Today’s consumers are more eco-conscious than ever, seeking information regarding the origins of the products they purchase in search of greater peace of mind that their buying habits are not harming the environment or workers. In recent years, some players in the agriculture industry have been shifting operations to meet these changing consumer demands, “greening” their processes and seeking more sustainable methods of farming. One such method that is, quite literally, on the up, is vertical farming.
With more and more industry players embracing this innovative growing method, citing it as a more sustainable, smarter way to address a looming global food shortage, it’s little surprise that the vertical farming market is projected to grow over the next decade. In 2021, the Global Vertical Farming Market amounted to around $3.5 billion, and is estimated to grow at a CAGR of 25.3% from 2022 to 2030, reaching $25.7 billion by 2030.
Leading industry players in this sector include U.S. companies such as AeroFarms, Plenty, Bowery Farming, Gotham Greens, Futurae Farms, Iron Ox, Green Sense Farms, and Crop One, with a couple of international companies also making the list — InFarm (Germany), and Agricool (France). Ohio-based agricultural company 80 Acres Farms also has fully automated, indoor vertical farms that use 100% renewable energy, and 95% less water, with no pesticides or excessive food miles.
When most consumers consider vertical farms, they think of grocery store lettuce. They’re not wrong — leafy greens are an excellent crop for a controlled, hydroponic growing setup. But how exactly does vertical farming work, and how are today’s companies and startups taking advantage of the shifting landscape to offer a new way to acquire fresh produce?
What Is Vertical Farming?
Vertical farming, also referred to broadly as indoor farming, is the practice of growing produce in layers, stacked vertically, as opposed to the traditional method of growing in the ground. Vertical farms may make use of soil, aeroponic, or hydroponic growing techniques. Part of the urban farming trend, vertical farming is building on the success of urban greenhouses, such as those found in city centers on top of commercial buildings. Vertical farmers may incorporate growing systems into rooftop settings, onto the sides of commercial high rises, or into what’s referred to as “farmscrapers.”
Growing fresh food has traditionally been subject to the elements: location, climate, seasonal conditions, and weather trends are just the start of the challenges that can impact plant health and crop yield. Indoor, or greenhouse, farming creates a controlled environment to combat troubles like pests and drought. The strategy dates as far back as the Roman Emperor Tiberius, and its latest iteration bears the promise of an efficient “Plantopia” that we’ve yet to truly tap.
As the name suggests, vertical farms grow upwards, engaging with shelf-style structures that tend to operate via hydroponics or aeroponics. Robotics, data analysis, computerized controls, and sophisticated algorithms do the heavy lifting of optimizing every inch of the growing environment — all day long, every day of the year. This vertical solution maximizes even more urban square footage, proponents argue, without requiring higher investments or major changes to the growing process.
These vertical growing systems are gaining popularity in environments where growing fruits and vegetables is more challenging. Desert and mountain-side towns are beginning to see skyscraper-like vertical farming designs, incorporating innovative methods such as hydroponics, aeroponics, and aquaponics. Sky Greens in Singapore, for example, plants its vegetables on hydraulic-powered shelves that rotate throughout the day to ensure plants receive sunlight and water while the farm minimizes water, land, and energy consumption.
Benefits of Vertical Farming
Two words: perpetual growing. The high-tech engineering of vertical farms makes them practically invincible. Pests, poor weather, diseases, and even seasonal temperature changes carry no weight in these environments of complete control. Their products are organic by default — there’s no need for pesticides, and they grow with very little water (up to 70% less) for maximum efficiency. All of that fine-tuning makes for fast growth, too. Vertical facilities can turn around a crop in significantly less time than the traditional field, with growth rates up to 390 times more productive than competitors.
As if the ability to garden anywhere, in any environment, insusceptibility to harsh climate and weather, and almost complete immunity to pests weren’t enough to sway farmers to lean towards this new agricultural method, there are other benefits to vertical farming. These include consistently high-quality produce, no dependency on sunlight, the ability to grow produce closer to the consumer base and utilize renewable energy for power, and enhanced consumer safety as the risk of pathogens is virtually eliminated.
This groundbreaking farming method saves considerable space and soil, and, as an extra perk, these vertical farms tend to pay higher wages than traditional farming setups, too. This goes hand-in-hand with rising consumer concern for employee working conditions, which are often unsafe and low-paying in agricultural sectors. Combined with extreme weather patterns and land disputes, the situation can lead to a very insecure industry. Further enhancing safety, the chance of acquiring foodborne illnesses is greatly reduced with vertical farming, cutting down on overall liability and the risk of damaged reputations and associated costs.
Aside from meeting consumer demand for more eco-friendly, socially responsible practices and fresher, local food, these greening initiatives can also benefit food companies by reducing costs and shortening delivery distances while creating better working conditions for employees and protecting the environment.
How Food Supply Companies Are Implementing Vertical Farming
Several companies in the food supply and agriculture industry are implementing vertical farming techniques, pioneering a new way of growing, distributing, purchasing — and thinking about — our food. The ability to supply retailers with locally grown, sustainable products year-round has caught the attention of many investors, too, along with the increased consumer demand for more eco-friendly food purchasing options — for which today’s consumers are willing to pay more money.
Companies are incorporating these trends into their business strategies. For example, BrightFarms, a high-tech greenhouse operator, has raised $55 million for vertical farming initiatives. The company plans to use the money to extend its greenhouse farms. Another company, New York-based Gotham Greens, recently announced it had raised $29 million to expand facilities, take on new employees, and enhance R&D efforts.
San Francisco-based food start-up Plenty, which grows various leafy greens hydroponically, raised an impressive $200 million from the SoftBank Vision Fund. They now produce 4.5 million pounds of greens annually and are testing some food products for scalability. In addition, fast-food giant Wendy’s started using vine-ripened tomatoes in their salads, and other foods, sourced solely from greenhouse farms.
