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December 10, 2007

Bumper crop | Madison tomato grower Backyard Farms unveils an ambitious five-year expansion plan

By Whit Richardson
In its first year of operation, Backyard Farms produced nearly 17 million pounds of hydroponic tomatoes under a single roof in its 24-acre Madison greenhouse. Roughly 35% of those "Backyard Beauties," the tomatoes' marketing moniker, were sold in grocery stores in Maine, while the rest were shipped to produce aisles throughout the Northeast.

And a year after the facility opened, the Backyard Farms plan ˆ— which company founder Paul Sellew says is still "fraught with risk and uncertainty" ˆ— looks to have matured quickly. Sellew says the company's early success has "demonstrated we can grow world-class tomatoes ˆ— the freshest tomatoes in New England ˆ— for the New England market."

Indeed, it's not just Sellew who has given the hot-house tomatoes the thumbs up. "Compared to other cluster tomatoes, they're as good as the top of the line," says Armand Provost, senior director of produce at Gardiner-based Associated Grocers of Maine, which ships as many as 300 boxes of Backyard Farms' tomatoes a week to the majority of its 330 member independent grocery stores.

Building on its initial success, Backyard Farms recently unveiled a five-year plan that would more than double its greenhouse operation in size. The Maine Department of Environmental Protection in mid-November okayed critical parts of the $125-million expansion plan to build up to three new massive greenhouses, a research and development facility and a biomass cogeneration plant to generate enough electricity to power the entire operation.

Ground could be broken on the next phase ˆ— an 18-acre greenhouse and the R&D facility ˆ— sometime next year. (As this issue of Mainebiz went to press, Backyard Farms announced it had hired Roy Lubetkin, a former president of a division of Agway Inc., as its new president and CEO. Sellew is ceding the CEO title and day-to-day oversight of the company, but will remain part of the company's management committee, where he'll focus his efforts on the company's long-term goals, according to Melissa Doyle, Backyard Farms' spokesperson.

Sellew says the company, which is majority owned by Boston-based Devonshire Investments, Fidelity Investments' private equity arm, has a big market to grow into, and that market opportunity helps support its expansion plans. "New England is a tremendous net importer of tomatoes, so we're serving only a small portion of the marketplace," Sellew says. "We feel we're scratching the surface."

And while he says the company's focus will remain on tomatoes, at least for the short term, Sellew also says the facility could add vegetables like peppers, lettuces and eggplants to the greenhouse roster.

A local impact
Backyard Farms has made a significant impact on the local economy in Madison, a town of 2,700 that's 10 miles northwest of Skowhegan in southern Somerset County. The company employs nearly 100 people who bring home paychecks totaling more than $3 million. "That's 100 people that are working that didn't have a job a year and a half ago," says Norman Dean, Madison's town manager, adding that the Skowhegan area has lost hundreds of mill jobs in the past several years. "There was so little going on before this, it is a big boost for us."

Others point to the economic ripple effect of Backyard Farms. The business has spent more than $10 million with Maine-based contractors and suppliers, according to the company. One of those suppliers, Midwest Run Inc., a trucking company in Skowhegan, has doubled its business in the past year due to Backyard Farms, says Mark Redmond, who co-owns the business with his wife, Beth. "It's been a blessing," he says, adding the expansion plans bode well for his business. "We're hoping that we can grow along with them. That was the whole idea."

Brian Hamel, an economic development consultant hired by the town in April 2005, says Madison also has benefited from the publicity of Backyard Farms choosing the town, and has made it easier for him to pitch the town to businesses looking for a place to set up shop. "It's easier to tell the story to the next company that might come down the road," Hamel says. "You have to have success to breed success."

Hamel, former president and CEO of the Loring Development Authority, hasn't enticed any new companies to move to town yet, though he says there's been interest and a few are "in the pipeline." He adds that Backyard Farms' announcement that it's doubling the size of its operations "is a perfect example that businesses can work in Madison and the state of Maine if you match up the assets in a community with the needs of a company."

Sellew says from day one Backyard Farms has seen its relationship with the town as a "partnership" and he credits some of the business' success to the town. "There's a good business environment there and it starts with the people that run the town," says Sellew, who first did business in Maine as chairman of Earthgro Inc., a company he founded in 1983. Earthgro opened a facility in Medway in 1996 to turn waste bark from the nearby paper mills into bark mulch.

Long term, Hamel says Madison could mirror the success of Leamington, Ontario, a rural community roughly 40 miles southwest of Detroit, Mich., that bills itself as "the tomato capital of Canada." The town's fixation with tomatoes has created a multi-million-dollar greenhouse industry that supports several local agriculture-related businesses. Even large companies have been lured to Leamington by the promise of lots of tomatoes: Ketchup-maker Heinz has set up a production facility in town.

But Hamel cautions that Madison could be a long way off from seeing any benefits like those. After all, Leamington has been fostering its greenhouse industry for 30 years, and Madison is just getting used to its new enormous, glass-clad tenant.

Still, Hamel says that Madison has the wherewithal to make it happen. "There aren't many communities in Maine that have the same kind of patience and long-term vision that Madison has," Hamel says. "They're willing to fund economic development. You have to be consistent and persistent and have the willingness to get 99 'no's before you get one 'yes.'"

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