John Breedveld, GrowGroup IFS:

"Middle East Is An Ideal Market For Vertical Farming"

"We may soon bring along a pot of orange paint", jokes John Breedveld of project developer GrowGroup IFS about the vertical farm that will soon be erected in the desert near Abu Dhabi, the capital of the Emirates. It is expected that from May 2019, vegetables and herbs for the local market will grow in vertically stacked layers. And with a lot of Dutch input: "It is a truly Dutch quality product with Dutch technology, Dutch parties that take care of the construction and Dutch management that can monitor cultivation remotely 24-7."

But why exactly in the Middle East? John: "Vertical farming is now a tried and tested concept, but the costs are still relatively high. Also the costs for the products that you grow are automatically higher. In the Middle East, a simple head of lettuce is already very expensive, so that makes the price that has to be paid for products from vertical farming more easily acceptable. We emphatically position our products as 'quality of Holland, locally grown' and there is much demand for this in the Middle East."

Extreme climates

The project developers for vertical farming mainly look for countries with extreme climates. John: "In the Middle East it is too hot to cultivate for eight months of the year and so the prices for products are quite high. This is interesting information for investors, because this results in the costs of a factory being earned back quickly."

At the moment, there are 16 enquiries at GrowGroup IFS from all over the world. Another region with also a lot of interest in vertical farming is China. John: "In that country they actually have similar problems to the Arabian peninsula and in the desert. During the winter months with Siberian conditions, fresh vegetables have to travel three thousand kilometers over land, which will increase the costs for fresh vegetables in winter substantially."

Factory

Vertical farming has a lot in common with greenhouse horticulture, yet John speaks of a 'factory'. "Cultivation is completely without daylight. And the complete post-harvesting process of cutting, washing and packaging can be started on location immediately after the harvest. This makes the products 'ready to eat'." Another difference is the role of investors. They are much more present than in greenhouse horticulture. "Vertical farming attracts parties other than just traditional growers. We are constantly looking for new investors, both equity (venture capital in exchange for shares) and debt (secured loan)."

Niche market

Large-scale application of vertical farming in the Netherlands is not yet going to happen according to John. "Because of the high costs in the Netherlands, vertical farming is now only profitable for niche products at the top of the market. Before vertical farming can really be used commercially on a large scale in the Netherlands, something needs to be done with the costs first. Those costs have to come down and I also expect price corrosion to occur. It is only when products from vertical farming are comparable in price to regular products that the consumer will also buy these products. Because the consumer will often ignore the more expensive products on the shelves."

For more information:
GrowGroup IFS B.V.
www.growgroupifs.com
info@growgroupifs.com

John Breedveld
john.breedveld@growgroupifs.com
+31 (0)85 -7500 265 

Publication date: 7/20/2018