031: Richard Vollebregt - Cravo Equipment Ltd. (Part 2)

In this episode Joe and Nick continue interviewing Richard Vollebregt, President & CEO of Cravo Equipment Ltd, a company that develops retractable roof production systems to enhance berry, cherry, cannabis and vegetable production for growers worldwide.
His background in economics combined with 30+ years of experience designing automated retractable roof greenhouses, knowledge of plant physiology and my worldwide experience in many crop industries allows me to be very effective in designing crop production systems and then creating financial models which bench marking again conventional greenhouses, tunnels and open field production.

More about Richard Vollebregt:
Website: https://www.cravo.com/en

More about Joe Swartz:
Website: https://amhydro.com/
Twitter: https://twitter.com/HydroConsultant

More about Nick Greens:
Website: https://www.nickgreens.com
Twitter: https://twitter.com/InfoGreens

Transcript

Yeah, exactly. Okay. So most people will say yes, that the plants are warmer because they're thinking air temperature. But if you've measured the leaf temperature, the leaf temperature dropped when I went into a building. Right. Okay. Now in nature, the sun is always making the leaves warmer than the air, which had drying them off and driving transpiration.

But the moment I go under a greenhouse covering my air temperature, winter. Yep. Which means my plant temperature was colder. So where's the humidity condensing on the leaves. There's an energy imbalance that happens. So in nature, we have warm leaves, cold air, which is why you don't see foliar disease outside.

And then the greenhouse, because the air is always warmer than the, than the leaf, the condensation accumulates on the leaf. So you have low transpiration and high risk of foliar disease. So simply retracting the roof for even two hours a day. Changes that energy balance to drive the leaf temperature up, to drive it warmer, to dry it off, get the transpiration rate to go higher, which then also changes your cuticle thickness.

Yes. This is that science behind where we shifted from. Yeah, we're, we're supplying automatic retractable roof houses to really understanding how are we changing. The plant development by really changing the environment at a level that none of us understood before. Yeah. Substantially changing how we're managing the equipment based on the.

The process going on in the plant or what's what's happening in the plant, Jean Jacques and Mellie, you know, we, we got into it a little bit with it, but this is, this is really the next level of environmental control and CA and, um, one of the big questions I, I wanted to ask. And, and so you could explain to the listeners because you and I have had this conversation a number of years ago, You know, based on kind of my initial response to a retractable roof, green house, people always are concerned about pests.

So the initial flop was that pests are just going to come right on into that space. And of course, you know, you and I have talked about it, but explain, explain to everyone a little bit about how that's really not the case. Um, yeah, this was, this was an interesting part of our learning journey because when we first built our houses, the re our demo houses down in Mexico, all the local growers, that'll never work because if you open a roof, the white fly will come in and you'll get virus.

And at our very first trial house we had, uh, Point two Hector's 2000 square feet, 220,000 square feet. And we had tomatoes inside the retractable roof and outside same varieties. And the grower had been using the house for several years. And I walked in there one April, and the tomatoes in the retractable roof recovered with white flight and the ones outside recovered with wife sly.

And there was virus outside and not inside. And my business development manager, uh, Carlos Ruiz, who I've worked with for 15 years on managing the demo houses. He's an entomologist and he'd go. I said, Carlos, what's going on? Why don't I see virus? And he goes, he gets his little glass magnifying glass and he looks closely and he goes, Richard, what don't you see?

I go, I don't know. Tell me what don't I see. He says there's no, the wigs and reproducing. So all of a sudden we're going. The insect behavior changed in the retractable roof. So they were living there, but they weren't reproducing. And then when you walk around different nurseries or facilities, where do the insects tend to congregate on the strongest healthiest plants are the sick ones.

There you go. The sick ones. So what that's is telling you is that the insects are choosing where to reproduce. They're looking for a good host. So when people first started looking at retractable roof, they're going, I'm afraid of insects, right? That would be the first statement. You know what my statement is now I'm afraid of weak plants.

Perfect. So getting that on a t-shirt that's brilliant. I'm afraid of weak plants. I mean, it's true. Um, so, so what happened? And then there was a doctor, um, uh, hurricane Bernie in Mexico. He actually did his PhD thesis studying the change in plant structure from a tomato crop, grown in a net house to a retractable roof.

