Vertical farms are evolving into a major food industry powered by sophisticated technologies and production methods.
- Growing fresh produce in underground areas
- Transforming a tunnel into a vertical farming operation
- Infarm allows customers to pick the produce themselves
- Vertical farming companies are facing an array of challenges
- Technology and lower costs are critical for the industry’s sustainability
- Innovation is vital to solving the world’s greatest challenges
Farmers around the world are heading towards an uncertain future. Apart from the prospect of feeding the global population that’s set to reach around 10.9 billion by 2100, they are also facing climate change-induced floods, droughts, and heatwaves. Fertile land is in ever shorter supply as soil erosion intensifies. Farming is also to blame for some of these problems as the CO2 footprint of food accounts for 17 per cent of total global emissions. And by the time plants get transported to supermarkets, they lose 45 per cent of their nutrients. As it becomes increasingly apparent that traditional agriculture is unsustainable, growing food in an artificial environment is emerging as a potentially better way forward.
Instead of ploughing fields, farmers would produce food in vertically stacked trays. Soil would be replaced by nutrient-rich water, while LED lights would act as the sun to ensure plants photosynthesise. This practice, known as vertical farming, offers many benefits. The indoor environment protects crops from extreme weather events and pests, which means that food grows fast and there’s no need for pesticides. Also, food is grown close to cities, which not only reduces food miles and the related carbon footprint, but also provides consumers with fresh and tasty crops.
However, vertical farming faces certain challenges as well. Companies have to constantly innovate to cut production costs and turn a profit, which is vital for the survival of this industry. But entrepreneurs remain optimistic. The global vertical farming market is forecasted to reach $12.77 billion by 2026 and people are becoming increasingly aware that there’s a better way to feed the population.
Growing fresh produce in underground areas
High rents and the lack of space have prompted some modern urban farmers to go underground. In London, for instance, a farm called Growing Underground operates from a World War II bomb shelter located 33 metres below Clapham High Street. Owned by Stephen Dring and Richard Ballard, the vertical farming facility produces an array of herb and salad mixes, including parsley, red mustard, coriander, and pea shoots. Fresh produce is then sold through Marks & Spencer, Waitrose, Ocado, and several other retailers. Some restaurants have also expressed interest in buying fresh produce, says Ballard.
He also points to many advantages of vertical farming. For instance, his farm delivers 60 harvests a year, compared with around seven that can be achieved in traditional agriculture. Furthermore, Growing Underground is carbon neutral and uses 70 per cent less water than typical farms. The only major cost he’s trying to reduce is electricity that powers the lights. And his ambitions are global. “The UK is the hardest market for growing salad. We’ve got very low prices in the supermarket, so if we can make it work here we can make it work anywhere,” says Ballard.
Underground vertical farming is thriving in other British cities as well. The Liverpool-based social enterprise Farm Urban, for example, provides customers with a weekly box of living salad leaves, edible flowers, and fragrant herbs. Jens Thomas, the company’s technical director, says that the product is pesticide-free and “it’s grown using 90% less water than if it was grown in a field; it’s zero-waste; and it’s hyper-local.” Farm Urban is trying to promote healthy and sustainable living. For each box of greens customers buy, the company delivers a box of greens to a local school. This activity is part of the Greens for Good campaign that aims to reconnect people with locally-grown food.
In New York, the vertical farming business Farm. One is also growing. Its underground farms produce over 500 different herbs, edible flowers, and microgreens year-round, using a specialised software to manage multiple operations, such as seed, harvest, and flavour optimisation. Founded by Rob Laing, the company supplies fresh produce to various New York-based restaurants, including Atera, Ai Fiori, Benno, and Flora Bar. All deliveries are made by bike and subway. Also, visitors can book a tour of the farm or take a class in hydroponics to learn how to grow vegetables in a soil-free environment.
Transforming a tunnel into a vertical farming operation
Successful vertical farming businesses can also be launched outside of cities. NEXTON, a South Korea-based startup, has built vertical farms in a former highway tunnel, located 190 kilometres south of the capital city of Seoul. Growing salads, leafy greens, and strawberries beneath mountains has many advantages. For one, the 6,500-square-metre facility naturally maintains a temperature that ranges between 10 to 20 degrees Celsius, which translates into lower energy spend for cooling or heating. Furthermore, labour costs are reduced by automating various operations. And as farming is done without pesticide or herbicide, with sensors monitoring humidity and CO2 concentrations, customers receive both healthy and affordable products.
