Wed.
Sep 22
2021
vertical farming
Image: Joshua Lanzarini via Unsplash

The buzz around vertical farming has grown in the past year as the pandemic triggered supply chain disruptions across the globe and fanned fears over food security.

The burgeoning sector, which sees crops grown in stacked indoor systems using artificial light, has been the subject of increasing investor attention. Proponents hail its potential to bolster agriculture in densely populated countries.

High-profile investments include New Jersey-based startup Aerofarms, which raised $100 million to expand its aeroponic growing facilities, and California-based Plenty, which took home $200 million in a funding round led by SoftBank that included backing from Jeff Bezos and Alphabet chairman Eric Schmidt. Recent months have also seen a flurry of media attention surrounding the construction of Europe’s largest vertical farm and plans to build the world’s largest indoor farm in the Abu Dhabi desert.

Hype around vertical farming is certainly not baseless. With the global population set to reach 9.7 billion people by 2050, the Food and Agriculture Organization (FAO) of the United Nations estimates that food production will need to increase by 70% from 2007 levels to ensure everyone in the world can be fed.

In countries short on space, vertical farming could play an important role in helping to meet growing demand as it enables companies to maximise output while saving on space – something particularly important in regions where it is not possible to turn more land over to agricultural production.

It is no surprise, therefore, that most of the sector’s growth has been concentrated in Asia. Leading the sector, Japan has over 200 vertical farms currently in operation, with its largest player Spread Co. Ltd. producing around 30,000 lettuce heads every day at its Techno Farm Keihanna facility.

Growing crops in a controlled environment away from the threat of the great outdoors also has a huge impact on production stability. Not only does it save farmers from the consequences of adverse weather conditions, but it also reduces the need for pesticides – a major challenge in traditional agriculture. As a result, crops grown in vertical farms are typically healthier and taste better. They can also be grown closer to consumers, eradicating the carbon cost of transportation.

For all the extolled benefits, why do vertical farms still occupy only a tiny sliver of the market? As with many climate solutions, things are not so straightforward. 

Growing crops on a mass scale indoors, while economical on space, is far from economical on the pockets. Vertical farming companies often face a difficult choice between spending large quantities on automation technologies to increase efficiency and cut labour costs or buying cheaper facilities that necessitate heavy labour spending.

This obstacle has made it extremely difficult for companies to turn a profit, and there is subsequently a fear that if investor risk dies down, a huge swathe of less efficient companies could be culled from the market. While some Japanese farms have achieved profitability, and a few more in Europe claim to be getting close, these players remain relatively few and far in between.

The high costs of running these facilities has also had a knock-on effect on the crop varieties farmers are able to grow there, with most facilities focusing solely on the cultivation of leafy greens and herbs – high-value crops that are easy to grow. In light of this, the overall impact of vertical farming on the broader food industry has been far from groundbreaking.

To make matters worse, there have been several instances of black mould and pest infestations hitting farms in the face of their lack of pesticides.

While it seems unlikely that we will be eating exclusively from vertical farms anytime soon, these facilities will continue to play a valuable – albeit understated – role in broader sustainability efforts.

As one analyst put it, we should now reframe the conversation to consider vertical farming as something that will only ever be “part of the mix among growing food systems”.

By Harriet Coleman

Harriet Coleman is a freelance journalist covering business and politics in emerging markets.

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