Pete Jr. and Hugo are two of the three Mercado brothers, the entrepreneurs behind Market Farms, a hydroponic greenhouse facility located in Salinas, CA – the heart of California’s “Salad Bowl.” Following in the footsteps of their farmer father, they’ve built a successful business of their own, and in recent years, have turned to CEA as a way to future-proof the family business.
Gentlemen, thank you for making some time for this interview. I’d love to start by hearing a bit of your background.
Pete: Our dad started his agriculture business in early 90’s, overseeing and managing row crops. He was really respected in the industry here. After my brothers and I came back from college, we followed his example and started our own company – Southwest Harvesting – in 2004. We supply and manage leafy greens from the field to delivery. The conditions in this region are world-famous for being amenable to growing leafy greens. 80% of all leafy greens in the US are from here. But we’ve been encountering new challenges and we see more on the horizon; climate change, water concerns, diseases in the field affecting our row crops. So we are always looking at ways to stay ahead of the curve.
Hugo: A while ago, we purchased an old eleven-acre property that hadn’t been maintained for decades. Originally it was just so we could store equipment, but there were some old greenhouses too. We refurbished one so we could use it for experimentation. One barrier to entry for CEA is that you can’t just buy fertile land and start growing. You need equipment, you need power, you need gas. We were actually fortunate to realize that we already had so many of the elements already available at this property.
So how did you start incorporating CEA into your business plans?
Pete: We launched a new company called Market Farms in order to market and distribute the hydroponic greens. Agriculture is agriculture, but we decided to start a relatively small trial – with a 4,000 square foot system – so that we could learn the ins and the outs of CEA. It’s so science-forward, but that also means a lot of data monitoring and management. It’s been 2.5 years, and we’re really getting the hang of it.
So the hydroponic trial has been going well?
Pete: Absolutely. We were in a great position to start the trial while conventional farming was still putting food on the table. We don’t have to rush. We can get feedback. For instance: We’re in all the local farmers markets, but this is the Salad Bowl, right? People can get lettuce anywhere. So it has taken time to expose our customers to the hydroponic products. It has taken time to help them understand that: No, it’s not “organic”, but organic doesn’t always mean pesticide-free, and our products are pesticide free. Now we’ve got dedicated customers who can tell the difference in quality and don’t want to go back.
Hugo: Those testimonials then also become a big key for approaching stores. We know we have a customer base, we know we can build loyalty there. So we’ve been taking our time, but we’re confident that we can learn to scale this up. Some people just want cheap lettuce, but others are willing to spend more to support sustainability and receive a superior product.
In your journey as entrepreneurs, are there any personal habits that you credit for your success?
Pete: I’ve got to give the credit to my Dad. He’s the one who taught us the value of hard work. 80 years old and he’s still out there working. He likes talking to growers. He still wants to walk the field. I am who I am because of his example of work ethic, humility, and loyalty to his customers.
Hugo: I couldn’t agree more. I would also just add, more generally, the importance of family. When you’re a business owner, you can have some flexibility with your time. If you use that flexibility to be there for your family, your family will be there for you when you need a little extra support or encouragement.
What sorts of trends are you seeing in the current business climate? How are you navigating them?
Pete: It’s not easy right now. We see growers are cutting back on acres, and there’s a vicious cycle. Food prices go up, people eat out less, restaurants order less. We grow leafy greens, and we know that salad is just not a priority for people when they are worried about putting food on the table. But we run a lean operation without a lot of overhead. If we can navigate the tough times, we’ll be in a great spot when conditions improve.
Hugo: One of the things we’ve focused on in the past few years is tapping into the exact needs and desires of our local cities and restaurants. We can’t just sell what we want to sell, we need to do outreach, get feedback, and make sure we’re growing what people actually want to buy. That approach has really prevented us from getting stuck in our ways.
Of course, Market Farms grows with a system manufactured by AmHydro. Would you recommend AmHydro to other entrepreneurs who are interested in CEA?
Pete: I can’t recommend AmHydro enough. When we started looking into CEA, we thought we just wanted a system we could play with and otherwise be left to our own devices. But when we met Jenny and Joe at Indoor AgCon, they were the real deal and we knew they could be the type of teachers and partners we didn’t know we needed. They just wanted to educate us, not sell us on a get-rich-quick scheme.
Are there any other tools, programs, apps, etc that you find indispensable as CEA entrepreneurs?
Pete: Aside from AmHydro, we learned so much just from YouTube. I also really appreciate modern AI chat tools. You always should verify the info you’re getting, but they can really help inspire lines of thinking and inquiry that wouldn’t occur to me otherwise.
Hugo: This doesn’t exactly answer the question, but the indispensable thing is just meeting people. At farmer’s markets; at conferences. We may run the business, but there are so many people who help. For example, at one farmer’s market, we struck up a conversation with a customer who turned out to be a local professor who taught hydroponics. Now he comes by the greenhouse from time to time, and he always has valuable insights. People have interesting jobs and there’s a lot we can learn if we’re open minded and willing to have a friendly conversation.
Pete: Especially in the world of CEA, that’s something that’s really impressed me. The people that work in this industry believe that it is important and they want to see the sector grow. That makes them really friendly and helpful. A win for one of us is a win for all of us.