Choi Jae-bin, the CEO of NextOn, also uses non-tech tactics to boost production. For instance, the music of Beethoven and Schubert is played in the 600-metre-long tunnel as Jae-bin believes it will help plants to grow faster. And his plan is to build more farms in urban areas. “Plants easily grow at home, at nearby stores, at hamburger restaurants, or even at metro stations. I think the system to grow crops far away from a city and transporting it will disappear,” he says.
Infarm allows customers to pick produce themselves
Infarm, a Berlin-based startup, has already achieved in several European countries what Jae-bin plans to do in South Korea. The German company builds modular farms that are placed in customer-facing locations, such as schools, grocery stores, restaurants, and shopping malls, enabling customers to pick the produce themselves. Clients can also add more modules if they want to increase the farming output, while the production is monitored and controlled through a cloud-based platform. Essentially, the whole thing functions as a ‘farming as a service’ operation that combines the IoT, Big Data, and cloud analytics.
The company is working with 25 major food retailers in Germany, France, and Switzerland, including Migros, Casino, Intermarche, Auchan, Selgros, and AmazonFresh. Furthermore, it has installed more than 200 in-store farms, as well as 150 farms in distribution centres. And in 2019, Infarm raised $100 million in Series B investment round. The funding will be used to expand research and development, sales, and operation teams. Also, the startup plans to increase its presence in the UK and negotiate partnerships with retailers in the US and Japan.
Vertical farming companies are facing an array of challenges
While the rise of vertical farming companies has been impressive, the industry is facing many challenges and its survival depends on reducing costs and increasing productivity. Take, for example, the fact that deploying even a small, low-tech vertical farm with the 1st generation technology costs around $280,000. On the other hand, the cost of setting up more complex farms with advanced tech can go over $15 million. There are also operating expenses such as lighting and labour that can further pressure companies’ bottom line, making it hard to compete with organic and traditional producers.
So it comes as no surprise that return on investment (ROI) in vertical farming projects is mediocre at best. The current market prices don’t make the situation any easier either. A kilogram of vertically-grown leafy greens is around $33, while organic produce costs $23. To gain a competitive edge, vertical farming startups need to take several measures.
Technology and lower costs are critical for the industry’s sustainability
The first step in ensuring long-term profitability of vertical farms is transitioning to 2nd generation technology. This means that in addition to automatic control of irrigation, humidity, lighting, CO2, and other relevant parameters, farms should also be capable of autonomously collecting data and optimising growing processes. They also need to implement cutting-edge machines that will autonomously run planting and weeding operations in the facility, and harvest, sort, and package produce for shipping. These improvements can enable the second generation of vertical farms to yield 55 times more produce than conventional farms.
Increased automation will also cut labour expenses. Intelligent Growth Solutions, a UK-based agritech business, has reportedly developed an automated farming system that uses modular structures to reduce labour needs by up to 80 per cent. Furthermore, LED lighting efficiency is likely to improve by an additional 70 per cent by 2030, reducing the energy spend. Boaz Toledano, a business consultant specializing in vertical farming, says that “lighting improvements should reduce OPEX [operating expenses] by 12%, and automation should cut OPEX by a further 20%+”.
Companies can also reduce costs by setting up farming operations underground. This would not only help them avoid the high cost of renting in urban centres but also enable them to enjoy the benefits of having a steady temperature. Underground facilities also offer better protection against natural disasters and can be more easily adapted to producers’ needs.
Innovation is vital to solving the world’s greatest challenges
New technologies are moving the food industry forward. Vertical farming, though still gaining traction, could help solve some of the world’s greatest challenges, such as food shortage. Tasked with feeding the growing global population, today’s agriculture producers still primarily rely on farming practices that hurt the environment. As it becomes clear that traditional farming is unsustainable, innovative entrepreneurs and scientists have come up with a potential solution. Vertical farming is increasingly hailed as an alternative food production method that can provide people with healthy and fresh produce. Thriving in undergrounds, stores, and restaurants around the world, vertical farms are becoming a major industry. But their survival depends on the ability of businesses to lower food production costs and increase productivity.