WEBINAR: July 23, 2020 - 1 PM EDT - Stakeholder Needs Relevant To Indoor Propagation

Date: July 23, 2020
Time: 1 p.m. - 2 p.m. EDT
Presented by: Celina Gómez

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There are economic and knowledge-based challenges that must be addressed for indoor farms to be viable in the United States despite their potential benefits.

A mixed-methods approach was used to identify the needs of specialty crop growers and stakeholders interested in or currently using indoor environments to grow seedlings, cuttings, and tissue-cultured plants. An online survey evaluated specialty crop growers’ experience with indoor plant propagation and assessed their needs related to improving propagation processes.

A focus group with 19 participants was then conducted to further understand the needs for indoor plant propagation by stakeholders. Our findings suggest that industry stakeholders are largely motivated to adopt indoor propagation environments to reduce crop losses (“shrinkage”), increase productivity per unit of land area, ensure faster germination or rooting, improve plant quality, and profit from anticipated economic benefits.

Research and education priority areas identified by stakeholders included economic costs and benefits (including capital investment and energy costs), improved crop quality, production time, uniformity, reduced shrinkage, and strategies to improve light management indoors.

As suggested by the results of this project, a strategic plan encompassing stakeholder needs must be implemented to maximize the benefits and enable adoption of indoor plant propagation environments. A discussion about ongoing efforts to identify stakeholder perceptions with indoor plant propagation environments will be presented.

Special Thanks To Our Industry Partners

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If you have any questions or would like to know more about GLASE, please contact its executive director Erico Mattos at em796@cornell.edu

Vertical Farming vs. Greenhouse Farming: Which is More Efficient?

June 1, 2019

When starting a farming operation, the first choice you face is what type of farm to start. The options are many: indoor vs. outdoor; arable vs pastoral; intensive vs. extensive. For farmers going the indoor route, one of the biggest decisions is between vertical farms and greenhouses. Both vertical farms and greenhouses operate indoors, which means they enjoy benefits like climate control and year-round growing.

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While there are differences and similarities between the two, they are best compared in terms of efficiency. For a long time, it was thought that greenhouses were more efficient and profitable than vertical farms, as they do not require artificial lighting. However, a 2018 study out of Quebec (Eaves & Eaves, 2018) showed that vertical farms enjoy a number of benefits over greenhouses, especially if the farm is operating for commercial purposes.

To understand what those benefits are, we first need to understand the reasons for farming indoors.

Why grow indoors?

For most of human history, farming has been an outdoor activity. Plants need sunlight to live, and soil to get water and nutrients from, so it is no surprise that traditional farming is done outdoors.

But as agriculture developed, farmers gradually realized that there were benefits to indoor farming. For one, it keeps pests and diseases at bay, as well as allowing certain crops to be grown all year long. Furthermore, indoor farming in ‘hot’ greenhouses can allow plants to grow faster than they would outdoors. By the late Roman Empire, greenhouse-like methods were already being used for these and other reasons. In the 1800s, Greenhouses hit their stride, as European farmers started using them to grow tropical plants that otherwise would not grow naturally on their continent. 

The differences between vertical farms and greenhouses

While vertical farms and greenhouses both practice indoor farming, the similarities end there. Greenhouses rely on sunlight and have their plants arranged on one horizontal plane. This means that they require a large amount of space and are therefore best suited for rural or suburban areas. In comparison, vertical farms can operate in urban areas as they need far less space than greenhouses to operate. This is because vertical farms have plants stacked in layers and rely on artificial light.

Many people have argued that because vertical farms require artificial light, they are less efficient than greenhouses. While artificial lighting is a major cost at vertical farms, it is not necessarily a barrier to profitability. The 2018 study “Comparing the Profitability of a Greenhouse to a Vertical Farm in Quebec” showed that growing lettuce in a vertical farm can actually be more profitable than growing it in a greenhouse. They attributed this to two factors: increased yield per square meter, and centralized distribution.

Yield

The main advantage that vertical farms have over greenhouses is a greater yield per square meter. Although vertical farms have higher light and heat costs, they have the benefit of more produce grown per unit of soil. This means that even though vertical farms cost more to operate, they produce more crops, with the end result being higher revenue.

