Is A Vertical Farm Cost Effective To Build And Operate?

Author: Robert Colangelo.

Founding Farmer at Green Sense Farms Holding, INC.

A common question we’re often asked is a vertical farm cost-effective to build and operate? There is no categorical answer to this complex question, which often requires a detailed feasibility study to resolve.

The answer Starts With The 4 Cs -

Crop, Capacity, Climate, and Capital Budget.

Crop: What is the intended crop and how many varieties will be grown? At this time vertical farms can economically grow leafy greens (lettuces, baby greens, herbs, and microgreens), starter plants, and cannabis. To grow a cultivar well its best to design a farm with individual grow rooms where set points can be optimized to the monocrop. Many customers ask us to build farms that can grow a wide range of crops. We suggest specializing in growing large volumes of a few crops, that you can grow well and build a brand. This will also make production more efficient increasing the profitability.

Capacity: What is the desired output and frequency of harvest? The answer to this question is key to sizing a farm design. Understanding the production schedule and how many crop rotations a farm will hold will assist in laying out the farm. Capacity is also key to calculating the unit production cost. The bigger the farm typically the lower the unit cost.

Climate: One of the advantages of a vertical farm is that it can be built anywhere from the cold-dry climate in the South Pole to the hot- humid climate in Southeast Asia. The more humid the climate the more expensive mechanical equipment will be required to control Temperature and Relative Humidity. A good farm design can take into consideration the outside cool-dry climate and use it to reduce capital and operating expenses. In addition, cooler drier climates tend to have less bugs which will reduce operating costs when it comes to Integrated Pest Management (IPM) programs.

Capital Budget: A rule of thumb is that if you spend more on capital expense then you will reduce your operating expense. A well-built farm that is designed to optimize crop growth will lower the daily operating cost. To do this it greatly helps to have an anchor customer identified, define the crop (s) that will be grown, the harvest frequency/delivery and how it will be packaged so that these variables all be factored into the farm design.

Many other factors play a role in setting and building a farm. This includes location, automation, and labor. The 4C’s will get you off to a good start and will allow the development of an initial financial proforma so that you can predict the size of the farm, output, and the capital required to build and operate the farm profitably. I have learned that sometimes the best projects are the “ones not done.” Building a farm too big or too small can be a disaster. Starting backwards to first identify and understand the customers’ needs is a good way to begin. With adequate research and planning a vertical farm can be built to operate profitably and be a project worth doing!