The Challenges Surrounding Vertical Farms
While vertical farming is an exciting new development for the food supply sector, this new method is not without its drawbacks.
First, the consumer cost of items grown in vertical farms is much higher than the costs of traditionally grown items. This results from the massive amount of funding still needed to build farms large enough to allow for lower prices. Equipment also adds to the price tag; heating and cooling systems, shading technologies, lights, environmental controls, and other equipment all require considerable capital. As an example, AeroFarms, a leader in the field, spent $30 million on its flagship aeroponic farm in Newark.
This makes for high electricity bills as well, and operating costs can be nearly $27 per square foot. The overall carbon footprint of these farms remains high, though proponents say technology is advancing every day to make vertical farming more sustainable and affordable.
Even still, vertical farming requires intense oversight, labor costs can add up quickly. Some studies show that vertical farms will need to hire 100,000 workers over the next 10 years if growth continues at the same pace. And while consumers have shown they are willing to pay more for local, eco-friendly products, it’s not yet proven that customers are willing to shell out more for food grown indoors. Studies have shown that consumers do not necessarily think of vertical farms as “natural,” which may impede overall growth.
Many analysts say the demand is not yet high enough to safely call vertical farming a guaranteed success story, but experts, consumers, and those in the industry are sure to keep an eye on future innovations and advancements as the food supply sector continues to shift and evolve.
The Trouble with Tech
High-efficiency growing facilities hosting plants at ten and twenty deep, growing at double time, and with less of an environmental footprint? It all sounds too good to be true… And it just may be. These brilliant feats of agricultural engineering come with a steep price tag — one large indoor vertical farm costs millions of dollars. Agritecture Consulting estimates the cost of a 30,000-square-foot facility for leafy greens and herbs near New York City at almost $4 million in startup capital – and that’s without labor.
Most of the costs come from high-end equipment including custom ventilation, shading devices, and high-powered lights. Sophisticated heating, cooling, and ventilation systems add to the mix, along with the immense amount of electricity needed to power it all: think nearly a $350,000 annual tab for lighting, power, and HVAC at the same facility near NYC.
Along with the obvious concerns of carrying such a large carbon footprint, vertical farming faces another serious challenge: competition. Smart greenhouses with advanced automation and the advantage of sunlight, while they may not host the same level of engineering, can operate at well less than a third of the cost per square foot.
Trans-Plantation
While vertical farming may have a host of complications, it’s particularly effective at one task: growing starter plants. For many growers, starter plants, or transplants, are extremely valuable. These fledglings can be grown rapidly, at extremely high densities, in the controlled environments of vertical farms before being inserted into the agricultural supply chain. They offer hardiness and ease of planting, saving growers the time and labor of having to start the young plants from fragile seeds in a greenhouse or field.
The quality of these transplants is consistent and immune to shifting outdoor conditions: hiccups in weather or seasonal conditions don’t alter their growth, making for a very uniform product with higher dry mass. They serve as an exceptional base for field growers and greenhouses who bring the final crops to market.
While these starter plants may not be the answer to the operational challenges faced by vertical farming facilities, it’s safe to say there’s more innovation in store. Between 2016 and 2017, investments in such facilities saw a boost of 653% and hundreds of millions of dollars. Forthcoming research from Cornell University, funded by the National Science Foundation, will help to tell us whether those investments will come to harvest.
The Future of Vertical Farming
Innovators in this market are promising to grow produce and herbs in ideal conditions indoors, without the use of pesticides, and with dramatically reduced amounts of water and energy. For instance, the indoor farming company Bowery claims its crop cultivation “utilizes 95% less water compared to traditional farming.”
Vertical farming also earns enthusiasm from environmentalists drawn to the idea of food produced locally — perhaps even in the very building where produce consumers work. This could mean fresher products — which are typically healthier, too, as there is more nutritional value closer to harvesting — as well as less food spoilage and reduced emissions.
Nevertheless, this iteration of urban agriculture is still in its fledgling stages. In 2016, only one in three urban farmers was able to make a living from their farms. Yet city and state restrictions on these growing systems are beginning to loosen, and many researchers are endorsing the method’s sustainable, Earth-friendly qualities.
A 2018 study focused on the potential of urban agriculture — conducted by Google, China’s Tsinghua University, the University of Hawaii, and the University of California, Berkeley — proposed that the added benefits of “reduction of the urban heat-island effect, avoided stormwater runoff, nitrogen fixation, pest control, and energy savings” has helped make urban agriculture worth as much as $160 billion annually worldwide.
There are also the corporate responsibility benefits for brands to consider. The philanthropic arm of Ford Motors, for instance, partnered with Detroit’s Cass Community Social Services to turn a 40-foot shipping container into a year-round hydroponic vertical farm. With 52 harvests per year and capacity equal to two acres of farmland, the “Ford Freight Farm” grows lettuce and greens to feed local food-insecure populations.
While R&D is ongoing, and the various benefits and drawbacks of vertical farming are still being explored, food supply companies and investors alike will be keeping tabs on the growth of this new industry.
Through lean methodologies, optimization, improved inventory forecasting, and a range of other techniques currently being explored, vertical farming and other new food supply initiatives may indeed prove to be as beneficial as they are revolutionary.
Food for Thought
According to researchers at Arizona State University, if “fully implemented [worldwide], urban agriculture could produce as much as 180 million metric tons of food a year — perhaps 10% of the global output of legumes, roots and tubers, and vegetable crops,”
This innovative method of farming is rapidly changing the agricultural landscape and the way people think about food. Over the next few years, farmers and consumers alike will no doubt be keeping an eye on the latest trends and innovations in this area.