Investment Projects On Construction And Modernisation of Greenhouse Complexes Will Be Presented At the 6th Annual International Forum Greenhouse Complexes Russia & CIS 2021

Date: 1-3 December 2021

Place: Moscow, Baltschug Kempinski

Organized by: Vostock Capital

Tel.: +44 207 394 3090  

E-mail: Events@vostockcapital.com

Website: https://www.greenhousesforum.com/en/

6th Annual International Forum Greenhouse Complexes Russia & CIS 2021 is an established professional international platform for attracting investment in the Greenhouse Industry of Russia, discussion of industry development strategies, exchanging experience between key market players, and signing new win-win contracts.

The Forum is supported by the Ministry of Agriculture of the Russian Federation.

 Silver sponsors: Svetogor, Gavita. Bronze sponsor: Hortilux.

Industry partner: the Association “Greenhouses of Russia”.

Onsite Visit Partners: Agrokombinat Moskovsky, Podosinki greenhouse complex.

You have the opportunity to become a part of a unique business conference.

Please Note! Vostock Capital company, an organizer of the International Forum in Moscow, assists foreigners interested in the industry development with entering Russia for event participation on the basis of a “green list”. Foreign delegates will be included in this list if they register for the event and submit their documents before August 10.

The event annually brings together over 500 delegates from the largest federal and regional agro holdings, heads of retail chains and service companies, presidents of national unions and associations. Just to name a few: ECO-Culture,  Stavropol Flavour, Greenhouse, Ovoschevod, Grow Group Azerbaijan, Yagodnaya Dolina, Tander, X5 Retail Group, Agricultural Complex Gorkovskiy, Agrocombine Moskovskiy, MC AgroPark Plody s Gryadki, Yug-Agro, ECO-farm Mazilovo, Trading House Vyborgec, Green Farmer, Sun Valley, Growth Technology, Yagodnaya Dolina, Udmurt Flowers, FITO, MWM RUS, Horti XS BV, Pylot, AgroBioTechnology and many others.

Among the speakers and honorary guests 2020: Dzhambulat Khatuov, First Deputy Minister, the Ministry of Agriculture of Russian Federation; Dmitry Aveltsov, CEO, Ministry of Agriculture of the RF Center of Agroanalytics Federal state budgetary organization; Inna Rykova, Head of the Sectorial Economy Centre, The Federal State Budgetary Institution Financial Research Institute of the Ministry of Finance of the Russian Federation; Dmirty Lashin, Chairman of the Board of Directors, Lipetskagro; Alexey Shemetov, Vice-President, Production Operation, Agricultural Holding ECO-Culture; Dmitry Lisnevskiy, Minister, Ministry of Investment Policy of Sakhalin Region; Sharip Sharipov, First Deputy Minister, Ministry of Agriculture and Food of the Republic of Dagestan; Alexander Belkovets, General Director, Trading House Vyborgec, Agrofirma Vyborgec; Andrey Chigin, General Director, Stavropol Flavour and many others.

Forum Highlights 2021:

·      500+ executives of flagship greenhouse complexes and agro holdings from Russia and the CIS – Belarus, Armenia, Kazakhstan, Uzbekistan, Azerbaijan, as well as investors, government representatives, chief agronomists, managers of retail chains and service companies

·      NEW! 2 TECHNICAL VISITS to state-of-the-art greenhouse complexes – Agrokombinat Moskovsky (vegetable farming) and Podosinki (flower cultivation)

·      Leaders' debates: the Ministry of Agriculture of the Russian Federation, agro holdings, investors, initiators. Post-pandemic status of the greenhouse industry

·      Greenhouse investment projects on modernization and construction with the implementation period of 2021-2025 from all Russian regions and the CIS countries

·      NEW! HYDROPONICS AND VERTICAL FARMING. What is the difference from traditional industrial cultivation? Technology development prospects

·      FOCUS SESSION: STRATEGIES TO INCREASE SALES. How to establish interaction between suppliers and retailers for the benefit of all?

·      HOW TO OPTIMISE PRODUCTION WITH THE HELP OF INNOVATIVE GREENHOUSE TECHNOLOGIES. How do innovations boost the development of the greenhouse industry?

·      IMPORTANT! POWER SUPPLY IN THE GREENHOUSE INDUSTRY. Cost optimization methods

·      INCREASE IN YIELD AND RESISTANCE – MODERN APPROACHES TO CULTIVATION. Parallel round tables for agronomists in the following areas: fruit and vegetable and lettuce greenhouses, mushroom complexes, berry greenhouses

·      Presentation of modern equipment and technologies for greenhouse complexes from top companies from the Netherlands, Israel, Germany, Italy, Spain, and other countries

·      Fast and efficient! Roadshow of innovative technologies and equipment by the global leaders

·      EVENING COCKTAIL

Register Now 

           

AeroFarms: An Unproven Business With Enormous Risk

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June 13, 2021

Written by Jamie Louko

Spring Valley Acquisition Corp. (SV) APPHSVSVU

Summary

• AeroFarms is a SPAC that is being brought to the market by Spring Valley Acquisition Corp. The deal was announced on March 26.

• AeroFarms runs and operates vertical greenhouse farms. Unlike most greenhouses, AeroFarms' greenhouses take up little horizontal space, which allows them to pay less in expenses.

• AeroFarms's mission is to grow the best plants possible for the betterment of humanity.

• Currently, AeroFarms is not a buy, but it should be on a watchlist for investors to watch closely to see how well they can execute.

sompong_tom/iStock via Getty Images

Investment Thesis

AeroFarms (SV will become NASDAQ: ARFM) is a business that has high hopes, but with little edge from their other tech-savvy competitors, I struggle to see how they will be able to achieve the immense growth they are claiming. With poor financials and only $2.5 million in revenue, this business has not yet shown that it can achieve these expectations. Until AeroFarms can consistently show investors they are able to meet the guidance they set for themselves, it should be avoided by long-term investors.

