'Vertical farm' poised to rise inside old Mat Maid building

A legal grow operation will soon open inside the old Matanuska Maid building in Anchorage, with an ambitious goal of cultivating 20,000 plants per month.

It's not what you think.

The cash crop Jason Smith hopes to reap can be found in produce aisles at local grocery stores. A veteran of the second Iraq War who learned to grow vegetables in his Anchorage garage, Smith wants to dramatically improve on the lettuce, spinach and kale commonly found on Alaska shelves.

He plans to build a "vertical farm," with racks of vegetation stacked to the ceiling of the building -- and fill a statewide niche for fresh, organic greens available year-round.

Using LED growing lights that cost less than traditional lights, such farms have begun to crop up like giant greenhouses, with rows of plants rising vertically inside buildings to maximize output and reduce costs in crowded urban areas.

Smith's business, Alaska Natural Organics, will be smaller than some of its Lower 48 peers, such as The Plant, built in a former pork-packing facility in Chicago. Still, Smith believes his will be the first large-scale commercial operation of its kind in Alaska.

If successful, he hopes to expand to remote hub communities such as Barrow, providing consumers with fresher, healthier vegetables and keeping money in local economies.

Smith, a U.S. Marine Corps marksman during the initial invasion of Iraq, is also looking to employ other veterans.

He's hired two so far and said they all share a common goal, the same one that led them to sign up for military duty.

"We're trying to make a difference," Smith said.

But he is also practical. "This is not a big social experiment. It needs to be profitable."

Sound idea

Those familiar with the project say the opportunity is huge. With nearly all the state's produce shipped north from the Lower 48, spoilage is common, especially in winter. Meantime, local leafy greens are available in summer only.

Rick Solberg, owner of Natural Pantry store in Anchorage, said vegetables can take days to arrive by truck after traveling through Canada or by oceangoing boat. Any imported produce in Alaska is at least six days old by the time it arrives, he said. Often, much of it can't be sold, including recently when a batch arrived at his store frozen. "We need it," Solberg said of the vertical farm.

Solberg, speaking by phone from an organic trade show in California, where he was meeting with farmers and sellers, said the toll is high economically. Shipping consumes 25 percent of his budget. He's looking to buy his own organic farm in Alaska, but it won't meet demand for local produce.

"There's room enough for everyone," he said.

Restaurants and grocery stores looking for fresher options have showed strong interest in Smith's vertical farm, said Al Hermann, a UAA business professor who has mentored Smith.

"This is a rare business opportunity because the market is there and the price people are willing to pay is there," said Hermann. "All Jason has to do is produce a good product on time."

Alaska Natural Organics has attracted $500,000 in start-up money, including $250,000 from the Alaska Accelerator Fund that Hermann helps manage. The fund is an angel investor fund trying to diversify the state's oil-based economy.

Investors are confident they'll see a healthy return, Hermann said. "They are all over this," he said. "They love the idea of helping people get fresh vegetables and expanding that idea around the state."

Another angel investor group -- such groups typically consist of individuals investing their money -- is giving $100,000. The Anchorage Opportunity Fund, launched by Jonathan Rubini and Mark Kroloff, usually supports existing, ready-to-expand businesses.

But they're making an exception in part because they're impressed with Smith, his detailed plan, and because there's a hungry market for locally grown produce.

"We think it's a very sound idea," Kroloff said.

Pinching pennies

Smith, a soon-to-graduate MBA student at UAA, hopes to start growing plants this spring. First, he must finish modifying a section of the dairy building in midtown Anchorage.

Behind the big loading doors, giant plastic water tanks wait to be set in place. They'll be filled with an organic solution that drips onto the roots of the soil-free plants. The first boxes of LED lights have started to arrive -- hundreds more will be shipped.

Smith plans to seal the facility to keep out plant-damaging bugs. Employees will have to shower in a clean room before working, and visitors will don Tyvek suits before touring the greenery, all to prevent plant-endangering viruses and insects from getting a foothold.

The old Mat Maid building on West Northern Lights Boulevard is perfect for the project, Smith said. The former cooling vault that once stored milk bottles was built with massive walls, 16-foot high ceilings and beefy insulation. Four-foot trays will be stacked under more than 1,000 blue and red LED lights, providing heat that can be controlled using a couple of ventilation fans.

Every penny counts when you're trying to profit off produce, Smith said. He's building his own irrigation system using PVC pipes and drip tubes. He's rejected offers from Outside manufacturers offering equipment at exorbitant prices.

"We're not selling pot," he said. "We're selling lettuce. I tell them I can't afford that."

He eventually plans to make his own plant solution, using koi fish grown on site. The water from the fish tanks will be cleaned with natural biofilters -- including worms -- that turn fish waste into a water-soluble fertilizer.

"It's basically like composting," he said.

Homegrown idea

Smith began growing produce in his garage several years ago because he and his wife wanted to eat healthier and weren't satisfied with store-bought products.

He makes his own plant solution at home using six koi fish, and developed an irrigation system that stands out among manufactured products because it does not clog, he said. He expects his innovation to save countless manpower hours.

But his homegrown hobby took on a different meaning in 2013, when Hermann, the UAA professor, helped him put his passion for indoor gardening on paper. The business proposal took second place that year in the Alaska Business Plan Competition sponsored by Alaska universities and businesses.

Smith said he plans to beat Outside competition on quality, while coming close on price, at least until the business increases in size and becomes more efficient. He said customers will pay slightly more for healthier food.

"The crops we decided to grow lose up to 75 percent of their nutritional content within five to seven days of being harvested," he said. "So if they're harvested in Southern California and take seven, 10, 15 days to get up here, the quality is subpar."

"We can deliver, depending on the price, within hours of harvest. So no one will be able to have as fresh a product."

Investors have also said they like Smith's focus on hiring veterans. Smith said they have important qualities, such as finding solutions to problems with limited resources.

He found Cullin Kelly, who served as a Marine in Afghanistan, through contacts with Archi's Acres in California. The farming enterprise, attended by Smith, teaches veterans about hydro-organic farming, the practice of using mineral, organic solutions to grow crops. Smith also hired Jerami Marsh, who served in the Army as an electronics technician.

Forrest Nabors, another UAA professor who helps manage the Alaska Accelerator Fund, said Alaska is the perfect place for Smith's business.

That's in part because there are no traditional farms nearby to compete year-round and because there's a large population looking for higher quality food.

"The wrong place to build a company like this is right in the middle of farm country," Nabors said. "The ideal startup is somewhere in the U.S. with lots of mouths to feed where produce is expensive. You narrow down the list and Alaska would be in the top five."

Nabors, who serves on the board of Alaska Natural Organics through his role as a fund manager, said he was initially skeptical of the project. But after studying the idea further, he's absolutely convinced it will be a huge success.

"This guy's going to do a hell of a lot of good for this state," said Nabors.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.