The 2018 study supports this through the results of a simulation, which showed that lettuce grown in a vertical farm has a slightly higher yield than that grown in a greenhouse.

Distribution

Another major advantage of vertical farms is centralized distribution. Because these farms can be run in almost any kind of building (ex. warehouses), they can be located in urban areas. This puts them right at the heart of major distribution hubs, in the middle of a big local customer base. Therefore, compared to a rural greenhouse, a vertical farm has less distance to travel to get to customers, and when it does have to ship over a distance, it has better transportation options.

As a result, vertical farm crops can be sold more quickly and at higher margins than greenhouse crops. According to the Quebec paper, this creates a perception of freshness that helps the vertical farm produce sell quicker than the greenhouse equivalent.

Gross profits

Due to centralized distribution, vertical farms may enjoy higher gross profits than greenhouses. The Quebec paper showed this to be the case specifically for lettuce grown in the Quebec area. Although the wholesale price of lettuce produced at greenhouses and vertical farms is usually the same, the vertical farm’s lettuce may enjoy a premium when sold in its local market due to the perception of freshness. Additionally, because the vertical farm is located in an urban area, it can ship more fresh produce to more customers, without high transportation costs.

A second reason for the higher gross profits at vertical farms is winter heating costs. It is widely assumed that vertical farms use more electricity than greenhouses. But that’s not necessarily the case. It really depends on the specific farm(s) in question. As the Quebec paper showed, in areas that get extremely cold in the winter, Greenhouses can be very expensive to heat. Depending on how rural their location is, they may need to be heated by a generator; and depending on their size, they may consume quite a bit of electricity. So while the vertical farm needs to be heated year-round, the greenhouse can actually be more expensive to heat in the crucial winter season.

Growth potential

One area where vertical farms really shine is the potential for growth. While sales from greenhouses are growing at 8% year-over-year, sales from vertical farms are growing at a full 30% annually. That means that vertical farms are growing more than three times as quickly as greenhouses. While part of this can be explained by the fact that vertical farms are newer than greenhouses, it also has to do with centralized distribution. Since vertical farms have access to urban distribution centers, they can get more product out, more quickly, than greenhouses can. The greater yield per square meter of vertical farm space also contributes to this fast growth.

Putting it all together

Vertical farming is the cutting edge of agriculture. Offering the ability to grow more crops, in a controlled environment, inside major distributions hubs (i.e. cities), it takes advantage of economies of scale in a way no other farming operation can. In the past, many critics have cited lighting costs as a stumbling block to profitability for vertical farms. But as the Quebec paper showed, vertical farming can actually be more profitable than a conventional greenhouse operation. Especially when situated in major urban centers, and taking full advantage of the distribution benefits that come with that, vertical farms can be highly profitable. And when you add the benefits of automated labor into the equation, the benefits can be greater still.

• We see vertical farming as the evolution of the greenhouse.

• Latest developments in LED (less consumption) and solar energy (higher efficiency) will reduce the biggest remaining cost factor (energy) during the next years.

• Automation will increase the benefits of vertical farming even further

  Source: Growcer

The Road Ahead For Vertical Farming

"In the next 10-15 years, it will rise as one of the dominant forms of agriculture." In a recent webinar presented by the Association for Vertical Farming and Heliospectra, the opportunities and challenges facing the vertical farming industry in 2020 and beyond were highlighted, resulting in quotes like the one introducing this article. Moderated by AVF Chairwoman, Christine Zimmerman-Loessl, the three guests, Nate Storey (Co-Founder & Chief Science Officer of Plenty), Joel Cuello (Professor of Biosystems Engineering, University of Arizona) and Ali Ahmadian (President & CEO, Heliospectra) shone their light on where the industry is headed.

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"On the cusp of growth"

According to Joel, the vertical farming industry has had a historic run in growth and proliferation globally in the last five or so years. "Going forward, especially in terms of the enormous COVID-19 disruptions in fresh produce chain, vertical farming will continue growing", he says. "It should be economically viable, but it shouldn't just be a growth story, but also of sustainability and resilience."

