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IDTechEx: How to Succeed in Vertical Farming
Vertical farming is an emerging technique within agriculture that involves growing crops indoors under controlled environmental conditions
NEWS PROVIDED BY IDTechEx
May 26, 2020
BOSTON, May 26, 2020,/PRNewswire/ -- Vertical farming is an emerging technique within agriculture that involves growing crops indoors under controlled environmental conditions. By carefully tailoring the environment to the exact requirements of the crop, such as through using LED lighting to produce the exact light spectrum needed for optimal photosynthesis, it is possible to obtain yields hundreds of times higher than traditional agriculture.
Vertical farms can be set up almost anywhere, making it possible to grow crops in the middle of populous urban centers, meaning that it is possible for crops to reach consumers within minutes of harvest. This contrasts with traditional agriculture, where fresh produce can take weeks to reach consumers, losing the freshness, and increasing contamination risk along the way. The recent IDTechEx report, "Vertical Farming: 2020-2030" explores the technologies and markets around the fast-growing vertical farming industry.
Vertical farms use artificial lighting and carefully controlled climates to grow crops at far higher yields than conventional agriculture. Source: Intelligent Growth Solutions (PRNewsfoto/IDTechEx)
Vertical farming has been the subject of a lot of hype in recent years, with supporters claiming it could revolutionize food production. Industry advocates, such as Columbia University Professor Dickson Despommier, have presented visions of a future world where fresh food is grown inside skyscrapers to feed giant, high-tech metropolises (for further visions of the cities of the future, see the IDTechEx report, "Smart City Opportunities: Infrastructure, Systems, Materials 2019-2029"). Investors are also feeling the hype, with vertical farming start-ups raising over a billion dollars in investment in the last five years alone.
However, despite this optimism, the industry does face some major challenges and the sector has more than its fair share of bankruptcies. PodPonics, once the most well-funded vertical farming company in the world, and FarmedHere, which once operated what remains the largest vertical farm ever built, both went bankrupt. David Rosenberg, Chief Executive of New Jersey-based vertical farming outfit AeroFarms, recently said he wouldn't be surprised if 90% of the players in the industry went out of business within the next three years.
Broadly, many vertical farms struggle for the same reasons. As well as costing a lot of money to set up, vertical farms can be very expensive to run, largely because they require continuously running artificial lighting and climate controls. This is compounded by high labor costs and logistical difficulties that often get more difficult as the vertical farm gets larger. This all makes it very difficult to compete on price with produce grown on conventional farms, which typically have razor-thin profit margins.
Because of these challenges, vertical farmers generally only grow crops where the whole of the plant can be consumed, in order to maximize space efficiency and avoid wasting energy on growing inedible stems and leaves. Therefore, almost all vertical farmers are restricted to growing herbs and leafy greens. These are still a large market but fall somewhere short of the lofty claims made by some supporters of the industry.
It is certainly possible to run a successful vertical farming business, as fast-growing players such as Bowery Farming and InFarm will attest to, however, it requires a carefully planned out strategy and consideration of all the variables and trade-offs involved in vertical farming, in addition to a fair amount of investor capital.
The keys to success in vertical farming are outlined in the recent IDTechEx report, "Vertical Farming: 2020-2030". The report discusses several factors that can contribute to the success or failure of a vertical farm, including:
Whether or not to automate. Automation can significantly reduce labor costs while streamlining the logistical processes. However, investing in advanced automation equipment can lead to extremely high start-up costs.
Choice of crops. Should vertical farming try to branch out beyond leafy greens, or should it corner the market it has? What about higher-value crops inaccessible to conventional agriculture?
How large is too large? Larger centralized facilities could lead to economies of scale but could also face spiraling logistical difficulties. However, smaller localized facilities may face much higher start-up costs relative to the output capacity.
The importance of location: is a city center location really the best place to set up a vertical farm?
The need for experience in the food industry. Crops are living organisms and are not always predictable. Despite this, there is a relative lack of food and agriculture experience in the vertical farming sector.
For more information on this report, please visit www.IDTechEx.com/vertfarm or for the full portfolio of Food & AgTech research available from IDTechEx please visit www.IDTechEx.com/research/agtech.
IDTechEx guides your strategic business decisions through its Research, Consultancy and Event products, helping you profit from emerging technologies. For more information on IDTechEx Research and Consultancy, contact research@IDTechEx.com or visit www.IDTechEx.com.
