage more of this effort?
    Mr. Gadouas. Well, to your point, Congressman Costa, there 
is so much that is needed. There is so much infrastructure. It 
is critical to the country, and it is going to be distributed 
all over the country. In order to make that happen, we need to 
diversify as much capital as--available as possible. And in 
addition to tax credits, tax increment financing, and some of 
the other economic development tools that are out there--and 
they are out there, but the truth is, and we have seen this, is 
they are all for relatively small projects. They simply do not 
address the type of scale of the capital expenditures that are 
going to be necessary here.
    So in looking at what has been successful in the past, we 
think that an obvious source of capital, because so many 
investors are just natural buyers, naturally aligned with this 
type of infrastructure, a new classification of exempt facility 
bonds would go very, very far in diversifying that kind of 
capital that is----
    Mr. Costa. My time is almost expired here, but, Mr. 
Chairman, I think in our next hearing we need to look at more 
tools to try to help provide financing in these public-private 
partnerships, and our universities throughout the country.
    The Chairman. Certainly, Mr. Costa. Thank you. The 
gentleman from Georgia, Mr. Allen, you are recognized for 5 
minutes.
    Mr. Allen. Thank you, Mr. Chairman, and thank you to our 
witnesses. We are talking about something here today that is 
growing in interest in our country. Controlled environment 
agriculture is important not only because it diversifies 
production methods for existing farmers, but it also serves as 
a testing ground for many new technologies before traditional 
farmers actually incorporate them.
    We need to understand the limitations of this industry as 
well. Food security is a national security issue, and our 
primary responsibility must be always to ensure that our 
country's food supply remains secure. I believe that these 
production methods we are discussing today do have a role in 
the potential of allowing more of our food to be produced 
domestically.
    In my district I toured, in October 2020, the Better Fresh 
Farms located in Metter, Georgia. These CEA farms are built 
inside of mobile containers, and so are able to be relocated 
easily. The ability these farms have to bring fresh produce 
right to a population center is an inventive method by which we 
might eradicate many of the food deserts throughout America.
    Before I begin my questioning, I would like to draw 
attention to an important matter that Mr. Safrance made in his 
opening statement. He stated that the primary barrier his farms 
face is the lack of a stable workforce, and this is exactly the 
number one issue that farmers tell me they face as well. This 
Congress I introduced a bill that would move administration of 
H-2A programs from the Department of Labor to the USDA. The 
Department of Labor is fundamentally cross purpose with the H-
2A Program. That Department is also out of touch with the 
particular needs of the ag industry, much of which arise from 
timing sensitivities due to planting and harvesting schedules, 
as well as the weather. And I hope that the Agriculture 
Committee will hold a hearing this Congress where we can look 
at my bill in greater detail and can have expert witnesses 
testify on how we can improve our H-2A program.
    Mr. Safrance, in your testimony you brought attention to 
the fact that nearly \2/3\ of fresh fruits and vegetables are 
imported into and consumed annually in the U.S. You explained 
how Mastronardi Produce is able to remain competitive in this 
market. How are you able to do that?
    Mr. Safrance. From a labor perspective?
    Mr. Allen. Yes, sir.
    Mr. Safrance. Well, when it comes to controlled environment 
agriculture, they are much more efficient from a labor 
perspective. We have a lot of automation, and also different 
things in the greenhouse where it is very ergonomic, and there 
is a lot of different pieces in there that can help us get the 
labor done at a faster rate than in a field, without having to 
bend over, and things like that. So that is how we try to stay 
competitive, but at the end of the day, we just really struggle 
with the actual numbers of people that we get in the 
greenhouses, and it has been a problem ever since we have been 
doing business here in the United States, which is many, many 
years. And that is the largest problem we have today, is just 
getting enough people.
    Mr. Allen. I have about a minute and 30 seconds left, and I 
would like to ask all of our witnesses, what is your biggest 
challenge in controlled environment agriculture production? 
What are the biggest challenges that industry face? And I will 
start, could each of our witnesses comment on that very 
quickly. Any challenges?
    Mr. Safrance. No, I would just say our number one issue is 
quantity of labor. We try to hire and endorse all the American 
workers we can, and at the end of the day we just can't get 
enough people. We physically go out and promote, radio ads, all 
kinds of things, and just physically don't get the amount of 
interest that we would like.
    Mr. Verbakel. For us at the moment there is a backlog in 
transportation, availability for trucks to get the containers 
out of port, so the material delivery from port to building 
site is a big challenge, but I think this will be solved within 
a year, and will not be the long-term challenges. We are 
looking for more collaborations within the U.S. market to be 
also domestically a supplier, together with more greenhouse and 
manufacturer in the United States.
    Mr. Allen. All right. Well, I am out of time. I will 
mention that I did visit Vertical Harvest in Jackson Hole, 
Wyoming, and they did something very creative. They used people 
with disabilities to harvest, and these folks were full of 
energy, and were amazing workers. And so maybe we can----
    The Chairman. Mr. Allen, your time has expired.
    Mr. Allen. Yes, sir.
    The Chairman. Thank you. And now I recognize the gentlelady 
from North Carolina, Ms. Adams, the Vice Chair of the 
Agriculture Committee.
    Ms. Adams. Thank you, Chairman Scott, Ranking Member 
Thompson, for hosting the hearing today. To our witnesses, 
thank you very much for your testimony. In my district in 
Mecklenburg County in North Carolina, nearly 15 percent of the 
population lives in what the USDA considers a food desert. 
Often found in low-income communities, these residents don't 
have access to a full service grocery store or nutritious food, 
and experts suggest that living in a food desert may put people 
at an increased risk of obesity, diabetes, and other weight-
related conditions, which is why I am particularly interested 
to hear how applying controlled environment practices to urban 
agriculture could aid efforts to achieve food security, and 
improve access to healthy foods in food deserts across the 
country. Already urban agricultural technologies are increasing 
the availability of food, which is especially important in 
communities with limited access to affordable fresh produce 
like my community.
    Mr. Giscombe, as I mentioned earlier, in my district 15 
percent of the population lives in a food desert, so can you 
address how controlled environment systems help communities 
located in food deserts, and how can these systems mitigate 
food insecurity?
    Mr. Giscombe. Congresswoman, thank you, great question, and 
I appreciate it. As I said before, one of the biggest 
challenges is the location and proximity of where our 
agricultural production is today. What that leads to is 
significant costs in transporting the items that are produced 
to their area of consumption. Controlled environment 
agriculture has the ability to be located, whether it be in the 
metropolitan city areas, like we spoke about with our 
colleagues at Plenty, or Bowery Farms, or any of the others 
that are practicing vertical agriculture. But what you will see 
is there are no greenhouses that you can put in the middle of a 
city center, right? Real estate is extremely expensive, 
extremely valuable, and we are trying to address things such as 
employment, housing, which is a critical issue. So when you 
think about what is the best and most efficient use of real 
estate for agricultural production, and making that proximate 
to where the consumption is, there has to be some middle 
ground.
    So by being within, let us say 6, 8, even a 10 hour radius 
of a metropolitan statistical area, you can eliminate up to 30 
worth of logistical cost per item, which means that the 
retailers, the distributors who are subsequently delivering 
that produce to your retail outlet, and your food service 
outlets, now have a benefit. Their margins become larger. And, 
at the end of the day, economics is what drives businesses.
    Ms. Adams. Okay.
    Mr. Giscombe. I would submit that if you are able to bring 
the cost of agricultural production within a certain level, you 
are going to also be able to pass that on, and ensure that 
greater quality food gets to the people that you are speaking 
about.
    Ms. Adams. Okay. So would the food produced in these 
controlled environments be as nutritious as the food grown in a 
field, and could there be micronutrient deficiencies in some 
crops?
    Mr. Giscombe. That is a phenomenal question, and I will say 
this very matter-of-factly. It is absolutely as nutritious, and 
we can argue whether or not it is more nutritious. When you 
grow inside a greenhouse, or in a vertical farm, there is no 
use of pesticides or herbicides. That is number one. Because 
you are able to control every element of nutrient that that 
item is receiving, whether it be lettuce, whether it be 
tomatoes like we have displayed here today, or cucumbers, they 
are all in higher quality. So by the time they got to--and 
again, as I said, traveling a shorter distance--that preserve 
the nutritional quality.
    Ms. Adams. Okay. So let me move on. Thank you so much. Mr. 
Verbakel, in your testimony you mentioned that there is no 
escaping the significant capital expenditures necessary to 
develop a controlled environment facility, so what are the 
potential infrastructure, resource, and energy costs associated 
with these CEA facilities, and how do they compare with 
traditional production agriculture systems?
    Mr. Verbakel. Initially the capital investment costs are, 
of course, much higher compared to open field farming, but in 
the long run, the greenhouses can also serve as an asset. So, 
from an investment perspective, that is much more interesting 
than just investing in the pure land. And, to your point, from 
where you are from, one of our clients, Little Leaf Farms, from 
Devens, Massachusetts, is going to invest in Burnsville, North 
Carolina, where they will realize a 20 acre complete controlled 
environment agriculture for lettuce production. I see we are 
running out of time, and I want to give the word back to you.
    Ms. Adams. Okay. Well, great. Well, thanks very much, and I 
am going to yield my 6 minutes back, Mr. Chairman, my 6 
seconds, excuse me. Thank you.
    The Chairman. Thank you very much. Now I recognize Mr. 
Balderson from the great State of Ohio, 5 minutes. Is he on? 
Mr. Balderson? You may want to unmute. If not, we will go to 
Ms. Moore of--or Mr. Moore of Alabama. Is Mr. Baird. Wait, what 
is that. All right. Mrs. Cammack from Florida.
    Mrs. Cammack. There we go. Thank you, Mr. Chairman, thank 
you, Ranking Member Thompson, and thank you to our witnesses 
here today. The examples that we are hearing about today really 
speak volumes of the innovation and the growth in hydroponics 
and controlled environment agriculture that are really just the 
tip of the iceberg--I put a pun in there--of a long legacy of 
American agriculture innovation, which for decades has improved 
yields, conserved resources, preserved our environment, and 
helped feed the world. No doubt about it, American farmers feed 
not just our communities, our states, our country, but the 
world.
    I am especially proud of PLANT-AG, there has been 
discussion about what it is and the exciting potential that it 
has brought to north Florida, bringing new jobs and economic 
