Has Vertical Farming Passed A Peak On The 'Hype Cycle'?

21 June 2018, by Gavin McEwan

Several senior industry figures sounded a note of caution on the potential of urban farms at last week's GreenTech international trade show in Amsterdam (12-14 June).

The former head of the US National Institute of Food & Agriculture Sonny Ramaswamy said the world faces "a perfect storm" of population growth, malnutrition, obesity, desertification, the spread of pathogens through globalization and "a loss of trust" in scientists.

"Growers’ ecological footprint needs to reduce by 50%, but controlled-environment agriculture (CEA) will only be a small part of it," he added. "We will need a toolkit of different systems including broad-scale farming."

CEA "is fantastic at lettuce, arugula [rocket] and micro-greens, but they won’t feed you-you still need protein, from plants, animals, fish or algae", he said, pointing out that CEA output is still dwarfed even by organic food, the two being worth $3bn and $15bn respectively in the USA.

But Ramaswamy added that while CEA salads "are already yesterday’s news", the technology offers plentiful opportunities elsewhere, in producing pharmaceuticals, fragrances, flavour chemicals, resins and other compounds.

Referring to the "hype cycle" of adoption of any novel technology, he said: "Many technologies turn out to be snake oil," adding: "We need to breed better varieties of crops that are suited to growing indoors."

Speaking on the theme of "making vertical farming profitable", Green Sense Farms founder and chief executive Robert Colangelo declared: "Urban farming is a bit of a myth." He explained: "The cost of real estate and labour in cities is high so it doesn’t always make sense to operate there." He added: "Distribution is key to your business model. We learned after much trial and error that it’s better to grow a small range of crops well for fewer customers and to automate for consistency."

Local production

Local production is gaining in the USA, partly because "we need a lot of trucks to move produce around and there is a shortage of truck drivers". He continued: "Amazon is selling dry goods directly to customers. Stores are becoming smaller and more niche. You will get more production at distribution centers, and that’s a great opportunity for 'urban' farm growers."

On Green Sense Farms, which operates in the USA and China and has a further eight sites in development worldwide, Colangelo said: "We can get a farm up and operational in about a year. Our biggest expense is the LEDs, then the electrical services — the HVACs [heating, ventilation and air conditioning]. Our farming inputs cost surprisingly little and we have driven down labour costs. When we do the feasibility, the first thing we want to know is, what will the customer pay?"

Echoing Ramaswamy, Colangelo said: "Vertical farms are great for leafy greens and it’s better to focus on getting really good at that. They are also great for producing seedlings for outdoor growing and for crops for medicinal use. But not strawberries or tomatoes."

Joep van den Bosch, chief innovation officer of Dutch firm Ridder Group, which installs vertical farms, said that from the technical point of view "systems should be reliable, safe, circular and optimized", adding: "I’d put reliability first as, without that, your plants will die. We make sure there are support systems, wherever you are in the world."

With a growing appreciation of the need to automate systems, he said: "You need to look for an integrated solution with one control centre, one dashboard and all your data in one place. We see a lot of start-ups with separate control for irrigation, cooling, lighting and so on. As a grower, you want to spend your time and money on growing, not on developing the technology."

He warned: "A number of vertical farms have failed in the past couple of years. They may have developed their own tech or got it from less experienced suppliers. Your supplier must also be able to provide support." Colangelo added: "There is a lot of good technology out there. Growers should focus on the growing."

Similarly, Niko-Matti Kivioja, chief executive of Finnish indoor lighting supplier NetLed, warned: "It’s very easy to establish a vertical farm unsuccessfully. Real estate prices are high in cities. You could spend two-thirds of your income on rent."

Explaining the perils of starting up CEA sites, he added: "It’s a challenge to convince banks and investors that it will be profitable. A one-year project to install a farm can become a two-year project if not properly managed. If you can shorten the installation time, you make it more interesting to investors. They may want to see your technology tested on a smaller scale first.

"Then you are still learning in your first year of growing, so not in optimal production. You are better to have technology that’s proven and integrated. Salespeople always say ‘it doesn’t need maintenance’, but of course it does."

Energy premium

Delft University of Technology researcher Luuk Graamans said that in comparing vertical systems with conventional glasshouse growing "plant factories lose on energy use, since LEDs still consume energy", adding: "It depends where you are. It isn’t an issue where energy is plentiful. But it’s the Achilles’ heel of vertical farming and you need to work round it. Can you say ‘it stays fresher for longer’?"

Graamans co-authored a paper published last November in Agricultural Systems that compared resources required to grow lettuces in conventional glasshouses and enclosed plant factories in the Netherlands, Sweden and the United Arab Emirates.

"In terms of energy efficiency, plant factories outperform even the most efficient greenhouse [and] achieve higher productivity for all other resources (water, CO2 and land area)," the study found. "With respect to purchased energy, however, greenhouses excel as they use freely available solar energy for photosynthesis." It concluded: "The local scarcity of resources determines the suitability of production systems."