June 6, 2019 500 AM
FAR WEST TEXAS – “You can’t make it in vegetables,” Mike De-Giglio, the CEO of Village Farms said definitively into the phone this week, a worrisome statement from a man at the helm of a multinational vegetable farming company. Dejectedly, he added, “The whole vegetable industry in the US will succumb to Mexico.” DeGiglio acknowledged that the industry faces new uncertainty, as volatile threats over Mexican trade are rampant in the Oval Office and Congress.
But DeGiglio isn’t in crisis. Instead, he hopes hemp and cannabis will become Village Farms’ golden ticket. “Texas has a climate that’s conducive for both indoor and outdoor growing of hemp,” according to the CEO. His company, hoping to pivot operations quickly, just successfully lobbied for its legalization in Texas.
Hemp is a non-psychoactive form of the cannabis plant, which had been federally illegal in the United States until Trump’s 2018 Farm Bill, which no longer classified it as a schedule one controlled substance—a classification it had shared with drugs like heroin.
Last month, Texas legislators unanimously voted to legalize hemp production in Texas. Village Farms has now uprooted half of all tomatoes in its 1.3 million square foot Monahans greenhouse to prepare for their first crop of hemp. By winter, they’ll consider expanding to the Monahans facility’s fields. The only roadblocks ahead are Governor Greg Abbott’s signature on the bill by June 12, and waiting for the state to set industry standards.
Though they plan to start West Texas hemp in Monahans, De-Giglio already foresees expansion to its Big Bend greenhouses in Fort Davis and Marfa as early as 2020. In the meantime, DeGiglio said they’ll continue growing tomatoes, and begin a genetic program in the research breeding facility in Marfa that will isolate “the pure, clear oil that is CBD,” a non-psychoactive cannabinoid that can be found in the hemp plant.
CBD has exploded in popularity, according to DeGigilio, who mentioned that the extract is “all about health and wellness. It’s a consumer product industry. It’s not curing any disease but it’s a reduction of symptoms.” Companies and wellness circles that promote CBD have suggested it reduces anxiety, works as a sleep aid, and positively affects Alzheimers, Multiple Sclerosis, and a bevy of other ailments.
In a sign of how quickly legislation and public perception are changing around cannabis, the FDA held its first ever hearing about the drug, and its health-and-wellness extract CBD, last Friday. The hearing raised concerns about regulation in the CBD industry, and that there are few studies of the drug’s efficacy. The FDA did acknowledge that there is high demand for CBD, and they hope to make the extract safe, regulated, and accessible.
The US farming industry has struggled since President Bill Clinton expanded the North American Free Trade Agreement (NAFTA), which allowed Mexico to export vegetables to the United States. With NAFTA, De-Giglio says, “We can’t compete.” The CEO says Mexico today pays its employees $4 to $6 for an entire day’s work. Meanwhile, his company strives to compensate its employees with $15 an hour, medical and dental insurance, and a 401(k) retirement plan.
Many of the workers at its Marfa and Fort Davis greenhouses travel to work each day from the Mexican border city of Ojinaga, Chihuahua. With dozens of employees, it is one of the largest employers in Presidio and Jeff Davis counties.
For US farmers, hemp is different. Mexico is not able to export hemp to the United States, meaning the market is wide open for US farmers to compete. Fortunately for Village Farms and its three west Texas facilities, the company is uniquely prepared for this newly legalized crop.
When Canadian politicians legalized hemp and then cannabis, the multinational farming company converted many of its Canadian tomato operations into the leafy green cannabis plant. The Canadian Cannabis Joint Venture resulted in lots more green for the company, generating $5.5 million in its first quarter of sales.
Now they’re ready to bring hemp to Texas, and should it ever be legalized, marijuana, too. The market is looking for a sustainably grown, high value greenhouse product for use in high end pharmaceutical or pharma-type products, and Village Farms is poised to fill that market.
But, “Until the USDA publishes the regulatory guidelines on regulations around growing it, nobody can grow it in a field or greenhouse,” DeGiglio notes. Those guidelines could come this fall, which would miss the cannabis growing season, but greenhouses are year-round, which may give Village Farms an advantage in the market.
The company isn’t ready to fully give up on vegetables, though. “We still have one of the largest single greenhouses in North America in British Columbia, and that’s tomatoes. We’re going to continue to grow vegetables,” but DeGiglio adds that so much is dependent on the current turmoil between Mexico and the US. “Trying to run a business with all this government craziness is bizarre.” DiGiglio said Village Farms tried for 22 years to “be proud Texans” and grow tomatoes in Texas that were free of pesticides, free of genetically modified seeds, and with a curated flavor profile. “Although our consumers want it, the retailers are looking for the lowest price. You’ve got to meet the Mexican price, and I can’t.” DeGiglio’s passion for his vegetables clearly comes through. “It’s frustrating. I feel proud, but what can you do.”
A March 1 press release from the company wrote, “Village Farms owns and operates 5.7 million square feet of existing, technologically advanced greenhouse facilities in West Texas, one of the best growing climates in the U.S. If Village Farms were to convert its Texas operations to hemp production, they would comprise the largest greenhouse hemp production footprint in North America.” The hazy future of west Texas’ Village Farms and its 600 employees is becoming clearer every day.