development to the region. It is no secret that fruit and 
vegetable growers in my home State of Florida and elsewhere are 
hurting right now. The few tomato growers left in my home State 
of Florida are under tremendous pressure from the unfair 
dumping of cheap Mexican tomatoes on our markets. I hear from 
witnesses and my colleagues alike that innovation is key to the 
future survival of American agriculture, and so I will just 
jump right in.
    And this will be a question, really, for the entire panel. 
How can controlled environment agriculture--because I have 
heard a few facts and statistics today, how can it reduce our 
reliance on foreign imports, and preserve domestic production? 
And if you could keep it to the facts, because I know there has 
been a few that have been thrown out? I really want to make 
sure that I capture that for myself and my team, and I will 
start on this end over here.
    Mr. Giscombe. Thank you, Congresswoman. First and foremost, 
we need to increase the amount of controlled environment 
agriculture production. If we do that, by whatever means 
necessary, whether we continue to look at it from a perspective 
as it is traditional, or we actually make the move forward and 
consider it infrastructure, and invest in that infrastructure, 
we will by default decrease the amount that we are importing. 
It is just simple math. By increasing the amount of acres under 
glass in America, which pales in comparison to that of Europe--
and contrasting, Europe is significantly smaller than the 
United States is. And that is not just a country, it is the--it 
is Europe.
    Mrs. Cammack. Do you----
    Mr. Giscombe. So all we have to do----
    Mrs. Cammack. Do you have a percentage of the difference 
between what is produced in Europe, as opposed to the United 
States?
    Mr. Giscombe. Europe has over 500,000 acres under glass.
    Mrs. Cammack. Okay.
    Mr. Giscombe. The United States has significantly less than 
10,000. Our colleagues, our Canadian colleagues at Mastronardi, 
have 6,000 themselves.
    Mrs. Cammack. Okay. Thank you.
    Mr. Gadouas. I will address it from a cost of capital 
perspective.
    Mrs. Cammack. Thank you.
    Mr. Gadouas. The more capital is out there, and the less 
expensive it is, is only going to make these facilities more 
competitive, and that is really what it comes down to. That 
will--it all comes down to price, and where demand is going to 
come from. The other point I want to make is the more data 
points you have with public capital, with bond financing, and 
the way that disclosure is done, best practices, that is for 
everyone to see, and the more of those publicly available data 
points we have, the more and more competitive our capital is 
going to be.
    Mrs. Cammack. Absolutely. Thank you. Mr. Kelley?
    Mr. Kelley. Congresswoman Cammack, you grew up on a cattle 
ranch, I believe, right?
    Mrs. Cammack. Yes, I did.
    Mr. Kelley. So you, and I am sure the rest of the 
Committee, can appreciate what is the good of good food with 
bad data? You have to have good data. And if you can control 
the variables, so control the amount of data, therefore it 
stands to reason that you are able to control the output, and 
have good data about that produce, or outcome that you are 
producing. So, therefore, that should increase the value. 
Therefore, that could distinguish that product amongst all 
products by controlling that data.
    Mrs. Cammack. Excellent. Thank you, Mr. Kelley.
    Mr. Safrance. I will go back to what Mr. Giscombe was 
saying about not having enough CEA greenhouses for controlled 
environment agriculture in the United States. The United States 
is significantly under-indexed compared to the rest of the 
world. I read a study a while back that said, if I have this 
correctly, and I believe I do, that there were--in Europe there 
were 700 acres per million population. In the United States, it 
is only about 16 acres per million population, so very under-
indexed, and I believe that is what is driving the imports.
    I think with a large expansion of CEA over the next decade 
that we can change that, and I think the biggest driver to 
doing that is not capital. I think that there are a lot of 
people that want to get involved, but I do believe that it has 
to do with proper labor supply. Because otherwise, putting that 
much capital in a place without the people, I should say, is 
just way too big of a risk for anyone.
    Mrs. Cammack. Thank you. And I do have--I am running short 
on time. I do have a question, I can enter it for the record, 
and this would be to my friend here, Karim, about the role of 
the University of Florida, and the educational exchanges that 
you are working in partnership and concert with. And with that 
my time has expired, but thank you to the witnesses for being 
here today for this very important issue.
    The Chairman. And now we will recognize Mr. Carbajal from 
California, 5 minutes.
    Mr. Carbajal. Thank you very much, Mr. Chairman. I am 
honored to have one of my youngest constituents with me today, 
by the name of Elijah, joining me and asking this question. So, 
with that, let me just start. Thank you to all the witnesses 
that have joined us today. The first question is for Mr. 
Kelley.
    Food security should be treated as national security, and 
that is why this Committee works to give individuals and 
families access to sufficient, safe, and nutritious food. 
Supporting the innovation and integration of controlled 
environmental agriculture is a tool we can use to protect 
domestic food supply chains and infrastructure, but it also has 
a substantial dependence on new technology, which could have 
unforeseen risks. Mr. Kelley, what can be done to prepare for 
cyberattacks on our food systems?
    Mr. Kelley. Congressman, thanks for the question. I think 
it is a very thoughtful question, and it--we have seen very 
recently the outcomes of cyberattacks, and those cyberattacks 
have been on a very fragile--and I will echo what Mr. Safrance 
said, fragile, but not broken, supply chain, I believe is what 
was stated. But that supply chain can be augmented, can be 
better supported, with greater technology, and with the ability 
to have greater visibility across that supply chain from source 
to consumption.
    And so, Congressman, when we think about the way that we 
deal with data in that supply chain right now, it is very 
siloed. And if we think about from production to consumption, 
each one of the passing of that product is just a handshake 
going from one step to the next. If we could implement 
technology that allows us to bring down those barriers, and 
share that data in a secure and very visible way, with 
transparency, such as I mentioned with blockchain, we can then 
understand who might be trying to tamper with that supply chain 
that we currently have. Not broken, but ready to be augmented 
with greater technology.
    Mr. Carbajal. Thank you, Mr. Kelley. My next question is 
for all the witnesses. This Committee will eventually begin 
consideration of provisions that will become the next farm 
bill. This is a slow and deliberate process that does not seem 
to match your industry's sense of urgency. What steps can this 
Committee take in between farm bills to ensure that we are 
maintaining pace with these advanced technologies and 
production practices, and what existing USDA programs can be 
utilized to support controlled environmental agriculture?
    Mr. Giscombe. I am sorry, Congressman, I didn't realize you 
were asking the question of me. First and foremost, what the 
United States Department of Agriculture can do is I think the 
conversation that we are having here with the Committee. There 
is an ominous need, as Mr. Kelley said earlier, to incorporate 
data management into our supply chain. We have the opportunity 
to do it, but also, going back to what Mr. Gadouas said, as 
well as Mr. Safrance, right, there are two sides to that coin. 
One is we need the capital to be able to make the investment in 
technology and innovation, right?
    Going to the other side of it, with regards to labor, yes, 
that is a reality. It is not cheap. Economics drive all 
innovation, so by increasing the access to that capital, we 
will by default create the opportunity for all participants, 
not just in controlled environment agriculture, but agriculture 
broadly, to be able to leverage that. And a great example of 
that is Walmart, right? They are not a producer. Walmart made 
the investments because they had the access to that capital, 
but we are all aware they are the largest retailer in the 
world, so it is kind of a no-brainer. As such, what about the 
other participants in the supply chain that don't have the 
ability to do that because their capital is spread so thinly 
across their operations? We have to--the USDA, the Committee 
here, has to look at it from a very fundamental perspective. 
What are the economics of innovation? That is how we then 
leverage things like blockchain to be able to create this 
platform.
    Mr. Carbajal. Thank you very much. I know I said to all the 
witnesses, but I seem to have run out of time. With that, I 
will yield back, Mr. Chairman.
    The Chairman. Thank you very much. And now the gentleman 
from Ohio, Mr. Balderson. You are recognized for 5 minutes.
    Mr. Balderson. Thank you, Mr. Chairman. Appreciate the 
time. My question is for Mr. Safrance. Thank you for your 
testimony. Appreciate that. My question is--the COVID-19 
pandemic drastically changed many aspects of farming across the 
nation, as well as the way agricultural produce was delivered 
to consumers. As the only witness here today with commercial 
experience producing fruits and vegetables through hydroponics, 
what are the biggest challenges you face during the course of a 
yield cycle?
    Mr. Safrance. Yes, so in the course of a yield cycle, I 
mean, there is, every day is a challenge. The biggest 
challenge, as I said earlier, is the labor, and having enough 
people, because if the plants get far behind on crop work, then 
the quality suffers, and the yield suffers, and then a 
greenhouse would become unviable. And so the biggest issue we 
have on a day to day basis, without question, is dealing with 
the labor.
    The Chairman. Is he muted?
    Mr. Balderson. There I go again. I apologize, Mr. Chairman. 
Sorry, Mr. Safrance. Are there any crossover benefits that 
controlled environmental agriculture, or CEA, can learn from 
traditional agriculture?
    Mr. Safrance. I think the processes are similar, but 
different at the same time. I think they can learn from each 
other, and I think that there is plenty of space for them to 
coexist. But from a crossover benefit, I mean, if you look at 
growing an outdoor tomato crop and an indoor tomato crop, I 
mean, the premises are the same, but you have a lot more tools 
at your disposal indoors, obviously, and I believe that that is 
why we can get better yields and bring the cost down and be 
competitive by growing indoors.
    Mr. Balderson. Okay. Thank you very much for your question. 
Mr. Chairman, I yield back my remaining time.
    The Chairman. Thank you very much. And now I recognize the 
gentlelady from Virginia, Ms. Spanberger.
    Ms. Spanberger. Thank you very much, Mr. Chairman, and to 
our witnesses, thank you so much for your fantastic testimony 
today. I know many of my colleagues and I have been in a mix of 
in here and virtual, so I have really appreciated all of your 
answers, and your opening comments. I am excited to have the 
opportunity to discuss the positive impact of controlled 
environment agriculture on our domestic food supply, and across 
my district I have had the opportunity to visit several farms 
that implement controlled agriculture technology, including 
Bright Farms in Culpepper, Virginia. And in Goochland, Virginia 
we have a new indoor growing facility opening soon that will 
utilize innovative technology and sustainable practices, 
including recirculation systems that use 95 percent less water 
than traditional growing methods.
    I am encouraged by some of the recent growth in the 
controlled environment agriculture across my district, and 
certainly across the country, and over the last year the COVID-
19 pandemic really has laid bare some of the challenges and 
