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Vertical farming plans ‘paused’ as overseas partner reports large losses

The Government plans to create a vertical farming industry on the island have been put on hold after the overseas company behind the scheme reported massive losses.

The Bermuda Economic Development Corporation had partnered with Florida-based Kalera to set up a Bermuda subsidiary of the company.

In September Jason Hayward, the Minister of the Economy, trumpeted the initiative as one of the four cornerstones of the Government’s economic recovery plan.

And last month David Burt, the Premier, said that “a deal had been done” that was due to go before Cabinet within weeks.

But figures for the third quarter of this year show that the parent company made a gross operating loss of $20.7 million in the three months up to the end of September.

And the disappointing results have forced Kalera to pull the plug on its foreign operations in order to focus on its US farms.

Total revenue for the period was just $1.7 million, offset by selling, general, and administrative costs of $10.8 million, plus other expenses.

Last night Erica Smith the executive director of the BEDC, confirmed that a Bermuda branch of Kalera could now be in jeopardy.

Ms Smith said: “At this time the international partner for the vertical farm initiative has undertaken a strategic review that may potentially impact plans contemplated in Bermuda.

“Until we understand the implications of this strategic review, actions on this initiative have been paused.

“The ultimate goal with the vertical farming initiative is to reverse the unsustainable trend of reliance on imports for our country while reducing food costs for consumers.

“As such, BEDC remains committed to the ideals of creating better food security for all Bermudians and residents of Bermuda and will re-engage as soon as clarity is received from our international partner on this project.”

Earlier this week, Jim Leighton, the president and chief executive officer of Kalera, acknowledged that the company’s balance sheet was ”challenged“.

In a conference call with investors, he said that the company had made a decision to “halt capital investments” on its international farms, and had “made a decision to divest our international assets”.

Playing down the negative results, Mr Leighton said: “What has undeniably changed over the past six months are the capital markets and the availability of capital for microcap companies like Kalera.

“The volatility in markets and interest rates this year have been at times unprecedented and require us to remain flexible and maintain optionality.

“We halted capital investments on our international farms and non-operating US farms. We made the decision to divest our international assets, thereby eliminating capital, and operating and G&A expenses from our monthly cash burn.

“We are operating in a leading and a new industry, and that comes with a certain level of uncertainty. And the recent market volatility has added an extra layer of challenge down to our business.

“But I can tell you that I believe in this company, our people, our customers and our ability to provide transformative product to the market, and we will continue to work every day to create value for all of our stakeholders.”

In September Mr Hayward said that an announcement on the “execution and implementation” of the plan was just “weeks away”.

But there has been no announcement from the ministry since then, despite repeated requests for updates from this newspaper.

Quizzed again by The Royal Gazette last week, a ministry spokesman would only say: “While the Ministry of Economy and Labour cannot share specific details at this time, we continue working with stakeholders to launch Bermuda’s first large-scale vertical farm.”

Local farmers have also questioned the financial viability of the scheme.

A spokesman for the Bermuda Farmers Association last month said: “How can one produce cheaper goods with both the high capital and operating costs of such a facility, given Bermuda’s very expensive electricity rates?”

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Published November 18, 2022 at 3:51 pm (Updated November 18, 2022 at 3:51 pm)

Vertical farming plans ‘paused’ as overseas partner reports large losses

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