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SOURCE IDTechEx
Direct Delivery
With its fresh delivery service and strategic retail partnerships, Great Lakes Growers is building a business for the modern consumer.
May 28, 2019
Chris Manning | Photos by Allison Krieg
Great Lakes Growers, based in Burton, Ohio, produces leafy greens and herbs hydroponically in glass greenhouses.
Great Lakes Growers wants to change the way people buy and think about salad. The hydroponic greens and herbs operation is capitalizing on changing consumer tastes and sending its products straight to customers’ doorsteps with a new initiative called Great Lakes Growers Express.
Located in Burton, Ohio — a village with a total population of less than 1,500 — the operation was founded in 2011. But through relationships with restaurants and regional grocery store chains such as Buehler’s, Giant Eagle and Heinen’s, the business can reach a customer base in Ohio and neighboring states that would make up several dozen Burtons. And if its home delivery service goes according to plan, the company’s reach will extend even further.
“There’s about 80 million people we can reach,” says John Bonner, owner and founder.
“There are home delivery services out there for food, but we’ve always heard the complaints about, well it’s the produce that is really bad,” says Tim Ward, who does marketing for Great Lakes Growers and helped develop the Great Lakes Growers Express concept. “The other food is fine; the produce doesn’t hold up because they’re really packaging it and shipping it in traditional methods, the way you might find in a traditional grocery store. They’re getting it from out West. Everything’s being shipped directly from the source here.”
Through Great Lakes Growers Express, which officially launched in March, consumers can order combinations of living lettuce, fresh-cut herbs and other leafy greens from the grower online, and have them shipped directly to their home via UPS. Currently, there are four different combinations to pick from and each is available for delivery weekly or every other week for $29.99 per delivery.
According to Bonner, the logic behind the delivery service is two-fold. First, it opens new markets in urban and rural communities that don’t have grocery stores nearby — like inner-city Cleveland or a small town in Pennsylvania.
Second, Bonner believes that by shipping fresh greens directly to the consumer, he can tap into a younger customer base that seeks out instant gratification and is already ordering other goods like pet food, razors and toothbrushes online with pre-determined shipping (and payment) dates. It’s also a customer base, Bonner says, that wants fresh produce and worries about the quality of food they are consuming.
“Even if you’re getting it from a local guy like me, it’s still three or four days old at the store, which there’s probably not much difference in freshness,” Bonner says. “So it had to be fresh, had to be good, and the cost had to be no more money than they’re going to pay when they go the grocery store.”
John Bonner, left, and Tim Ward
Bonner’s beginnings
Bonner grew up in Burton, where his entire family is connected to the horticulture industry. On his father’s side, the main family profession has been traditional field farming. On his mother’s side, his grandfather founded BFG Supply, a greenhouse supply company based in Burton. Additionally, his father founded Dillen Products (later renamed HC Companies), a manufacturer of injected molded pots whose clients included many members of the Van Wingerden family, several of whom own large-scale ornamental operations.
“That’s how I got into farming,” Bonner says.
Additionally, his sister owns Eagle Creek Nursery, a wholesale ornamental producer. Originally, though, horticulture was not the path Bonner pursued. After graduating high school, Bonner attended Capital University in Columbus and earned a bachelor’s degree in finance. From there, he took a job at Merrill Lynch. But according to Bonner, it wasn’t work that fit him.
Bonner worked at Eagle Creek Nursery for a time after leaving Merrill Lynch, gaining notoriety in the industry for implementing sustainable business practices. In 2011, he left the family business and founded Great Lakes Growers.
The business started out small. He tested out his concept with 300 square feet of poly greenhouses and a basic hydroponic system constructed from supplies at Home Depot — but expansion came quick. From there, he was able to get his greens into local restaurants and eventually local grocery chains.
Today, Great Lakes Growers has 80,000 square feet of production space and is currently in the middle of an expansion that will double its size. Down the line, Bonner sees a need to hire growers. (Currently, he’s hands-on with the plants seven days a week.) But he can’t envision a future where he doesn’t spend at least some time in the greenhouse working directly with the crops.
“I cannot see myself not coming in here at least one day a week and watering everything and taking care of everything,” he says. “I can call everybody up in an hour and find out, ‘Hey, where do we want to do this, do that?’ But it’s just got to have more structure as we get bigger. And that’s what we’re doing. We’re expanding as an organization; we’re broadening out. So it’s fun. It’s challenging.”