fragility that we see in our food supply chain. I am hopeful 
that controlled environment agriculture can help increase 
supply chain resiliency, and decrease dependence on foreign 
growers, improve food safety and trust, and mitigate some 
concerns, like weather disruptions and drought. I am 
appreciative of you all being here today, and I am going to run 
through a couple questions.
    Mr. Safrance, I would like to begin with you. You mentioned 
that many of the controlled environment agriculture facilities 
present in the U.S. contain outdated technology. Could you 
describe, briefly, some of the examples of outdated technology, 
and the better technology that is available to be leveraged?
    Mr. Safrance. Yes, absolutely. Going back over the years, 
and we will call it the last 30 years, say, there has been a 
massive difference in technology in these greenhouses. Going 
back about 30 years ago and beyond, they were short, A-frame 
type greenhouses, single-pane glass, where crops were growing 
in dirt, and usually heated with steam. And as time moved on, 
we got into the 1980s, and a lot of people went to what is 
called a double poly, or two layers of plastic, where they blow 
air in between the plastic layers for more insulation.
    And then, soon thereafter, they got into hot water heating 
systems, and then soon thereafter that we got into what is 
called a gutter system, where we raise the crops up off the 
ground, and we use the gutters to recycle all the extra water. 
The water will go back to our irrigation rooms, and go through 
a cloth filter, much like you would see a coffee filter in a 
percolator. And then after that it will go through a UV 
sterilization system. So basically we take the water back with 
the leftover nutrients in it, we make the water completely 
sterile, and then we add more nutrients to it, and send it back 
into the greenhouse.
    So in the newer greenhouses, like you were just saying 
about 95 percent less water, that is exactly what we do. And 
the only water that actually leaves these greenhouses, or 
should leave, is in the weight of the fruit, or the respiration 
of the leaves through the air.
    Ms. Spanberger. Fantastic. Now, that--I was furiously 
taking notes because that was a tremendous answer. I really 
appreciate that.
    Mr. Safrance. Thank you.
    Ms. Spanberger. And so, Mr. Gadouas, and I apologize that I 
am directly positioned, oh, I can see you. I am sorry, sir. How 
successful do you see current investments in controlled 
environment agriculture? So are people seeing this as a good 
place to invest? Certainly the technology is evolving, as Mr. 
Safrance just walked us through.
    Mr. Gadouas. Certainly, from the information that we have, 
and a lot of the information is still private more than public. 
But from an equity perspective, there have been successes. 
There have also been some tweaks, because it is an evolving 
asset class, and I think I mentioned earlier today that we are 
indeed at an inflection point. So the more information we have, 
the more and more targeted and effective investments we are 
going to have. But, generally speaking, as far as emerging 
asset classes go, it has been tremendously successful, and it 
is at a point where more and more people want to participate. 
It is certainly a lot of press.
    Ms. Spanberger. Yes.
    Mr. Gadouas. The question is, can we unlock the other half 
of the capital that is available in this country to 
participate?
    Ms. Spanberger. Thank you very much. And, in my limited 
time, Mr. Verbakel, I was wondering, could you speak briefly to 
some of the barriers that exist for development here in the 
United States, for those looking to invest in the United States 
in controlled environment agriculture development?
    Mr. Verbakel. Well, the most important one, but that is 
something we cannot change today, is the weather. When it is 
too cold--when there is frost in the ground in the northern 
part of the U.S., we are limited to continue our construction 
work. But, over the past 2 or 3 years we have been forced 
with--or we have been confronted with some limitations to 
import our agricultural components. We consider a greenhouse an 
unassembled system which is not physically possible to ship. If 
you compare it to the surface that Mr. Safrance compared it to, 
a 60 acre greenhouse cannot be shipped on one boat, and in one 
batch.
    And we have been confronted with your port authorities, 
that they consider the greenhouse in loose components just 
steel or glass, and then we are confronted with quite high 
import duties. So one solution there could be to find 
collaboration with local sources, but they are somewhat 
limited. The greenhouses require quite a large light 
transmission. I see that we are running out of time, so I will 
give the word back to you. Apologies for the time.
    Ms. Spanberger. Thank you, sir. I yield back, Mr. Chairman.
    The Chairman. Thank you very much. And now I would 
recognize the gentleman from Indiana, Mr. Baird, for 5 minutes.
    Mr. Baird. Thank you, Mr. Chairman, and Ranking Member. We 
appreciate the opportunity to participate in this hearing 
today. Really appreciate the witnesses being here, and your 
expertise. So my first question goes to Mr. Safrance. Your 
comments have been extremely interesting to me, and so one 
thing I would like to reflect on is your comments about storm 
and irrigation water, and using that in CEA farming. As we all 
know, regulatory conversations, especially surrounding water, 
have been on the rise. So could you elaborate on how different 
environmental regulations impact your business and the CEA?
    Mr. Safrance. Yes, absolutely. If you compare what we do 
to, say, field farming, it is completely different. In most 
cases field farms can spray as many pesticides as they want on 
the crop. As it rains, it goes into the soil, gets into the 
water stream. In our world, we are not allowed to do anything 
like that. We collect rainwater off the roof for irrigation. We 
store it in lined basis so it can't soak into the ground, and 
we use the rainwater for irrigation. All of the nutrients and 
everything, like I said, are recycled, so we are really 100 
percent zero anything leaves the greenhouse that shouldn't be 
leaving the greenhouse.
    But when you compare that to a field scenario, my office 
back home, there is an apple orchard next to it, and about 
every week there is a tractor go by spraying white chemicals on 
the fruit, and, I mean, that all ends up in the watershed and 
whatnot. So much more strict for us, much more sustainable, 
much bigger investment, but we feel it is worth it.
    Mr. Baird. Thank you. If I may ask one more question, given 
the challenges that we saw during the pandemic, and the 
shortages at the retail level for certain products, can you 
talk about your distribution system just a little bit, and how 
you were able to service major retailers during that period, as 
well as how you are able to deliver to major stores fresh 
quality products just in a matter of hours?
    Mr. Safrance. Yes. So, for us, it is very just in time, 
high sense of urgency. We have distribution centers, especially 
east of the Mississippi, that are pretty much close--within 400 
miles of each other, or of either end, so everything is pretty 
much within a 1 day drive or less. Today a truck can drive 
roughly 10 hours under its current log system. So our products 
come in the building this evening, so to speak. We would get 
orders today and tomorrow morning for tomorrow's orders. We 
would fill the orders, and ship the trucks, and have them 
delivered the next day.
    The biggest problems we had during the pandemic was having 
enough people to show up for work. There were some people that 
were concerned. Obviously, we are essential. We did all the 
proper things, including creating a shield program for COVID 
issues, but there were still a lot of concerned citizens, and a 
lot of people didn't show up, so that was a big challenge. But 
at the end of the day we still delivered all of our orders, and 
provided--the products are in the building when we need them. 
We had no problem delivering them.
    Mr. Baird. Thank you. Mr. Kelley, first off, I want to 
thank you for your service. An Army Airborne Ranger, I assume 
you spent some time at Fort Benning, Georgia, as I did, so 
thank you for that.
    Mr. Kelley. Congressman Baird, thank you, because you are a 
very highly decorated veteran from the Vietnam War, so you 
paved the path for us brother and sisters in arms that came 
after you.
    Mr. Baird. I never figured out why you would jump out of a 
good flying airplane, but anyway. I commend you for your 
service, and thank you.
    Mr. Kelley. Amen.
    Mr. Baird. But anyway, you mentioned something about 
working with Walmart in a farm to store pilot program with 
USDA. I am not sure how much you can elaborate on that, but any 
thoughts you could give on that pilot program?
    Mr. Kelley. Thank you for the question, and--Congressman 
Baird. I would say when we think about what was done with 
Walmart, you talked about the supply chain, and I will stick 
with the same thought, as--the data, and what is in the supply 
chain. Very quickly, what we did with Walmart, and also was--
work with the USDA was the thought that it takes so long to, 
when there is a food-borne illness recognized, to actually 
remedy it. Using technology such as blockchain, what used to 
take Walmart, and their use of this technology a full week to 
find a problem, that means a whole week of throwing away food, 
they were able to do it in 2.2 seconds. Find the source, remedy 
it, and move forward: 1 week to 2.2 seconds.
    Mr. Baird. Perfect. Thank you.
    The Chairman. Thank you very much. And we all, on this 
Committee, certainly congratulate you, and appreciate your 
great service, jumping out of that airplane. Takes a lot of 
nerve in and of itself. Congratulations. Thanks for having you. 
And now the Chair will recognize the gentlelady from 
Connecticut, Mrs. Hayes, 5 minutes.
    Mrs. Hayes. Thank you, Mr. Chairman. My district in 
Connecticut is leading the way in innovative urban agriculture 
that makes our food supply chain more resilient, brings new and 
beginning farmers into the agriculture industry, and provides 
fresh local foods in areas that have historically lacked access 
to them. Among the other benefits discussed here today, 
controlled environment agriculture seems to provide an 
opportunity to address lack of access to healthy food, local 
products, and for underserved communities, communities that 
have been deemed food deserts or food swamps.
    The U.S. Department of Agriculture estimates that 54.4 
million Americans live in these low-income areas, and have poor 
access to healthy foods. For city residents, that means that a 
person can live more than \1/2\ mile from the nearest 
supermarket, and when you add in the fact that many of these 
people are walking with groceries, or riding public 
transportation, that distance becomes even farther. So my 
question today is for Mr. Verbakel. Can you address how 
strengthening local food systems through controlled environment 
agriculture can improve access to healthy foods? And does the 
lower cost of produce from controlled environment operations 
translate into lower costs and healthy foods for consumers?
    Mr. Verbakel. Thank you for your questions. I can say yes 
to both of your questions. I think they are--the last question 
is clearly something that is from a 365 day perspective, and 
the fixed cost that an operation carries can benefit into a 
lower price per pound, or per square foot, which makes the 
operation more competitive, opposed to similar operations, 
either from the outside, or from a much longer distance. At the 
same time, providing in labor a place is something that some 
areas appreciate. A greenhouse is a very nice area to work, 
especially in the winter times. In Connecticut, it can be very 
cold, so--from--working in an enclosed environment with good 
conditions, as Mr. Safrance stated, is something that is also 
much appreciated by the workers. I want to be careful with the 
time, so I will give the word back to you.
    Mrs. Hayes. No, you are absolutely right. My district in 
Connecticut has more greenhouses--actually, it is the largest 
