Tomato distribution agreement between a Mexican greenhouse grower and Village Farms International, Inc. (TSX:VFF) has been extended by seven years
SmallCapPower | June 7, 2018: Village Farms International, Inc. (TSX:VFF) announced recently that it has extended its distribution agreement with Mexican greenhouse grower Agroparque de Yecapixtla by signing a new, exclusive, seven-year agreement to sell, market, and distribute Village Farms’ exclusive tomato varieties grown by Agroparque de Yecapixtla in the U.S. and Canada. The new agreement considers the major expansion underway that will more than double the growing area over three years (125 acres from 50 acres) as well as the inclusion of cucumbers and peppers for distribution. Under the extended agreement, Village Farms International will continue to provide Agroparque de Yecapixtla with technical expertise in growing and packaging operation support. Agroparque de Yecapixtla’s parent Grupo CIC is a shareholder of Village Farms International.
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The extended agreement highlights Village Farms’ continued emphasis on growing its produce business whilst focusing on its new cannabis venture. In June 2017, Village Farms International formed a 50/50 joint venture, ‘Pure Sunfarms’, with Emerald Therapeutics Inc. (TSXV:EMH) that would create one of the largest cannabis greenhouses (75,000 kgs annually in 2020) in Canada. Village Farms International received a cannabis cultivation license in March 2018 and commenced commercial scale growing in early May 2018. Revenues from the JV are expected once it receives a sales license under ACMPR by July 1, 2018.
Village Farms International President & CEO Michael A. DeGiglio said, “We are thrilled to build on this existing and flourishing relationship with Agroparque de Yecapixtla. Village Farms prides itself in its ability to deliver year round consistent quality products to its customers. This new, exclusive, long-term agreement with Agroparque de Yecapixtla further solidifies Village Farms’ value commitment to its customers. And reflecting upon our many years of operating in Mexico we are most grateful to be associated with such a highly respected company lead by the honorable Mr. Miguel.”
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For more than three decades, Village Farms International has been a leader in large-scale and low-cost greenhouse growing of agricultural produce such as tomatoes, cucumbers and peppers. The formation of cannabis JV ‘Pure Sunfarms’ in June 2017 is a transformational opportunity for Village Farms, catapulting the Company into one of Canada’s largest cannabis greenhouse growers. Compared to pure-play cannabis players that trade at hefty valuations, Village Farms International currently trades at an attractive market cap of $311 million with a price to sales multiple of 1.97x.
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