High-tech greenhouse operator Revol Greens has issued a WARN notice to the remaining 42 staff at a high-tech greenhouse in Tehachapi, California, after making the “painful” decision to shutter operations there and focus on driving efficiency at its other sites in Texas, Georgia, and Minnesota.
The Tehachapi site—which laid off 100 employees in June 2024 after reorganizing production there to focus exclusively on heads of lettuce—is owned by Revol Greens’ key shareholder Equilibrium Capital and leased to Revol Greens.
The facility, which has been growing leafy greens in ponds with natural light supplemented by LEDs since 2021, will close in November, says Dutch greenhouse operator FoodVentures, which was brought in by Equilibrium in 2024 to help turn things around.
FoodVentures CEO Dirk Aleven, who has been serving as president at Revol Greens since January 2025, told AgFunderNews: “We started working with Equilibrium during the bankruptcy process at [controlled environment ag firm] AppHarvest. So that’s how we got involved in the US market.
“We were asked to look into Revol Greens in April 2024 as Equilibrium was in the situation where it had put a lot of capital in the assets, in expanding the site in Minnesota, building a new site in Texas, and refurbishing the site in California, but the operating company, Revol Greens, was heavily loss making.
“So we brought a team on board and basically started restructuring Revol Greens. Now, we also have a small stake in the company, but at the start, we were just brought in as a restructuring team as we own and operate profitable greenhouses all over the world.”
Equilibrium Capital looking to sell or lease CA site
Aleven explained: “California is an expensive place to grow anything because of the energy and labor costs, and when we came in, they were growing baby leaf and head [of lettuce], which is complicated to do in one greenhouse because you have different climate regimes and strategies for each. The new Texas site was also doing both, so we decided to make California heads-only and Texas baby leaf-only.”
Things have gone well in Texas, with a 50% reduction in man-hours per kilo, he said. However, the California site is not viable.
“We scaled things down in California and after more than a year of restructuring, we were nearing break even, but we didn’t have sufficient sales in California, and a lot of product was still transported throughout the country, such that you basically lose all your advantages of being a CEA player [local supplies].
“So you have your expensive cost structure but you do not have the benefit of being close to your customer, so the very painful decision was made to close down in California at the start of November.”
Equilibrium has just put up a notice on hortdaily explaining that it will “consider both short-term lease options and full site purchase” for the 62-acre site in Tehachapi.
According to the notice, the site includes “14 acres of lighted, high-tech lettuce production, 32 acres of semi-closed high-wire greenhouses designed for tomatoes, peppers, and other vine crops, 16 acres of partially decommissioned acreage, restorable within 9-12 months, and a large packhouse and cooler with pallet racking and eight loading docs.”
Aleven added: “One reason we’re focusing on the Midwest is because that we strongly believe in indoor production for organic grown. That’s what we do in Texas, that’s what we do in Minnesota, but we couldn’t do in California because of all the pest pressure.”
The Texas site: ‘We have reduced the man hours per kilogram by 50%’
The Revol Greens site in Texas, which opened in 2023, is a “beast of a greenhouse,” said Aleven. “When we came in, they were growing heads, arugula, spinach, spring leaf, green leaf, red leaf… but in greenhouses, you need to have the discipline to first get one or two SKUs right, so today we are just growing baby leaf there.
“It’s a 20-acre production area, and we are currently yielding more out of 10 acres [half the facility] than historically was the case over the full 20-acres. We have reduced the man hours per kilogram by 50%.
“We put our growers next to the existing growers; there was a lot of talent at the greenhouse, but they weren’t being empowered to make quick decisions. We strongly believe that at a greenhouse you have to empower the local teams, the grower and the general manager. Support them at a distance but let them do their job on a daily basis at the farm.
“We also changed procedures, recipes, suppliers, climate settings, but the biggest change was more around the discipline and the culture.”
He added: “We have extremely satisfied customers that say the quality is way better than it was. And that’s without investing in more technology, we’re just doing the fundamentals better. We now have such a good control over the organic products that we are now outperforming conventional with organic yields.”
The Minnesota site (growing baby leaf and arugula) is a more mature operation, he said. “We didn’t have to go back to the basics, but we are doing the basics better and now investing into a little bit of technology to get higher efficiencies.”
But he added: “Your flow has to be right with people before you start jumping into robotization. If you do that too early, and you don’t have control of your flow and your production, you won’t see where things go wrong.”
Slashing overheads
FoodVentures has slashed overheads at Revol Greens in part by cutting out layers of management and the head office in Austin, said Aleven.
“I did not understand why a company this size has a head office outside of the greenhouses. We got overheads down from $24 million to $4 million in three months. I mean, it was just inefficient. At the end of the day, we’re selling lettuce.”
As for labor at the greenhouses, he said, “In Texas they couldn’t get the kilograms packed that were harvested. And the answer was let’s put more people on the line. But it should have been, what is causing the bottleneck? The issues were around the line and the flows. We had to make sure that we fixed those first, and then we could do it with half the amount of people.
“So the problem wasn’t a lack of people, it was that the processes weren’t running smoothly and the equipment was not running smoothly yet. Once we got that fixed, in the first few weeks, we could immediately see the efficiencies.”
CEA: ‘The wrong type of money and the wrong expectations’
Stepping back to look at high-tech greenhouses more generally, which rely on natural light supplemented by LEDs, he said, “In the Netherlands we have the same labor costs [as the US] and even lower farm gate prices for our outputs, and we’ve been doing it [profitably] for years. So we know it works.”
He added: “One of the issues [in the US] was that it was a different kind of capital going into the market, especially a lot of venture capital and private equity, which wanted to see relatively quick returns, and this industry is extremely slow. It takes discipline and year over year learnings to get to a smooth oiled machine which will generate returns for the next 30 years. They had the wrong type of money and the wrong expectations.
“I’d say it takes a year of preparation, a year of construction, and then a year of technical failures and training your staff. So only in year four or five do you start seeing decent returns. But the beauty is, once that machine is running, you can keep it stable for the next 20, 30, years. But is it sexy enough for venture capital? It’s not.”
As for vertical farming [which uses LEDs and stacks rows of crops vertically], he said, “I have a fundamental difficulty with [the economics of] that as you’re eliminating everything that nature gives you for free [such as natural light]. Meanwhile, the consumer doesn’t pay extra for products made in vertical farms vs a high-tech greenhouse, as they are both pesticide-free and locally grown.
“The second thing is the labor costs, which from what I’ve seen are too high for CEA produce.”
Unit economics
At a basic level, CEA is about being able to exert greater control over the growing environment, cutting water use, speeding up growing cycles, increasing yield per acre, and creating a more consistent product, said Aleven.
For retailers and foodservice customers, meanwhile, it’s about having more shelf-life products and greater security of supply. Consumers, in turn, see products with a “fresh,” “local,” and “pesticide-free” positioning. But the economics have to add up.
“Can you differentiate vs open field [production]? Absolutely you can differentiate on the fact that you’re organic, you’re closer to your consumer, and your shelf life is better and so on. But does that make it worth two or three times the price? No.”
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