industry in my district, greenhouse growers, so thank you for 
that. As I discussed here before, UConn--my district is home to 
UConn Extension, which teaches students each year how to 
successfully become urban farmers, with controlled environment 
agriculture and other methods. Some projects conducted by the 
program were the funding of the USDA NIFA Beginning Farmers and 
Ranchers Programs. We have waiting lists for all of these 
programs in my state.
    In your testimony, Mr. Safrance, you discussed labor 
shortages across the food and agriculture sectors over the past 
year. Aside from the updates to the H-2A Program that you 
discussed, are there other ways to incentivize domestic workers 
to seek opportunities in these types of facilities? And how do 
you encourage specialized education experience in controlled 
agriculture environments?
    Mr. Safrance. Yes. So definitely there is more we can do. I 
think something you touched on that is very important is what I 
would call the skilled labor side of the industry. When it 
comes to labor management, crop management, crop care, 
supervisors, growers, assistant growers, integrated pest 
management specialists, there are a lot of really good jobs in 
each greenhouse, and the industry is extremely short on skilled 
people in those parts of the greenhouse. So to put together an 
industry-wide, or a university, or college-type program for 
this would be an excellent idea to start to cultivate the next 
people in these jobs. They are all really well-paying jobs, and 
it is great industry to be in. It is basically recession-proof, 
so I would highly encourage as many programs as we could to 
train the next greenhouse operators for sure. And when I say 
greenhouse, I mean CEA.
    Mrs. Hayes. Yes, absolutely. I appreciate that. My other 
committee is the Committee on Education and Labor, and as we 
discuss higher education, I try to always remind my colleagues 
that that has to include career and technical training, vo-ag 
programs, any means for people to access economic 
opportunities, and that is not always a 4 year college degree. 
So I am really pushing to expand programs like the UConn 
Extension, and vo-ag training programs in my own district, so 
thank you. Mr. Chairman, I yield back, under time.
    The Chairman. Yes, thank you very much. Thank you very 
much, Mrs. Hayes. And now I recognize the gentleman from North 
Carolina, Mr. Rouzer, for 5 minutes.
    Mr. Rouzer. Thank you, Mr. Chairman. I appreciate that very 
much, and I appreciate you holding this hearing today. Very 
interesting subject matter. When it comes to greenhouses, I 
worked on our family farm during the summers, and the prospect 
of a 64 acre greenhouse just kind of blows my mind. I am used 
to the smaller version, where you were growing tobacco plants 
that were transplanted to the field. Same with sweet potato 
plants as well.
    I have to ask, what kind of investment is that, a 64 acre 
greenhouse, and was that all at once, or was that over a long 
period of time, or if you could talk about that a little bit? I 
am just curious what kind of investment that is.
    Mr. Safrance. Yes, sure. That specific one was at one time 
it was the largest greenhouse ever built in one consecutive 
build in the United States, so it is at the high end of the 
spectrum. The investment for a facility like this, depending on 
the technology, for a vine crop--and when I say vine I mean 
tomatoes, peppers, cucumbers, things like that--are probably 
$1.5 to $2 million per acre. If you get into a fully automated 
leafy green facility, it could be upwards of $5 million an 
acre. They are very expensive.
    Mr. Rouzer. Wow. It strikes me that it would be a very 
natural environment to produce organically. Is that correct or 
incorrect, or how much more effort does it take to produce 
organically?
    Mr. Safrance. Yes. Essentially the differences for CEA 
organics versus conventional are basically down to the grow 
media you grow in and the fertilizer you use. We technically 
try to never--almost never spray any kind of pesticides or 
anything like that anyway, and we all use IPM pest management, 
so it just really comes down to growing in different media and 
organic fertilizer.
    Mr. Rouzer. How much more does it cost, if anything, to 
produce organically?
    Mr. Safrance. It costs considerably more. The media is more 
expensive, it is much more labor to apply the fertilizers. The 
fertilizers are much more expensive. But when it comes to cost 
per pound, it is much higher because you get considerably less 
yield, so it drives the cost per pound up considerably.
    Mr. Rouzer. Got you.
    Mr. Safrance. And I would say that the average is almost--
probably 30 or 35 percent more.
    Mr. Rouzer. How much of yours is organic that is produced?
    Mr. Safrance. In the United States we don't do any.
    Mr. Rouzer. None? Okay.
    Mr. Safrance. Not currently, no.
    Mr. Rouzer. I assume the answer to this is no, but is there 
anything that cannot be produced in a greenhouse, it is just a 
matter of the economies-of-scale, et cetera?
    Mr. Safrance. Well, I mean, technically we could probably 
grow orange trees in a greenhouse. I don't know if anyone has 
tried. But, I mean, they would grow fine, I just don't know 
that you would ever get your return on your investment doing 
something like that.
    Mr. Rouzer. Right.
    Mr. Safrance. The majors are leafy greens, tomatoes, 
peppers, cucumbers, and then--now we are getting into berries 
indoors. We are doing a bunch of strawberries.
    Mr. Rouzer. Got you. It is a very intriguing subject there, 
yes, because weather is one of the key variables in every 
growing season for every farmer out there. One day they could 
have a great crop, the weather has been super, and then a 
hurricane comes through, for example--in my district it happens 
all the time--and ruins everything. And, of course--then on the 
produce side, one state does well, the other state doesn't do 
well from a weather perspective, and you know how that dictates 
the price, et cetera, so it is a very interesting subject area.
    Mr. Kelley, you mentioned in your testimony, with regard to 
the Food and Drug Administration, their efforts to implement 
tangible strategies to modernize the food industry. I am just 
curious to get more detail on that.
    Mr. Kelley. When we think about how we measure the success 
of the food industry, it is really are we getting food that is 
high quality where it should be when it should be there, right? 
And so when we think about those metrics and those measures, it 
is based on accuracy. And if we bring it down to what we know 
about accuracy, it is trust. Trust as consumers, all of us. It 
is easy to ask all of us, raise your hand if you eat food, back 
to the Chairman's point at the beginning of our session here. 
And the work that was done with the USDA, along with some 
retailers, such as Walmart, was based on looking at those 
measures, and them saying, look, how can we make sure that 
those measures of food safety, food quality, and the supply 
chain that surrounds all of that, how do we pull down some of 
those barriers that currently allow that data to sit in silos, 
and how do we do it with trust? And that is what we did with 
them. As IBM used to say, look, let us implement some 
technologies, augment it. Intelligence, some people call it 
artificial intelligence, but how do we do that with blockchain 
and make it safe?
    Mr. Rouzer. Thank you, Mr. Chairman.
    The Chairman. Thank you very much. Thank you very much. Now 
I recognize for 5 minutes the gentleman from California, Mr. 
Panetta.
    Mr. Panetta. Great. Thank you, Mr. Chairman, I appreciate 
that, and obviously thanks to all of the witnesses that are 
here talking about a very important issue. As many of my 
colleagues know, and maybe some of you know who are testifying 
today, I represent the Central Coast of California. And as many 
of my colleagues know, and maybe some of you know, it is known 
as the Salad Bowl of the World. It is known that not just 
because I say that, it is known with that appellation because 
we grow over 100 different specialty crops there in the Salinas 
Valley, San Juan Valley, and the Pajaro Valley on the Central 
Coast.
    Now, many, if not all, of these crops are grown outside. We 
have the acres of land, we have the nutritious soil, but we 
also have the people, with the highest principles, that 
prioritize, and are very progressive when it comes to the food 
safety of the products. For example, most of the leafy green 
producers in my district belong to the Leafy Green Marketing 
Agreement, which actually holds its members to a more rigorous 
food safety standard than the FDA. Now, the LGMA is 
representing 90 percent of the leafy greens grown in the United 
States, and when it comes to those LGMA products, there is 100 
percent traceback to the farm and date of harvest.
    Even with that level of certainty, however, the growers 
that I represent continue to ensure an even stronger, safer, 
and more transparent food system. And that includes their close 
work, and yes even scrutiny, by the FDA. It also includes their 
work over the years now with their Congress Members and their 
Senators to secure strong language in our appropriations bills 
on food traceability and traceback, and partnerships under the 
Food Safety Modernization Act.
    Now, most recently we were able to secure language in the 
Fiscal Year 2022 House Approps bill that provides an increase 
of $9.5 million to facilitate traceability and enhance outbreak 
response. It is language like that in that bill which 
encourages the FDA to work in closer partnership with existing 
government food safety programs in the specialty crop industry, 
and also allows them to share and coordinate information and 
data with industry partners, and state and local governments, 
so that they can better coordinate before, during, and 
sometimes, yes, as we know unfortunately, after an outbreak 
occurs.
    Now, my language that I got in that bill also directs the 
FDA to capture point of sale details, such as the lot number 
and product identifier throughout the supply chain. It also 
ensures that those details are maintained from the point of 
origination through the retail food or food service 
establishment. Now, I believe that we can continue to advance 
our food safety technology. We are going to get better. But, to 
do that, we must work closely with the specialty crop growers 
so that we can continue to build on the industry's decades of 
work and leading role in addressing food safety issues.
    Now, Mr. Kelley, you and IBM have talked--you, in 
representing IBM, have done an amazing job, and you have talked 
a lot about it today, but I also want to basically talk about 
your work not just with the small leafy green farms in 
California, because you understand firsthand that these types 
of operations that are committed, absolutely committed, to 
delivering fresh, safe, nutritious food to consumers. And you 
know that these types of producers, they are willing to do what 
is necessary so that their products are identifiable and 
traceable, should any issues arise. You also know, though that 
we have some work to do when it comes to speeding up our 
traceability and traceback effort. So I know you have hit on it 
a little bit, but talk to me, as we look to the future, the 
need, and the need to further develop our capacity to trace our 
food products more efficiently. What can blockchain technology 
do to continue to support these ongoing efforts? If you could, 
Mr. Kelley?
    Mr. Kelley. Thank you, Congressman. When we think about 
what you have laid out there, which I thought you did very 
well, with regards to talking about the source all the way to 
consumption, and you included point of sale, so there is a 
retailer in there, what has to happen is when we look at going 
forward, we know that safe food is a team sport, and in order 
for it to be a team sport there has to be this sharing, trusted 
sharing, of information. And that trusted sharing has to be 
something that pulls down the barriers that we currently have 
with regards to the accuracy of the data, the speed at which we 
can share that data.
    As I called out, Walmart set a very high bar when they went 