And he documented the change in the, in the cell wall structure of the tomato crops, which explained why the insect pre production was less than a retractable roof, because the insects again are looking for good hosts for the babies and the babies don't have the strength and the power to penetrate a strong, healthy, thick leaf.

So your, your rapid rise of re of insect reproduction, correlates to the foods, quantity of foods. Hmm. People often think of a healthier plant being more resistant to two diseases, but it's the exact same is true with insect pests as well. Yeah. Yeah. And also a conversation that we had to in, in certain instances, you also do have the option of an internal shade screen that, that seals, um, the, the crop from the external environment, even though the, uh, it's independent of the actual roof structures.

Is that right? Yeah. Th Joe, that's a really interesting comment. We've done a couple of projects in India lately. Um, where they have a retractable roof, a either retractable shade curtain, and a retractable insect net. And so when you look at these, um, climates, uh, in Mexico or the middle east, where they're doing a lot of work with net houses, they're putting up hectors of insect net just to keep the insects away, but it also creates a little better of a microclimate during the high heat, dry conditions.

And so these projects in India, um, the one in particular right now, triangle firms, they're growing cups that comes colored cups have come during the time of the year where it's 36, 40 degrees Celsius, 20% humidity, and there's no cooling pads and the retractable insect net. Is only close when the risk of insect pressure's high.

And if you look at the, the flight patterns or behavior of insects, normally at first thing in the morning, you don't see insects flying around. So they will retract the insect net for two or three hours in the morning just to get that direct sunlight on the plants and dry them out and activate them.

And then they're closing the insect net saved by nine o'clock in the month. But that was enough to activate the plant and get it to be more balanced because the problem as you get into those hot conditions, you tend to get a more vegetative plant. And so flower, abortion, smaller fruits, sizes blossom, end rot.

All those things are connected to transportation. And so what we did through this learning journey was really trying to go, what are all the problems growers face and what is the root cause? And transpiration is typically a very big group cause of many of the problems because transpiration drives plant structure drives, plant balance drives nutrient uptake and distribution.

So. That just said, Hey, we need to manage transportation. So there's time to where we need to increase it. And there's times where we need to decrease it. And, and when we have the luxury of being in a mild or hot climate, we have the luxury of using nature. It's free sunlight, free heat, free wind free, low humidity.

So how can, can we use the tools to be able to manipulate when, when less than that? That's right. And so this is where climate becomes climate and crop is the first two parameters we look at, where are you located and what do you want to grow? And which time of the year do you want to harvest? Because globally, there's always a time of the year where the prices are low because everybody can do it.

It's easy to grow. And if it's easy to grow, that means that the conventional greenhouse or net house or open fields. Was easy to grow during that time of the year, which is when the supply is high. And so if you're in the hotter countries, the higher prices or during the summer, if you're in the colder countries, the higher prices or during the winter, I hear the economics, uh, the economist coming out.

Yeah, exactly. Yeah. So that's fantastic. And, and obviously, um, you know, this is really starting to catch on, um, what type of projects do you have going on right now? And kind of where, where do you see the next few years going? Um, you know, the, the pandemic has been very, had a very interesting impact. When you look at the mega trends out there in the world, migrant labor is harder to move.

Supply chains are messed up. So local production, not relying on imported labor, uh, healthier eating, less chemical residues, uh, global climate change causing changes in precipitation and water availability. Those are all megatrends that are, you know, really having, uh, a major positive effect on the projects we're doing.

So investors are now looking more favorably at the egg industry. Uh, the developed countries, advanced countries have already made major investments into the high-tech glass houses in the U S and Canada and the UK and Holland and places like that. But it's the other countries. The. Developing countries, which are typically in the warmer climates, haven't really reached that level.

And so if you take India as an example, it's a very complicated distribution, not very efficient. The middle east, they have capital, not a lot of water and not a lot of food. So there's major focus on improving, increasing food production in the, in the Gulf coast countries. Uh, When the pandemic return, it goes away and travel returns and the hotels are full again, and the restaurants are full.

It's going to cause increased demand for high quality food. The Berry industry is doing well because everyone's focused on healthier eating. And so what's happening now is the focus is really on continuity of supply. So, how do you, as a distributor guarantee that you have consistent quality 12 months a year?