Nate adds that currently, the vertical farming industry is still in its infancy. "We're on the cusp of growth and expansion as an industry. By and large, the world is still skeptical because vertical farming isn't a dominant form of production yet, but in the next 10-15 years it will rise as one of the dominant forms of agriculture."

Tech catches up with vision

Having moved on from the stage of pioneers and visionaries (who were, in a sense, "too early", because they saw the potential for vertical farming, but the tech didn't match up to their visions), Nate says that "we're now at a point where the tech matches the need; technology has caught up with the vision", adding that it's not going to be a pain-free road. "Folks will be challenged by the economic fundamentality of the business. We need to either offer a differentiated product, or a product that is cost-competitive with the field, so they're accessible to people."

At Plenty, he says, the primary tech inputs are LED and semiconductors. "As costs go down, we reap the benefits - same with data storage, genetics, etc. So we have created our own tech cost curve around indoor ag, which drives costs down and quality up." As a result, the yield for the same amount of energy increased by 12x at Plenty, Nate explains.

There's still a world to win when it comes to the proper use of tech, however. Ali: "50% of vertical farms today are profitable, while the other 50% are struggling. The main reason why vertical farms are struggling is because farmers underestimate the true cost of labor: many farmers overlook the way in which growing techniques make workers more or less efficient."

A small test of Mother Nature: "Get your act together"

Of course, the elephant in the room wasn't ignored by the panel. COVID-19 has had an impact on all industries, and vertical farms are no exception. "In the US, the fresh produce supply chain has been dramatically upended by COVID", Joel says. "Lots of growers were suddenly left without a place to deliver their produce. They need to establish new contacts, which is hard to do, so lots of fresh produce goes to waste."

At the same time, in a lot of major cities in the US, there's been a huge increase in demand for produce from vertical farms. The same thing happened in Europe, although there the dependence on seasonal workers from outside the EU has proven problematic, Joel explains, with a shortage of workers, again leading to produce going to waste.

Nate points out that in many cases the food supply chain is global now. "We've been pushing yield increases in the field to the max, but it's a system under stress, operating at the max all the time - break a link and the whole system comes crashing down." With instabilities like climate change, Nate argues the industry has a lot of buttressing to do. "COVID was a small test of Mother Nature, basically saying 'get your act together'. As the COVID situation affected the Bay Area (where our flagship farm is), our sales have doubled - indoor produce is a supplement to produce from the field, and retailers are realizing the usefulness of indoor produce."

The crucial role of governments

With the COVID crisis, governments have been giving more attention to indoor/vertical farms now. According to Ali, this will open up huge opportunities for current and future vertical farmers.

Nate agrees. "Government recognition is super important - it's a capital intensive business." At Plenty, they're building agricultural infrastructure, comparable to electricity and water. Nate even goes so far as to say that in the future, food production will become one of those utilities. "Government has to play an important role in getting the industry off the ground, cutting red tape and supporting producers, like with loans and capital to help the industry get started. Government support will be a critical step for this industry."

Christine agrees that the role of governments is important, but they also need to be made aware of the opportunities of vertical farming, they need to be informed of what it is and what it isn't. "Governments always say: 'Human beings can't live on salad - so where do we go with this vertical farming industry? Will we produce things like corn and maize in a vertical farm? What is the blueprint of the future?" So informing and educating is also of the utmost importance.

Attracting investors

The same goes for attracting investors, another important pillar under the industry. According to Nate, "folks are starting to view vertical farming not as an if but a when question - what we've earned over the last decade or two is the recognition that this is a necessary thing. It's driven by incredible demographics changes, so it's an inevitability. We are proving that it can be an extremely profitable venture."

As a result, more people are starting to think about investing in this. "The money out there is going to get smarter and smarter about this industry", Nate adds. "Investors tended to be super-specialized in agriculture; now folks who don't come from that background are also approaching the space, having enough info to start making huge investments. So, access to capital will grow, but there is a gap between the capital which is more risk-tolerant and the capital with very little risk tolerance. We'll have to build relationships with risk-tolerant capital."

For more information:

Association for Vertical Farming

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Marschnerstrasse,
81245 Munich,
Germany
info@vertical-farming.net
vertical-farming.net

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Publication date: Thu 4 Jun 2020
Author: Jan Jacob Mekes
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