from 1 week to just a couple seconds.
    Mr. Panetta. Great. Thank you. My time is up. Thanks to all 
of you. Thanks to all the witnesses. Thank you, Mr. Chairman. I 
yield back.
    The Chairman. Very good. Thank you very much. And now I 
will recognize the gentleman from California, Mr. LaMalfa.
    Mr. LaMalfa. Thank you, Mr. Chairman, I appreciate it. I 
will just dive right in here for Mr. Safrance on the labor 
issue. Several of us on this Committee have been working really 
hard on that, I see my friend Mr. Panetta nodding. We have put 
together pretty good legislation, I wonder if you have heard of 
it, the Farm Workforce Modernization Act.
    Mr. Safrance. What is that, sorry, I didn't hear the end of 
that.
    Mr. LaMalfa. The bill we passed out of the House twice, 
actually, the Farm Workforce Modernization Act.
    Mr. Safrance. Yes. I am sorry, I didn't get the question, 
though.
    Mr. LaMalfa. Have you heard of that yet, that we passed out 
of the House?
    Mr. Safrance. Yes, I have heard that. Yes, absolutely.
    Mr. LaMalfa. Good, right on. All right. Because obviously 
ag labor has been an issue for quite some time, having a known 
size and legal workforce has become a very important issue. 
There is a lot of other outside politics. It is actually a 
tremendous effort, a tremendous bipartisan effort, to get that 
bill through the House, and it is waiting over in the Senate 
for action. But talk to us a little bit about, we've got 
everybody from the American Farm Bureau Federation to people in 
the labor industry side all trying to find a way on this thing. 
Tell us about what your struggles are with the greenhouses for 
staffing, and keeping a workforce together, and do you think 
what you have seen of our bill, or just in general, that see 
some kind of hope for a farm workforce that will be----
    Mr. Safrance. Yes. The biggest issue we have is getting 
enough local labor. It has always been a challenge for us, and 
I have talked to many other people in the farming space in the 
United States, including field farms, and everybody kind of 
seems to have the same sentiment. The biggest problem we have, 
and I think CEA will have, is when the--I guess the legislation 
was made in the 1980s for H-2A labor, they didn't contemplate 
greenhouses, and they have this provision that it needs to be 
seasonal, and greenhouses and CEA are actually seasonal, to a 
certain aspect. But, when we get finished with our crop, we 
have to literally take the entire crop out of the greenhouse, 
take all the media that it grows in out, sterilize the 
greenhouse, re-plant it.
    I mean, the equivalent would be an apple farmer shows a 
season by saying, hey, we need to put in some trees, we need to 
pick the apples, and then we are done for the season. While 
ours, if we were the apple company, would say, now we have to 
take all the trees out, we need to remove all the soil, bring 
all new soil back in, plant all new trees. So it is a seasonal 
issue, but it just looks differently than what normal people 
are thinking about in terms of field agriculture. So I think 
that we need to have a look at that for CEA, that it kind of, 
in some way, shape, or form, understands how our seasons work, 
compared to, and that they are not the same as a field-type 
scenario.
    Mr. LaMalfa. So, yes, you have a lot more infrastructure, 
obviously, with the greenhouses. Our bill tried to pay close 
attention to seasonality, as well as the needs of some of our 
year-round ag issues, such as dairy, like that. So if you have 
more suggestions on how that could look moving along, I would 
certainly want that to be part of the discussion. What else do 
you think Congress can be doing? You brought that issue up. 
What other frustrations or issues do you think Congress should 
be addressing on that to make this go farther?
    Mr. Safrance. Well, I mean, I don't know that it pertains 
to the bill, but I think it is frustrating that we apply for H-
2A, and occasionally sometimes we get it, sometimes we don't, 
but there is never a proper reason why, and it is very 
inconsistent. So I think we need to address the consistency of 
it so that people that want to invest in these expensive 
facilities can be assured that they are going to have the labor 
to operate them properly. Otherwise, nobody will ever continue 
to build these, because they won't be able to make money.
    Mr. LaMalfa. That makes sense. So we were fighting for more 
flexibility on that program as well. So let me shift gears a 
little bit to Mr. Kelley over there at IBM. Can you follow up a 
little bit more on the food traceability? I mean, that is very 
amazing technology, to be able to track as closely as you can. 
Can you emphasize a little bit more on if there is a question 
about food quality or food safety on a recall-type situation, 
or what, I guess, recalls become pretty wide when they have an 
issue with some kind of a meat product or a vegetable product. 
Do you see this as helping to narrow the amount of product that 
would have to be removed from the shelves? Because they talk, 
like, in pretty broad amounts of product in tonnage, or 
packaging, or what have you. But what do you see the potential 
is for this traceability, maybe of narrowing the amount of food 
they have to take off the shelf, and it goes to waste?
    Mr. Kelley. So I think I may have to yield my answer based 
on the time.
    Mr. LaMalfa. Okay. Sure.
    Mr. Kelley. With regards to food going to waste on the 
shelf, Congressman, what I think you are calling out is the 
ability to have increased data about the time that those SKUs, 
and--when we talk about numbers of SKUs, some of that--now, 
when we first started, it was some 6,000 SKUs. Now we are able 
to manage some 75,000 SKUs in a blockchain network that says 
look, let us look at all of that.
    And if you can understand that very complex network of not 
just one ingredient--I mean, as we sit here, it is not just one 
tomato, but it is a tomato, and a sausage, and a grain product 
in a pizza, so now you are talking about when does that go bad? 
And if we could manage those timings of when something is 
really just ready to go bad before it does, and being able to 
then also move it from a shelf, perhaps to the food desert that 
was mentioned early by the Congresswoman, that is what we are 
talking about with timely data that is available and shared, 
and timely action that can be taken with that data. So when we 
start thinking about what we can do, that is what we are 
talking about, Congressman.
    Mr. LaMalfa. Thanks so much.
    The Chairman. And thank you very much. And thank you, Mr. 
LaMalfa, and our entire Committee. But before we adjourn today, 
I want to invite our distinguished Ranking Member to share his 
closing remarks. Ranking Member Thompson.
    Mr. Thompson. Mr. Chairman, thank you so much, and thank 
you to all of our witnesses for really contributing to a great 
discussion in this hearing. American agriculture is, once again 
and it always has been, science, technology, and innovation. 
And as I said before, early on those first farmers were just 
trying to survive a winter. It was probably pretty crude and 
rudimentary. Today it is very sophisticated. One of the 
statistics I shared in my opening statement just rings true, 
the fact that our productivity of American agriculture has 
increased 287 percent since the 1940s, and today's hearing 
showcased a great example of this. So I really want to thank 
our witnesses.
    I want to build off what our mutual friend from California, 
Mr. Costa, talked about, the importance of innovation 
investments.
    The Chairman. Yes.
    Mr. Thompson. And I couldn't agree with him more. That is 
what we do with the farm bill. That is what we do in this 
Committee. We continue that tradition of American agriculture, 
increasing the productivity, and continuing to develop, in 
terms of the science, and technology, and innovation. And that 
is good for everything. Not just nutrition, not just the rural 
economy, it is the environment. You know, that is the positive 
outcomes we get. So in that spirit, I would just like to close 
my remarks that, I just want to recognize, in terms of 
investments and innovation, this Committee's unified work to 
invest $43.2 billion in rural broadband, which is needed for 
our continued innovation?
    And I would like to certainly encourage all of the Members 
of our Committee to join the Chairman and I in calling on 
leadership to put what we passed unanimously, which was a great 
reflection of innovation and technology, on the House floor, 
the Broadband Internet Connections for Rural America Act (H.R. 
4374). Rural America needs this, and I always say that without 
a robust rural economy, all people, including those in the 
cities, are going to wake up in the cold, dark and hungry. And 
so I will just--I guess I won't say anything more. I will just 
yield back. Thank you, Chairman.
    The Chairman. Well thank you so much, and you are 
absolutely right. And I know the attending physician told me to 
keep my mask on. Tell him I did for the entire meeting. But 
because you brought up our bill, folks, if we do not get rural 
broadband, connection to the internet, much of what you are 
talking about, controlled environment, how can we accomplish 
any of this indoor farming if our farmers, if our agriculture 
producers, are not connected to the internet?
    And, Ranking Member, you are absolutely right. If there are 
those of you under the sound of my voice, please call your 
Members of Congress, call the leadership, call the White House, 
call everybody. This Committee has passed a very good bill to 
finally bring rural broadband to our rural areas. We passed it 
bipartisan. Every single Republican and Democrat came together. 
It is the only bill, as we are moving for the infrastructure, 
that the Congress has to address this.
    So in order for us to make this hearing meaningful, in 
order for us to be able to have controlled environment 
agriculture, which you all stand for, using cutting edge 
technology, we can't do it unless our rural communities--that 
is where farming is. That is what our pioneers, the shoulders 
we stand on in 1936--when our rural communities did not have 
electricity, they called on us. It was agriculture. It was our 
Agriculture Committee back then joining forces with our United 
States Department of Agriculture that brought electricity to 
rural America.
    This is the foundation we are building on. But yet our bill 
sits in the House and does not have a vote. And we are asking, 
we are pleading, with the bipartisanship of this Congress to 
please pass our bill. Because this is the only way we are going 
to be able to make real the advocacy, the programs, the 
promises, to fulfill our true destiny, to make food available 
and secure for the American people for generations and 
centuries to come. We have to move it indoors. Climate--and not 
only that, there is just so much land. Everything is there on 
the table, but we have to get rural broadband into our rural 
communities. Thank you for your partnership on that and thank 
you for giving me the opportunity to back you up. And if you 
see the attending physician, please tell him that I did put my 
mask back on at the end, but I had to say it. Thank you.
    And so I want to thank Mr. Giscombe, PLANT-AG, thank you. 
Mr. Gadouas, Mr. Verbakel, Mr. Kelley, and Mr. Safrance, thank 
you all for this brilliant, and intensive, and very good 
testimony. And we are going to build on this foundation. This 
is why we have the hearings. And we will pull this in, and 
there--then we are coming back so we can give you the 
legislative help that you need to complete your task of 
bringing controlled environment agriculture into real time and 
real life for our great nation. With that, our hearing is 
adjourned. Thank you.
    [Whereupon, at 12:10 p.m., the Committee was adjourned.]
    [Material submitted for inclusion in the record follows:]
  Joint Submitted Statement by Hon. David Scott, a Representative in 
  Congress from Georgia; Hon. Jim Costa, a Representative in Congress 
 from California; on behalf of Matt Barnard, Co-Founder and Executive 
                      Chairman, Plenty, Unlimited
    Chairman Scott, Ranking Member Thompson, and Members of the 
Committee:

    Thank you for the opportunity to participate in such an important 
discussion. My name is Matt Barnard. My cofounder Nate Storey and I 
started a company called Plenty in 2014 with one simple mission: to 
improve the lives of Plants, People, and our Planet. We are united 
behind this mission to nourish plants, people and planet to vitality 
with a low water, carbon and land footprint and to convert agriculture 
from an extractive industry to a generative one that underpins societal 
prosperity.
    Today, our technology-rich vertical farm in South San Francisco 
produces a range of pesticide-free leafy greens for customers across 
the Bay Area, and we are currently building a facility in Compton, Los 
Angeles that will be capable of servicing grocers across California. 
Our plan is for the wave of farms that follow Compton to produce not 
just leafy greens, but also strawberries and tomatoes--bringing to 
market the groundbreaking work in which we have invested at our Plenty 
Plant Science, Flavor and Sustainable Farming Center in Laramie Wyoming 
over the last 7 years.
    Americans are paying attention--not only to where their food is 
grown--but to how it is grown. The rapid expansion of organic produce 
in the U.S. is a clear expression of the importance we now place on 
food that minimizes the chemicals laid on the land and ingested into 
our bodies. Indeed, as Americans show more interest in their food 
sources, they are demanding lower pesticide use, a sustainable and 
perpetual food chain, and nutrient-rich rather than calorie-rich foods. 
These are encouraging trends, and they speak to the demand for a 
comprehensive look at how we grow our food in America.
America has run out of Farmland and Water is Close Behind
    America last acquired farmland in 1848--following the Mexican 
American War. Since that time, the United States has been losing 
irreplaceable farmland at a rate of \1/2\ million acres per year while 
the U.S. population continues to grow. We ran out of fruit and 
vegetable farmland decades ago and our import dependence has been 
growing ever since--from under 10% to about 40% and growing. We are now 
import-dependent.
    Additional ``farmland'' is needed now in order to simply maintain 
America's food chain, and even more so to grow it in line with our 
population. Far from threatening existing and incumbent farms, the 
United States needs controlled environment production to supplement 
supply of fruits, vegetables, and other specialty crops that have 
become the purview of importers--outside of the concentrated production 
in select regions like my native California (the most prolific fruit 
and vegetable growing region in the world.
    In order to sustain America's and the world's continued growth--we 
must have more production capability. This leaves us with two basic 
choices--raze and industrialize a plot of land nearly the size of the 
Amazon Forest and prepare it for planting, or to change how we grow the 
food we eat. Industrializing that much land would increase humanity's 
total carbon footprint by 10-15%--clearly not a viable option in a 
world that is in the midst of a rapid warming cycle that is disrupting 
our food chain and exposing its stressed fragility.
    Vertical farming's revolutionary ability to grow plants in three 
dimensions and in a fraction of the time allows us to now grow a 
massive farm's worth of food in a structure the size of a Walmart. 
Vertical farming maximizes space utilization--allowing for scale-level 
production in facilities that can be placed nearly anywhere there is 
water, people, and power.
    To that end, vertical farming consumes a minor fraction of the 
water that is utilized by traditional agriculture. Our current 
agricultural water consumption has reached an unsustainable point--with 
farms sitting an entire telephone poll lower because the aquifers 
beneath them have been sucked dry.
    Plenty's farms are designed to run at industrial farm-scale 
production levels while 90% less water than a traditional farm.
Addressing the Climate
    For the vast majority of human history--agricultural production has 
been at the mercy of the elements. The recent increase in severe 
weather events across the country has highlighted the fragility of our 
agriculture production, and the reliance that remains on elements 
beyond our control. The global systems upon which our food chain 
relies, water, climate, and interdependent ecosystems--are strained to 
the breaking point and in urgent need of repair. Meanwhile, the global 
population continues to rise. This rapid growth (a doubling of the 
human population during our lifetime) has delivered us from abundance 
to a stressed fragility that necessitates the slashing of the water, 
land, and carbon usage of our food production.
    As scientists expect the severity and frequency of these dangerous 
storms, flooding, and other catastrophes to continue increasing, 
America must look to ways to protect its food chain from these adverse 
events.
    Thanks to the controlled nature of our facilities, we can now 
control all of the factors that account for plant development: light, 
climate, water, and nutrient loads are all carefully balanced to ensure 
that the produce is receiving exactly what it needs, and nothing that 
it does not. This careful balance performs many important functions.
    First, by providing the plant with everything it needs to grow, we 
do not need to expose it to the elements at all--thoroughly protecting 
the food from pathogens, pests, and even floods and hurricanes.
    Second, it allows us to grow food faster and with higher nutrition 
density that with any other method. In fact, at my farm in South San 
Francisco, we can produce up to 40 seasons of produce in a single 
year--meaning nutritious food that was growing just hours or days 
before is accessible, 365 days a year. In fact, Plenty's plant 
scientists are now able to affect the flavor characteristics of our 
plants by controlling their nutrient, water, and light intake. 
Vertically farmed food really does taste better!
Vertical Farming Shortens, Simplifies and Hardens the Food Chain
    In addition to protecting our food from the local climate and other 
stressors, Plenty's vertical farming operations are allowing for food 
production where there has never been farmland to begin with. As I 
mentioned before, Plenty's vertical farms are capable of growing food 
wherever there is water, power, and people. This flexibility allows us 
to bring our farms to the market and produce hyper-locally like our new 
facility in Compton, CA.
    Currently, the average fruit and vegetable can spend around 2,000 
miles traveling to its final market. This travel time means a larger 
carbon footprint for the food, and a shorter shelf life for the 
consumer. Plenty's farms address both of these issues by producing the 
food within the communities that purchase it. This localized production 
has the added economic benefit of opening up what are essentially high-
tech manufacturing jobs in communities where economic opportunity can 
be as scarce as access to healthy foods.
Food Safety
    I've mentioned that controlling the environment allows vertical 
farms like Plenty to control for flavor, environmental stressors, and 
water consumption, but the most important aspect of vertical farming's 
controlled infrastructure is the safety benefits provided by our Food 
Safe Certified production facilities. By certifying our entire 
production facility as food safe--we are able to forego pesticide and 
fertilizer production. This, in turn, allows us to forego chemically 
treating the produce and means that our plants are up to one million 
times cleaner than chemically treated food from the field.
Congress Has a Role
    I reach out to you today because, while the vertical farming 
industry shows incredible promise, it remains a very new and fragile 
industry. Our farms require significant capital expenditures to build, 
and traditional agriculture capital financing is simply not available 
to innovative producers like Plenty. Instead, we are forced to seek out 
venture capital funding at a detrimental rate that involves forfeiting 
ownership of our companies. I ask you to consider opportunities for 
backstopping funding opportunities so that our industry can continue to 
scale and grow to fit the demands of American consumers. Thank you for 
your attention to this important matter, and I look forward to working 
with you to advance these important objectives.
                                 ______
                                 