Well, the challenge is always based on the seasonal changes. So if you, if you're in California and you're in the Berry industry, the Berry production starts dropping after September because winter's coming and Mexico hasn't picked up yet because they're still in the heat of the day. And so all of a sudden we've learned from our own demonstration trial centers that we can grow strawberries starting with a harvest in September, because we can use a retractable cooling roof to manage the high radiation, to make the plants start to produce at a time where, when a tunnel won't work.

So we're really kind of the last step. People will start an open field, go to a tunnel, use it as far as they can, and then they want something. So we're kind of that next step. So people that are growing in glass houses typically don't look at what we do because they're there in a certain climate with a certain mindset and a certain technology package.

So, Joe, you made a great comment at the beginning where you said, Hey, open the roof, I'm losing control. Right. That was your comment. Now, if Nick was an open field grower and I said, Hey, Nick, would you get be more profitable? If you could close a roof when it was too.

Yeah. Yeah. If you could close the roof, when it's too hot, would you make more profit? Yes. And what about if it's too windy? Yes. Now what about rain or hill? Correct? Yeah. So you would be more profitable, Nick, if you could close the roof automatically when the, when the weather is adverse, but Joe over here is going to be nervous when he retracts the same roof, because he's lost his microclimates.

It shows you the difference. And this is where there is science. And then there's just how we think and how we analyze situations. And the problem is the open field growers know nothing about control. And the controlled egg people have generally lost their connection with the natural outdoors. So they're no longer thinking about nature as this tool in managing crops, because they're trying to, yeah, Richard, that is an excellent point.

Is that with controlled environment ag, um, especially on the higher level of technology, we, you know, we do see that where there's a loss of that connection. Again, it takes us away from the. We're now focusing more on the technology indoor vertical farming, I think is, is, you know, uh, a great example of where we're trying to force the plants into our technology rather than using technological tools to optimize the plant production.

And your approach really brings it back, takes the, the technological tools and advancements that we have with the understanding of the plant physio. And again, I'm just a much higher level of using your tools to optimize that or when not to use your tools to. Yeah, uh, plants have evolved over millions and millions of years to, to use a certain environment.

And if, if it's there, um, to not use it would be ridiculous. Well, it's a, it's a, here's an interesting insight that I learned many years ago. I walked, I would walk into a grower that had a conventional glass house and I'd say, um, would you like more light in the house at eight o'clock in the morning? He goes, yeah.

Yeah, yeah, yeah. Would you like lower? She made it. Yeah. Yeah, yeah, yeah, yeah. Would you like more CO2 in the house? He goes, of course I would. Well then open the roof and it's all outside. You just had to let it in, but once you're in that inside mentality, You, you can't take advantage of what's outside. So you keep on looking at what equipment do you need to add insight to supplement what was naturally outside?

This would work for any variety of plants. I mean, we're talking cannabis ha whatever, right? Absolutely. Absolutely. I mean, that's, that's a whole exciting sector as well. That, uh, there's the cannabis growers. You telling a cannabis grower to open their roof there. They're going to lose it. Uh, you know, the cannabis sector is very interesting.

I mean, I'm, I live in Canada, so Canada kind of blew their brains out, building all these expensive high tech facilities that we're never going to be profitable. And then the industry switched to outdoor production as a means of low cost. But then they struggle with wind and hail and ready rain and bud rot and all this stuff.

And I go, Hey, if all you had was a retractable roof over your cannabis, you grow it outside, get the full terpene package and more, more bud development. Cause you had a better balance, you know? And then. Put a black coat system underneath the retractable roof just to regulate short day. So you'd have multiple harvests and we've got several projects going on in California and Arizona built right around that at the moment, that concept.

So when you do an economic analysis and this, I love doing these types of analysis where you say let's put indoor high-tech open field and retractable roof. Side-by-side. And we want to produce 10,000 pounds or 10,000 kilos of whatever. Let's understand the CapEx, the operating costs, the return on investment for each of these production facilities that have to produce the exact same output.

Yeah. And you can predict the future because finance doesn't lie. Low cost producer will win and quality is not even negotiable. You must have high quality, otherwise you're done, but if you're a high cost producer, you're still going to be financially in trouble. Yeah. So you're, you're really, you're, you're looking at.

