A rosy future for vertical farming

High-tech agriculture attracts investors

From LA to New York and London to Tokyo, new companies are using advances in machine learning, hydroponics and LED lighting to grow food indoors all year round. And right on the doorstep of the people who need feeding.

Far below a bustling London street, a hi-tech growing revolution is happening literally under people’s feet. Growing Underground is one of a slew of indoor farms that have sprung up in recent years. They are bringing food production into city center locations. Not only that, they take pressure off land given over to cultivation, shun pesticides and use less water than their conventional counterparts.

With urban populations set to mushroom, the potential of these indoor farms has not escaped the keen eyes of forward-thinking investors. In 2017 alone, three of the largest US ‘vertical farms’ – AeroFarms, Bowery and Plenty – received more than US$250 million (€202.24 million) in investment. This eagerness by venture capitalists to get in on the ground floor is being echoed around the world.

Three vertical farms received over US$250 million in investment

- #Kickstartfood

Problem solvers

“Venture capital is moving into this space like there’s no tomorrow,” says Steven Dring, co-founder of Growing Underground, which releases its Series A funding prospectus in February 2018 and supplies its produce to retailers including Marks & Spencer, Waitrose and WholeFoods. “The urban farming sector is likely to be huge because of the issues it solves: food security, finite land resources, food price inflation, sustainability. That’s leading to exponential growth in the market and that’s why investors are moving in.”

Harvesting the Growing Underground way

Deploying modern technology to overcome some of the major food system problems is the motivation for many in the sector. According to Bowery’s CEO and co-founder Irving Fain, agriculture is at the epicenter of so many issues, including hunger, health, environmental degradation and resource scarcity.

“Over 70% of our water supply is used up by agriculture”

- Irving Fain, CEO and co-founder of Bowery

“More than 70% of our water supply is used up by agriculture,” says Fain. “Meanwhile, we use around 700 million pounds (317,500 metric tons) of pesticides per year in the US alone. Not only is that hurting the soil, it’s a terrible waste of natural resources. As modern technology advanced, we saw there was an opportunity to bring those innovations to bear in an agricultural context, which is why we started Bowery.”

Bowery Farms lettuce nursery

Bowery combines automation and machine learning capabilities with Artificial Intelligence to constantly monitor and analyse plant growth.“We can create a controlled environment that’s ideal for the food we grow and that is consistent all year round,” he says. “We don’t use any pesticides, fungicides or insecticides and we can grow crops twice as fast as conventional farming, while using more than 90% less water. It’s a huge step forward.

Nutrition nearby

Another major advantage indoor farms have over traditional farming is proximity to their customer base. “There are five ‘Mediterranean’ climates globally that are conducive to growing fresh fruits and vegetables in the field at scale,” says Matt Barnard, co-founder and CEO of Plenty. His company is building a global network of field-scale farms right next to conurbations to bring better tasting produce to consumers within hours of harvest.

“Produce may travel 2,000 miles, losing 45% of its nutrients”

- Matt Barnard, co-founder and CEO of Plenty

“Our current system is based on an outdoor environment we don’t control. That forces us to use a complex supply chain at the expense of the environment and the quality of the produce we eat,” adds Barnard. “Fruits and vegetables in the US travel an average of more than 2,000 miles before they reach your plate, often taking more than a week to arrive and losing up to 45% of their nutritional value along the way. Plenty wants to deliver locally-grown produce that tastes the way nature intended, to people everywhere – and at an affordable price.”

Plenty's wall of basil

Secure supply

It’s not only convenience these new urban farms offer the food supply chain; it’s a higher level of food security too. Severe weather events, natural disasters and volcanic eruptions have all had a direct impact on food security in recent years, but these would not stop indoor farms delivering to their customers.

“A winter freeze in Georgia wiped out 80% of the state’s renowned peach crop in 2017,” says Barnard. “Hurricane Irma is estimated to have cost Florida’s agriculture industry more than US$2.5 billion (€2.02 billion). Conventional agriculture is essentially an uncontrolled outdoor industry, whereas indoor farms can introduce control and consistency.”

It’s that consistency food retailers appreciate, according to Dring. “Supermarkets want a constant supply,” he says. “And they are beginning to discover reliance on traditional farming can’t deliver that. One of the large consulting firms recently mapped a climate change model over WalMart’s fresh produce supply chain and found that 95% of it was under threat – that’s the kind of challenge and opportunity our industry is seeking to address.”

Bowery herbs at the supermarket

Premium produce

So far, most hi-tech urban farms are limited in what they can produce. All specialize in niche, high-value crops such as leafy greens, salad plants and exotic herbs. They can charge a premium for these thanks to increasing demand for sustainable, pesticide-free produce.

“Urban farming has been validated by players like Philips”

- Steven Dring, co-founder of Growing Underground

“At the moment, the economics don’t add up for many crops,” says Dring. “We aren’t yet in a position to grow crops like spinach that don’t command a high price and where there is lots of competition. But as the scale of urban farming expands, and the cost and efficiency of the technology becomes more favorable, we’ll see a much larger variety of foods grown this way.”

Growing up vertically at Plenty

If he’s right, it won’t be too long before investors begin to reap the rewards of the significant sums of money they are ploughing into urban farms. Dring believes it’s a comparatively safe bet. “The idea has not only been validated by the investments and by the number of players in the sector, including organizations like Mitsubishi and Philips that are providing dedicated equipment,” he says, “But also by customers who are buying our products. Our challenge now is to stack up economically as a fresh produce brand, not just as niche foods suppliers. The challenge for the industry is that we prove ourselves as viable fresh produce suppliers as well as tech-led businesses. And we’re seeing that happening right now.”