  Submitted Letter by David Rosenberg, Co-Founder and Chief Executive 
                           Officer, AeroFarms
August 9, 2021

 
 
 
Hon. David Scott,                    Hon. Glenn Thompson,
Chairman,                            Ranking Minority Member,
House Committee on Agriculture,      House Committee on Agriculture,
Washington, D.C.;                    Washington, D.C.
 

    Dear Chairman Scott and Ranking Member Thompson:

    Since 2004, AeroFarms has been the pioneer and leader for indoor 
vertical farming, and we were very excited to see you convene the 
hearing on ``21st Century Food Systems: Controlled Environment 
Agriculture's Role in Protecting Domestic Food Supply Chains and 
Infrastructure.''
    COVID has put a spotlight on how fragile our food system is, and we 
fundamentally need a more resilient approach. Vertical farming is 
highly relevant to address climate change challenges, enable local 
production, and create new year-round jobs with fair wages and 
benefits.
    Indoor vertical farming companies like AeroFarms are able to bring 
the farms to the cities right where the consumers are, by-passing what 
is typically a very long and complex supply chain. Through our cutting-
edge growing platform, AeroFarms is able to grow with up to 390 times 
greater productivity per square foot annually vs. field farmers while 
using up to 99% less land, up to 95% less water, and zero pesticides, 
fungicides, herbicides, or insecticides. Another key benefit is that 
our totally controlled growing approach from seed to packaging is also 
setting a new standard for traceability and food safety to give our 
consumers better, safer choices than ever before.
    AeroFarms has been leading the way not only for vertical farming, 
but agriculture overall. Our expert team of plant scientists and 
engineers are focused on helping the broader agricultural community 
with state-of-art innovation and breakthroughs including the latest in 
speed breeding. In fact, AeroFarms is the principal investigator for 
the Foundation of Food and Agriculture Research (FFAR) and their 
Precision Indoor Plants (PIP) Consortium, a group of multi-national 
companies focused on next-generation crops and solutions. In addition, 
AeroFarms has partnered closely with USDA on key grants to enhance 
product quality and shelf life.
    AeroFarms is a great example of public-private partnerships working 
in concert to drive innovation and impact in the community.
    We look forward to future additional hearings and more importantly, 
the opportunity to share directly with the House Committee the work 
that we are doing to help agriculture overall.
    All are welcome to come visit our global headquarters in Newark, NJ 
as well and see first-hand our transformative work, and even better, 
taste our difference.
    Please advise on any questions or comments.
            Best,
            
            
David Rosenberg,
CoFounder & CEO,
AeroFarms.
                                 ______
                                 
Submitted Letter by Jonathan Webb, Founder and Chief Executive Officer, 
                               AppHarvest
July 27, 2021

  Hon. David Scott
  Chairman,
  House Agriculture Committee
  Washington, D.C.

    Dear Mr. Chairman:

    I was excited to learn that on Thursday the House Agriculture 
Committee would be conducting a hearing on, ``21st Century Food 
Systems: Controlled Environment Agriculture's Role in Protecting 
Domestic Food Supply Chains and Infrastructure.'' AppHarvest \1\ is 
based in Appalachia and uses Controlled Environment Agriculture/CEA to 
grow a climate smart, sustainable, year-round, food supply. In the last 
year, AppHarvest has expanded from 25 employees to more than 500. We 
began operating in October in Morehead, Kentucky, where we produce 
tomatoes. Our facility in Morehead is 2.76\2\ million --a full 60 
acres under glass--and sold 3.8 million pounds of tomatoes in the first 
quarter of the 2021. We have four more sites under construction in 
Kentucky and they will soon be opening to create even more permanent 
jobs in transitioning coal communities.
---------------------------------------------------------------------------
    \1\ https://www.appharvest.com/.
---------------------------------------------------------------------------
    The plentiful rain in the region enables AppHarvest to rely 
exclusively on recycled rainwater. Because of that and our proximity to 
East Coast markets--70% of the U.S. population is within a day's 
drive--we expect to play an essential role in protecting America's 
domestic food supply and infrastructure. I would welcome the 
opportunity to show you and your colleagues on the Committee how our 
state-of-the-art facilities operate and share the insights that we have 
gleaned over the last 2 years.
    One issue that I hope you will raise during the hearing is the need 
for CEA crop insurance. We know that USDA and RMA embarked on a study 
in January of this year and will be working over the next few months to 
develop a policy that covers ``diseases'' that might impact the sector. 
Given how important CEA will be to America's future food supply, that 
initiative is important and timely.
    I would be honored to confer with you or your staff at any time, 
whether prior to the hearing or after, and welcome all of you to plan a 
site visit to our facility in Morehead.
            Sincerely,
            
            
Jonathan Webb,
Founder & CEO,
AppHarvest.
                                 ______
                                 