Great Lakes Growers is in the midst of an expansion but it's already mapping out its next building project.
Fresh deliveries
Bonner and Ward, another Burton native and someone Bonner has known for years, started working on the delivery service about a year ago. According to Bonner, Great Lakes Growers Express and has been rolled out slowly on purpose in order to solve any potential logistical issues. The idea appealed to Bonner as a way to diversify outside of traditional retail methods.
“We told our retail partners we were doing it and they said, ‘Spot on man.’ Because they’re seeing it, too,” he says. “We’re doing meal kits and things for them, but their product development, this whole convenience thing, is what I was seeing when I started. This whole feeling of instant gratification — well it’s getting on steroids now. And I think we see it in all these subscription services and things like that. It’s not going to stop.”
To start, the company sent out greens and herbs via UPS and FedEx to friends and family. When the packages arrived, those friends and family sent back pictures of the greens to see how they held up. Bonner says that they sent out packages in a variety of weather conditions from extreme heat to extreme cold to make sure the greens would remain fresher than what they could buy at the store.
“We were testing so many things and looking at the variables,” Ward says. “I think we got it down to where anything within basically 24 hours is doable. So in any place that UPS can ship within a day is perfect.”
A key to the service is that Great Lakes Growers offers living lettuce with the roots still attached — allowing the lettuce to last longer once its in the customer’s fridge. Each order is also checked by hand in Burton to ensure that the greens are fresh and the order is correct. According to Ward, word-of-mouth and rave reviews from customers on social media are the driving factor as the business continues to grow organically and expand into new areas.
“We want to make sure that we can check every single box and we’ve had zero complaints so far of anything that we’ve shipped out to consumers,” Ward says. “And frankly I expect that to continue.”
Offering fresher products than the local grocery store is the main selling point for Great Lakes Growers Express. Say a customer orders greens on a Sunday. On Tuesday of that week, the greens are harvested, packaged and shipped out. The next day, the greens arrive at the customer’s doorstep via UPS. That’s even faster than the same greens, harvested the same day, would arrive at the local grocery store.
“It’s more units than you might find on a trip on a Monday to a grocery store, but it’s also got a shelf life that’s two weeks plus,” Bonner says. “So that whole process of training people that say, ‘Hey wow, got five heads of lettuce or six heads of lettuce, whatever it is, I can’t eat all that.’ But then if you leave it in your fridge for a week, two weeks, and you look at it, you’re going to go, ‘Damn, that still looks better than anything I’ve put in there.’”
Great Lakes Growers Express launched in April 2019 as part of Bonner's effort to better engage with modern consumers.
A key part of Great Lakes Growers' labor force is workers from the neighboring Amish communities.
Growing into the future
Right next door to the greenhouses filled with greens and herbs in Burton, Great Lakes Growers is in the process of expanding. Walk through one door and instead of greens, you’ll find construction crews building glass greenhouses and setting up the space for a concrete floor to be poured. Each greenhouse will be outfitted with LED lighting, environmental control systems, boom irrigation and other technologies since Bonner believes embracing technology and its possible benefits is key to keeping the business moving forward.
“I’m a big believer that ultimately, we have to get the cost inside the greenhouse down in the space or an area where we’re competitive with the field-grown stuff,” he says.
The plan, Bonner says, is to have enough growing space that products shipped via Great Lakes Growers Express have their own production area. He adds that the additional space is already “sold out” — meaning he already knows what will be grown there. And another expansion in the near future isn’t out of the question either.
There are also plans to continue diversifying the business. In addition to the delivery service — which Bonner and Ward hope to expand to new areas in the coming months — Great Lakes Growers products are now sold at Giant Eagle under the grocery store’s Market District branding. And other retailers are selling the product with the Great Lakes Growers logo on the package.
Outside of that, Bonner says selling greens to the food service sector is the business’ largest growing market share.
The key for whatever comes next, however, is still freshness. Regardless of what is next for Great Lakes Growers, and for Bonner, he says that must remain the core principle of the business.
“I look at it as we need to have stuff there that tastes better, looks better, grows better,” he says. “We need to give our customers the best price, so they can compete with their competitors. But ultimately, we’ve got to give the consumer the best price and the best quality.”
To learn about Great Lakes Growers' Amish workforce, search 'Amish' at producegrower.com