Vertical Farming: How to Succeed?
What is a Vertical Farming?
Vertical Farming is an evolving agricultural technique that involves indoor cultivation under controlled environmental conditions. By careful adaptation of the atmosphere to the exact demands, such as by means of LED light, it is possible to obtain hundreds of times more output than conventional farming to achieve the exact light spectrum required for optimal photosynthesis. Vertical farms can be established almost everywhere and crops can be cultivated in the middle of populous urban centres, allowing crops to reach consumers in a matter of minutes from harvest.
It is in contrast to conventional agriculture where the harvesting of fresh produce takes weeks, losing its freshness and causing increased pollution. The latest IDTechEx report, “Vertical Farming: 2020-2030,” looks at technology and markets across the rapidly growing vertical agriculture industry.
In recent years, vertical agriculture has been the subject of many hypes, with proponents claiming that it might revolutionize food production. Industry advocacy experts such as Professor Dickson Despommier from the Columbia University have outlined dreams of a future environment where indoor fresh food can come to feed giant high-tech cities (see IDTechEx paper, “Intelligent City Opportunities: Infrastructures, Technologies, Materials 2019-2029” for more dreams of cities of the future). Investors also sense a hype: over the last five years, vertical startups have earned over $1 billion in funding.
Vertical farms use artificial lighting and managed conditions for cultivation at much higher yields than traditional farming.
Despite this optimism, however, the industry is confronted with several major challenges and the sector is more than just bankrupt. PodPonics, once the world’s most well-funded upright farmer, and FarmedHere, which once ran the largest upright farm ever built, failed both. David Rosenberg, New Jersey’s chief executive officer for AeroFarms, has recently stated that he would not be surprised if 90% of industry players had left the business in the next three years.
In fact, for the same reasons, many vertical farms fail. In addition to the cost to set up, vertical farms can be very costly, mostly because artificial lighting and climate controls are constantly needed. This is combined with high labour costs and logistical problems which often become more complicated when the vertical farm grows. All of this makes it very hard to compete with traditional farms, usually with a small profit margin.
In order to optimize space efficiencies and ensure that no power is wasted from growing inedible stems and leaves, vertical farmers typically only grow crops that are consumed in the entire field. Consequently, nearly all vertical farmers are limited to growing herbs and leafy greens. These are still a major market but often fall short of the strong claims made by some industry supporters.
Profitable vertical farming business is certainly possible, as fast-growing players such as the Bowery Farmings and InFarm would attest, but it requires a carefully prepared strategy and consideration, in addition to a reasonable amount of the investor’s money, of all the variables and offsets involved in vertical farming. Vertical Farming: How to Succeed?
In IDTechEx’s recent report “Vertical Farming:2020-2030,” the key to success in vertical agriculture is outlined. The study deals with many factors that can enable a vertical farm to succeed or fail, including:
- Whether automate or not. Significantly, automation can reduce labour costs while simplifying organizational processes. Investment in advanced automation technologies can, however, lead to extremely high start-up costs.
- Plant option. Is vertical agriculture supposed to attempt to branch over leafy greens or should it turn into the market it has? What about higher value inaccessible crops for conventional farming?
- How big is it too big? Larger centralized facilities could lead to scale economies, but also to spiralling logistical problems. Less localized facilities could, however, face significantly higher start-up costs compared to output capacity.
- Location is critical, is the city centre the best place to create a vertical farm?
- The need for food industry experience. Cultivation is living organisms and not always predictable. Nonetheless, in the vertical agriculture market, there is a relative lack of expertise in food and agriculture.
Vertical Farming: How to Succeed?