Highest quality production combined, you know, balanced with the economics of, of, of your, exactly. You know, we have a customer in Mexico growing blueberries, and he gets larger sizes, firmer fruit, and you can manage this production into the heat of the season. So he gets a premium because he's got great sizes, firmness, and he can harvest when others are already struggling and their quality is going up.

So it's a matter of looking at where's the industry going and every market at some point becomes saturated and you have to be positioned to be able to produce at a lower cost of production. If you take these extremes on the cannabis side, you need a really small indoor facility, but you need a $10 million investment and a million bucks or 2 million bucks a year to operate.

And if you're totally outdoors, you need to no cap X, but you're not a consistent player because you're dependent on the weather. And if you were to invest, uh, you know, five bucks, a square foot, you know, $200,000 an acre. To put an automatic retractable roof over your cannabis field, you would be producing cannabis unlike anybody else.

And see, this is where people really made a big mistake. When you analyze the tomato industry, there's three sectors, sorry. There's there's three sectors. There's field tomatoes that go into cans, field tomatoes you buy in the summer, and then the field tomatoes you buy every week at the grocery. The price per pound or per kilos changes for each of those, the producer of field tomatoes for processing gets the lowest price, but he can harvest once a year process it, put it in a can and wait to sell it.

And the same in the cannabis side, people don't buy fresh cannabis. They buy dried cannabis, so you don't need to be supplying it every three weeks. Because it costs you more to try to grow cannabis in the dead of winter in Colorado or Northern California or Washington, Oregon than it does to grow naturally in the summer.

But if you can get the consistency of growth, the quality of an outdoor crop, and, you know, there's the tough thing about this industry and the cannabis side, uh, there's things happening that, you know, we're not allowed to disclose. But there's stuff happening. Let's just say work in the Midwest. Cause I know the Midwest is just it's blowing up, especially in the cannabis industry, it would work, um, primarily as a three season house, I think maybe because the Midwest, you still got those cold dark winters.

And when you start to look at CapEx and OPEX, the heating requirements, the lighting requirements, the humidity control requirements, or through the winter, the dead of winter. Are what really changed, you know, how much money you had to put out upfront, how much you spend every year. But if you said, Hey, we're going to use the retractable roof to grow our young plants and then move them outside into a different retractable roof.

That's a cheaper model. And then have blackouts to regulate the harvest cycles. And then on top of that, uh, there's even people that want to use the retractable roof and black code as a drying facility, because you can do a slow dry, if I can keep the rain off, control the humidity and have no direct sunlight, I can maintain the quality.

By creating this environment. And so how do you build a facility that has multiple uses? Because when you invest in a big drying facility, you got to use it for a couple of weeks, and then you're done. And particularly for the guys that are doing outdoor production, they need massive facilities for very short periods of time, massive labor for harvesting.

And so once you put retractable, uh, uh, light depth, Over your cannabis, your outdoor cannabis. You've now got the protection of the do and the condensation that correct. The creates the bud rot. You can actually make your plant, uh, ripen during the longer days, which means you have the better quality. Cause the problem is when the plant starts to flower and ripen, you're going into the darker colder days.

So you don't really get to pick it up. But by changing the timing of when it's, uh, when it's right, you can actually pick it a higher, higher quality peak. That's fantastic. So the shelf life does give you that window, right? Yeah. Yeah. Which, which I think gives you a bigger buffer on harvesting too. How many laborers do you have for how long?

And if I can have some of my crop coming in earlier, I can start finding harvesters early and earlier and promise them a longer employment because labor is. How do you make sure you get the quality and quantity of harvesters that you need? The shorter, the window is the harder it is to find them. And if I can, if I can use the retractable roof to plant outside four to six weeks earlier, because I can frost protect and then use the retractable roof for climate optimization through his growing period, then pull the harvest forward with light depth.

Well now I'm, I'm, I'm creating a business production factory. That's built around a reasonable cap. CapEx. Your operating expenses are virtually the same as growing outside. You've dealt with your labor requirements and you minimize the size of your grind facility that. So there's a lot of versatility here.

This, this technology, or this group of technologies, really, um, sometimes we tend to get pigeonholed into cannabis production, food production, year round, a season, and extended, uh, perennial fruit crops versus vegetative food crops. Um, this covers a lot of ground and it's just a certain, certain different applications maybe of the technology.