               Submitted Statement by Bowery Farming Inc.
    Bowery applauds Chairman Scott and Ranking Member Thompson for 
holding a hearing on the role Controlled-environment agriculture (CEA) 
plays in protecting our national fresh food supply.
    Bowery Farming is the largest vertical farming company in the 
United States. Founded in 2015 by Irving Fain, our mission is to 
strengthen and fortify our national food system by building smart 
indoor farms close to the cities we serve. We grow local, pesticide-
free produce 365 days a year. We transform non-arable land into 
warehouses that become incredibly productive farms and create green 
jobs in the communities where we operate. Our farms stack vertically, 
leveraging hydroponics and using LED lighting that mimics the spectrum 
of the sun. Our operations are run by our proprietary BoweryOS that 
integrates sensors, vision systems, robotics, automation and data that 
orchestrates the entire farm operation from seed to shelf and provides 
our plants with exactly what they need when they need it.
    We grow in a completely controlled environment, and we hold our 
farms to the highest food safety standards. Each farm is SQF Certified. 
Our produce moves from harvest to store shelves within a few days, 
which means we are reducing our transportation footprint, extending 
shelf life (reducing waste at the store level) and maximizing the 
nutritional density of produce. We are 100X more productive on the same 
square foot of land as traditional agriculture and we are 90% more 
efficient with our water usage. Bowery is also committed to reducing 
our carbon footprint and is pulling our farm energy from low-impact 
renewable sources. The result is a vertically integrated fresh food 
supply chain that offers a fresher, safer, more transparent, resilient 
and sustainable approach to growing our produce.
    Bowery currently has two commercial farms in Kearney, NJ and 
Nottingham, MD serving the Tri-State and Mid-Atlantic regions in over 
850 stores with retail partnerships that range from Whole Foods Market 
to Albertsons to Giant to Amazon to Walmart. We are preparing to open 
our third farm in Bethlehem, PA in early 2022 with line of site to two 
more farm openings at the end of 2022 that will expand our footprint 
nationally. In addition to our commercial farms, we also have a major 
R&D facility in Kearney, NJ focused on plant sciences and breeding 
programs that will enable us to accelerate our work in product 
development to continue optimizing quality and yield within lettuces 
and herbs and to drive innovation in the indoor space beyond leafy 
greens including strawberries, fruiting crops and root vegetables.
    Most recently, Bowery closed our Series C funding, raising $300M in 
additional capital with Fidelity joining as our lead investor, bringing 
our total capital raised to $475MM.
    This capitalization in our business will enable us to accelerate 
building our farm footprint throughout the U.S. In addition to lead 
agricultural and tech investors like Temasek and GV (formerly Google 
Ventures), we are fortunate to have advisors who are at the forefront 
of shaping food policies that champion a more equitable future 
including Chefs Jose Andres and Tom Colicchio.
    As discussed in the hearing, our food system sits at the heart of 
so many of our most pressing issues and opportunities, such as climate 
change, national self-sufficiency, safety, health, equity and labor. 
Although not the only solution, we believe CEA is a critical part of 
strengthening and fortifying our national food system. We look forward 
to supporting and helping shape the future of our U.S. fresh food 
supply chain.
                                 ______
                                 
                          Submitted Questions
Questions Submitted by Hon. Kim Schrier, a Representative in Congress 
        from Washington
Response from Aaron Z. Gadouas, Managing Director, B.C. Ziegler and 
        Company
    Question. Mr. Gadouas, in your testimony you discussed the barriers 
for smaller CEA producers to access capital. I've heard from CEA 
farmers in my state about the difficulty in accessing capital, 
especially to overcome high startup costs. From your perspective, how 
can this Committee, Congress, and USDA be better partners in ensuring 
CEA producers have access to the necessary resources to enter and 
succeed in this industry?
    Answer. As I described in my testimony, capital markets resources 
can be made available to finance large CEA projects, as they are most 
efficient at large economies of scale. Obtaining financing for smaller 
CEA producers will continue to be a challenge. Commercial banks and 
specialized lenders in the agriculture space usually require 
substantial equity and personal recourse. The real issue in this 
country is there is a dearth of food system infrastructure for all 
participants across the broad supply chain.
    As local, state and Federal Governments have risen to the challenge 
of providing assistance to broad constituencies during the pandemic, 
this is an opportune time to advance salient public initiatives for 
food safety and food security and infrastructure by recognizing CEA as 
an asset class.
Response from Kevin Safrance, Executive Vice Chairman, Mastronardi 
        Produce Limited, Mastronardi Produce--USA, Inc.
    Question 1. Mr. Safrance, in your testimony, you said the primary 
barrier to the success of the Controlled Environment Agriculture 
industry right now is a lack of access to labor. I have heard about 
this from farmers in my district, both CEA and non-CEA, repeatedly over 
the last few months. Can you discuss the unique barriers CEA farms face 
in attracting and maintaining workers?
    Answer. Representative Schrier, as you indicated, field and CEA 
farms often struggle to attract and maintain the workforce necessary to 
feed America, and not for want of trying. Both aggressively seek to 
hire U.S. employees and then turn to programs such as the H-2A program 
only if necessary. Then, both often struggle to secure much-needed 
workers through the program. The challenges with the H-2A program are 
especially acute for CEA farms, however, because of the unique high-
tech growing processes and attendant labor needs of CEA farming. When 
the immigration law was last amended in 1986, no one could envision the 
technological and business innovations that have evolved to become a 
central part of the 21st-century controlled environment agriculture 
industry. As I testified to the Committee, there are two primary 
challenges that impact our workforce needs.
    First, and most notably, a CEA hydroponic farming system requires 
each farm to undergo a significant cleanout and sanitation process at 
the end of every harvest and for preparation of the subsequent season. 
That means that as a part of each growing cycle, CEA farms clean, 
disinfect, and sterilize the entire growing facility, including its 
gutters, irrigation, heating/rail systems, and ground cover so that all 
plant material is fully removed, and the hydroponic growing systems are 
ready to plant for the upcoming season. This unique and vital process 
can take up to 8 additional weeks depending on the crop, which means 
CEA farms need to retain H-2A workers for slightly longer than the end 
of a field farm's typical harvest season, but in no event longer than 
the conventional 10 month maximum period generally permitted by the 
U.S. Department of Labor. Second, hydroponic CEA farming often includes 
multiple segregated, separately enclosed ranges for growing fruits and 
or vegetables. Those hydroponic ranges are often specially tailored for 
growing one or more general types of fruits and vegetables, and as such 
may require separate H-2A workers for each range.
    Because of the unique requirements of modern, high-tech CEA 
farming, and the lack of action by Congress to update the rules 
governing immigrant farm labor, the Department of Labor has been forced 
to interpret the 1986 law and establish rules governing the admission 
of H-2A workers that have resulted in inconsistent application of 
standards that have often made it very difficult for CEA farms to avail 
themselves of the H-2A program. This lack of access impedes our ability 
to meet the domestic need for fruits and vegetables because we lack the 
workforce needed to timely harvest our crops, and at times, resulting 
in tons of food being discarded. CEA farms have specific needs for 
foreign workers and those needs fully comply with the intent of the H-
2A program, which is to guarantee that no worker who gains employment 
through it is here longer than 10 months nor displacing any U.S. job. 
Our experience over the years is that the lack of statutory clarity as 
to what constitutes ``seasonal and temporary'' workforce needs for CEA 
farms leads to Department of Labor decisions that are inconsistent in 
their application. In many ways the decision making, and the standard 
setting vary so greatly that we find it difficult to plan accordingly. 
Not only does this limit the productivity of our existing facilities, 
it dramatically limits the potential investment to expand CEA so that 
we can reduce our dependence on foreign produce and acts as an 
impediment to achieving domestic fresh produce food security.
    We believe a handful of clarifying technical amendments to the Farm 
Workforce Modernization Act would eliminate this inconsistent access of 
CEA farms to the H-2A program and address administrative barriers and 
make sure the H-2A program accounts for the technological advancements 
and unique temporary and seasonal workforce needs of CEA farming. Those 
modifications would: (1) Make clear that work on hydroponic CEA farms 
is classified as agricultural labor; (2) clarify that agricultural 
workers employed on CEA farms are seasonal workers for purposes of the 
H-2A program due to unique seasonal requirements of CEA farming like 
facility cleanout, sterilization, and future site preparation; (3) 
clarify that staggered end dates are allowed for CEA farms provided the 
period of employment in the job opportunity is no more than 10 months; 
(4) require the U.S. Department of Labor to establish special 
procedures for H-2A work at hydroponic CEA farms notwithstanding the 
traditional temporality and seasonality requirement; and (5) clarify 
that petitions involving segregated and distinct ranges submitted 
within a period of twelve consecutive months can be approved where the 
covered job opportunities are no more than 10 months in duration and 
the \3/4\ guarantee is met for each worker. We are readily available 
and welcome the opportunity to discuss and provide more detail on these 
proposed clarifications if you would like. Without these changes, we 
believe the business uncertainty caused by lack of access to the H-2A 
program will dramatically hinder investment in CEA in the United States 
and diminish the opportunity to onshore the production of fresh fruits 
and vegetables that have increasingly become dependent on imported 
crops over the last 3 decades.

    Question 2. Mr. Safrance, I have also heard from farmers and 
stakeholders about the need for workforce development for the indoor 
agriculture industry. Can you comment on the differences in the 
training and technical expertise necessary for workers in CEA as 
compared to traditional agriculture?
    Answer. There are unique workforce training needs for CEA farms due 
primarily to the advanced technological growing systems used on the 
farms. For example, as discussed above, CEA farming requires extensive 
facility cleanout and future site preparation, including disinfecting 
and sterilizing the facility, its gutters, its irrigation, heating/rail 
systems, and its ground cover--procedures and physical features unique 
to CEA farming. It also requires understanding and using inert medium 
Grow Cubes instead of traditional soil, carefully monitoring and 
controlling the use of natural and artificial light, capturing and 
recycling water, deploying an integrated pest management systems such 
as ladybugs instead of the ordinary significant use of pesticides, 
using ergonomic ``white glove'' harvesting methods, and generally using 
sophisticated computers and systems to assist the growing teams with 
management of critical aspects of CEA farming, which technology 
continues to be advanced inclusive of robotics and artificial 
intelligence. These features of CEA farming are different from field 
farming and require specific training. In our experience, however, 
training has not been the primary barrier to obtaining the necessary 
and qualified workforce to manage the harvest. Our primary challenge is 
an inadequate supply of labor, which was prevalent prior to the current 
pandemic and will remain unless steps are taken to update the H-2A 
rules to account for CEA farming, which we believe could be addressed 
through the previously mentioned technical clarifications to the Farm 
Workforce Modernization Act.

                                  [all]