Nicola Kerslake

Dec 17, 2019

If you think about indoor agriculture as exclusively the preserve of small mom and pop farms selling leafy greens, or of a handful of VC-funded plant factories, you might want to think again.

Although this misconception is understandable — there are many indoor farms that grow leafy greens and operate at a smaller scale — the proposition doesn’t even begin to capture the scale or the diversity of the indoor agriculture industry.

So how should we think about indoor agriculture?

Let’s get one thing straight: the indoor growing sector isn’t small — no matter how you spin it.

Let’s start by looking at the finances of indoor growing. According to a Global Hydroponics Market Source, the global market size is currently valued at $8.1 billion and is expected to grow to $16 billion in 2025. In 2019, the indoor agriculture sector raised $56 million in the first quarter alone — that would be a lot of mom and pop shops!

Media coverage portrays indoor agriculture as the exclusive purview of large scale plant factories, tech-focused entirely controlled environment facilities. These plant factories focus on economies of scale and farm economics. Sometimes, the focus on securing large corporate partnerships, establishing their own produce brands or franchising their approach.

Companies like San Francisco-based Plenty, have raised a total of $226 million; AeroFarms raised $138 million; Bowery raised $118 million; BrightFarms raised $113 million. Oasis Biotech has had a listed parent, SananBio, committed a hefty one billion dollars to indoor agriculture development. Some assume that these raises end up solely in more production, but that’s rarely the case as companies compete to create ever-better tech and recognizable brand names.

But is that the whole picture?

According to Nicola Kerslake, founder of Contain Inc, part of the reason that we think about indoor agriculture as only being large scale plant factories growing leafy greens is because of how we define indoor agriculture.

“Part of the challenge is that some define indoor agriculture as just being a small group of plant factories, such as AeroFarms and Plenty Ag. But we define it to include all forms of protected agriculture, such as greenhouses, hoop houses, and container farms in addition to warehouse farms, which is a much more diverse group,” she said.

As a result, we need to rethink and redefine indoor growing.

To be sure, indoor farm sizes are on the rise regardless of the form they take. We are starting to see more, bigger farms, and see those farms represent a larger percentage of the overall capacity of indoor farming. Greenhouses, in particular, are seeing a revival in fortunes with labor-saving automation technology becoming more common. In California, a state that represents a large portion of indoor growing in the United States, 28 percent of capacity consists of large greenhouse operators of 30 acres or more. We also have the farms that have broken the 100 acre, and 300-acre threshold, like Nature Sweet in Arizona, which is 336 Acres or Windset Farms-Calif which is 125 acres. Produce major Mastronardi announced just this week that it is close to completing the largest single greenhouse in the country, in New York.

Large companies, that historically haven’t been involved with agriculture, are starting to take up indoor agriculture. The globally known Swedish furniture store, Ikea, announced that they would start sourcing their greens from container farms right on site. Singapore Airlines partnered with New Jersey-based AeroFarms to grow food to serve on their flights right at the airport itself.

But this still leaves plenty of space for other players in a market that is growing at 12%+ CAGR. According to the USDA, more than 90% of America’s farms are small, and there is no reason to believe that indoor agriculture will not replicate this pattern as new farmers opt to serve their communities with year-round leafy greens, manufacturers grow their own ingredients or schools and hospitals grow for their own needs.

Indoor agriculture should not be defined by leafy greens, but by the diversity of its offerings.

“At Contain Inc, we cover both traditional leafy greens, and other types of produce, mushrooms, fish, insects and licensed hemp.” says Kerslake.

As time passes, technology develops and indoor agriculture continues to change. A diverse sector becomes even more diverse. One great example of this is strawberries, a newer crop for indoor systems, now moving indoors apace.

Indoor growers are finding that strawberries grow particularly well in an indoor setting — especially in combination with new growing technology.

One vertical farm in The Netherlands saw a 300 percent increase in strawberry yield when compared to traditional cultivation. In a piece for HortiDaily, they told the website that they grew a year’s worth of harvest in just one season using new LED technology.

And others are starting to hop on to the trend. The city of Murray Utah is getting the world’s first commercial farm dedicated to growing strawberries with 40,609 square feet for operations.

There is a role for every kind of grower in indoor agriculture, not just the small ones. Now, it is just a matter of giving indoor farms, big and small, the right resources to get started.

“We’ve seen in other industries like solar, that — when the right financing mechanisms are in place — the industry grows rapidly. At Contain Inc, we’re aiming to do the same for indoor agriculture.”

In the view of Kerslake, “indoor agriculture is inevitable as it starts to be adopted by outdoor farmers, newcomers and mega corps alike.”

Indoor agriculture is large-scale, 100-acre farms. Indoor agriculture is also smaller farms. Indoor agriculture includes growing insects; it includes leafy greens. Indoor agriculture is all of this, and more. All of these sectors together, the big and the small make indoor growing the industry that it is today.

Agriculture Greenhouse Indoor Agriculture Hydroponics

WRITTEN BY Nicola Kerslake

• We’re Contain Inc. We use data to improve access to capital for indoor growers, those farming in warehouses, containers & greenhouses. https://www.contain.ag/