But the basic technology and the basic concept is all the same. And it's all based again on optimizing your plant growth, um, and balancing the economics of doing so. Yep. But it only works on plants that are native to outdoors. Yep. Which is every single species in the planet. I like that. I think a lot of the variety of work, I think people have kind of become to believe that there are plants that are not native to the outdoors.

Well, what happens. The whole breeding program is built around trying to solve the climate shortcomings of being indoors. Yeah. Right. If I'm growing a tomato in Canada in December, I don't have a choice. Yeah. I'm going to be indoor. I need genetics that helps the plant express the best traits through those conditions.

And so this is why I say we really have to make sure we're thinking clearly, what climate zone are we. What I'm talking about is not a universal fix-all. If you take cannabis, this solution would be great. Spring, summer fall. If you're an Arizona, you could probably do 12 months because you've got more radiation, more heat units to work with Texas, Florida.

Yeah, exactly. Southern California. Yeah, I will be talking to you actually, Richard, about a couple of projects down south, for sure. Um, but uh, we're getting close to the end of our time. One, fortunately, I do have a question, Joe. Um, if you can go Richard, if you can go back to a younger version of yourself and, uh, give a little advice, uh, what would that advice look like?

Um, teenage version of it. Yeah, I know. Let me think. Um,

you know, my, my journey, I'm going to say I'm extremely fortunate and blessed, but it took a hell of a long time. It's everything took a lot longer for me to understand. Um, my, my one advice, here's my biggest learning. And this is kind of an interesting twist on this. I learned a ton from being connected to scientists who were studying deeply about different problems, but I had to break away to think differently to think conceptually.

So why is, why am I such a big believer in the black players? And the focus on transpiration and plant temperature, because those are not concepts that came from academia, per se. They came, they came from understanding what are the root causes of these problems and how do we solve them? So the combination of working with the people, the scientists, I learned a ton, right.

And, and I'm forever grateful for that. I had to take it to the next step. So all of the R and D facilities we were in, I funded myself. We had no government help. No, you know, we're still a family business and we had to do it ourselves. And that made it take longer because you know, you're always constrained by what you can do financially.

And, uh, so I don't know if I, you know, I don't know if I have, it's a great question, Nick. And I was actually thinking about that. Um, I, I don't have a lot of regrets other than I wish I would have moved faster. That's really? Yeah, but your timing is good because I think really the understanding, the plant empowerment, uh, movement, the understanding of, uh, the drivers of plant growth and, and optimizing based on the plant response, I think that's really just coming here now and I think, but.

I think that your timing is actually excellent. And, um, and I think crave also, so everyone, you know, make sure that you look up crave equipment, um, and, and take a look at what they've got. And, um, Richard, I'm assuming that, uh, you know, the standard social media, is there a good way for people to reach out if they want more information?

Um, you know, we've done what people tell is an amazing job of documenting our science and knowledge on our website. We're, we're all open source. Like we don't hide stuff. We don't keep things proprietary. We share everything we learn. And, uh, I created a series of educational videos on the whole retractable roof production system.

And if you go to www.cravottacravo.com, and there is a page called the retractable roof production system. And if anyone wants to learn more, if you invest one hour of your time, There's seven videos that document the complete journey about the difference between air temperature and plant temperature, the impact on transpiration, the effects of water, stress, the control strategy for the retractable roof.

So we've taken all our learnings that I've tried to condense it into one hour. So you actually just pulled it up and it looks, it looks pretty amazing. And I recommend everyone go in and check that out. Yeah. Thanks, Joe. Well, Richard, thank you so much for spending time. We're going to definitely want to have you back.

Um, talking about the environment, um, talking about plant growth, talking about the economics around it are really the whole foundation. Of correct controlled environment ag and, uh, and I think that, that you and your approach and your company really epitomise that. And, uh, and we appreciate that. So, so thanks very much, Richard, for joining us today and sharing a lot of really great usable information, everyone.

And then hopefully everyone will, will go and check it out. And now I thank you all again for listening. Uh, we appreciate your time and, uh, we look forward to more conversations about controlled environment ag. So thanks very much, everyone have a great day.