SPAC Details

AeroFarms is being brought to the market by Spring Valley Acquisition Corp. This was announced on March 26. AeroFarms is expected to receive $317 million in cash from the deal, and the deal is expected to close in the second quarter of 2021, which would assume that AeroFarms would branch off into their Nasdaq listing, ARFM, within the month. However, SPACs usually take 4-6 months from announcement to go public, which would pin AeroFarms around July-September. September is on the longer side of this estimate, and considering estimates from Spring Valley and AeroFarms, a September target is likely inaccurate. I would expect that AeroFarms will go public sometime between late June and late July.

This process would estimate AeroFarms' equity value to be roughly $1.2 billion, which is slightly lower than another competitor that recently SPAC'ed in 2021, AppHarvest (NASDAQ: APPH). After the SPAC process, AeroFarms expects to nominate two of Spring Valley's existing directors, Debora Frodl and Patrick Wood, III, to its Board of Directors. Now that we have the basic details of the SPAC out of the way, let us dive into what AeroFarms does and why they are coming to the public markets.

AeroFarms' Mission

AeroFarms is a vertical greenhouse that is trying to change how Americans create sustainable food. This Certified B-Corp uses vertical farming, AI, and biological sciences to improve the way fresh produce is grown and distributed locally and globally. Their product, Dream Greens, "wins on quality, flavor, taste, and texture," and they sell in many major distributors like Whole Foods, ShopRite, Amazon Fresh, and FreshDirect.

AeroFarms was founded in 2004, and it became a B Corp in 2017. AeroFarms is trying to solve issues brought on by the megatrends of population growth, water scarcity, arable land loss, and climate change.

Source: Analyst Day Presentation

Currently, AeroFarms focuses on leafy greens, primarily bok choy, kale, micro broccoli, and arugula. AeroFarms' reason for existing today is to meet the need to solve issues brought on by climate change and other environmental issues. Due to strong droughts and water scarcity, water will be needed more and more if our world continues to use water at the pace we do today. AeroFarms uses 95% less water than traditional farms, which allows them to be less reliant on these problems, as well as open up water that would have been used to go towards other needs. This lack of water has also caused droughts, which can, in turn, lead to food shortages. Because AeroFarms' greenhouses are not as reliant on water, as well as the fact that they are indoors, these droughts are not as impactful to AeroFarms' business.

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Source: Analyst Day Presentation

Simply put, AeroFarms sees great problems with our future if we continue to farm the way we do today, and they are trying to preemptively solve these problems.

Both co-founders are still involved, one as the CEO and the other as the CMO. Considering that AeroFarms was founded in 2004, it is clear that the founders are very dedicated to the vision and the mission of AeroFarms, and they will likely stay with the business for the long haul. If they founded this business simply to make a quick buck, the founders likely would have moved on already instead of dedicating 17 years of their lives to this business. This is a very good sign in my book. However, management is still extremely important for a business like this. If management were to cash out within a year of coming public, that would show me that the founders were not as dedicated as I thought, which would lower my conviction in this business to a more bearish conviction.

Being a SPAC, they were allowed to project revenues and estimates out to 2026. Therefore, it should come as no surprise that this company sees massive growth potential. They expect that vertical farming alone will be a $12.7 billion business by 2026, growing at over 22% 5-year CAGR. They also expect global fresh produce to become a $1.8 trillion industry by 2023, and leafy greens alone will contribute $108 billion to that large TAM. Clearly, this sort of farming is going to grow due to increases in demand (as the population increases). I have some skepticism as to whether it will be this large come 2023, but there is no doubt that the industry will be growing.

Quite frankly, it is near-impossible to correctly estimate how big this market will get. If it gets as big as AeroFarms claims it will, then AeroFarms will definitely have room to fight for market share and they will have vast opportunities to grow and become an amazing business. However, a 22% 5-Year CAGR in vertical farming is definitely aggressive. I worry that AeroFarms may be estimating on the extreme side, and that vertical farming will not grow that fast. If this is the case, then AeroFarms' potential will noticeably decrease, and it would make it a much less interesting investment.

Also, I am a firm believer that the world is going to need more greenhouses as it becomes harder to grow outdoors due to climate change and other sub-optimal weather conditions. There have been many recent droughts and other disasters that make it hard to count on reliable crops from outdoor farms, and greenhouses can minimize the impact that Mother Nature is having on our crop yields.

The sustainability of greenhouses is also a major benefit to society. The water usage is drastically lowered in greenhouses like AeroFarms, and so are emissions. These negative impacts are greatly reduced compared to traditional farms, so AeroFarms is not only helping create a sustainable supply of food, but they are also doing in a very environmentally friendly manner.

Their mission and drive to make our world better is the reason that I am writing about this stock today. I believe that AeroFarms and companies like it are trying to solve a major future problem for our world, and I am happy to give them attention for it. As I have mentioned a few times already, they have tons of competition. This competition is fierce, and it definitely has the potential to make AeroFarms fight for this market share.

Competition Concerns

As I have mentioned many times already, AeroFarms has some steep competition in the greenhouse space they are playing in. Although no major competitors are actively engaging in vertical farming (excluding one), they still have plenty of competition in the sustainable farming space.

Probably the company that first comes to mind is AppHarvest. I have written an article that dives deep into AppHarvest, but I will go over it quickly for anyone who is not extremely interested in AppHarvest. AppHarvest is a business that is based out of Kentucky and Appalachia. Unlike AeroFarms, which primarily focuses on growing leafy greens, AppHarvest's current focus is tomatoes. AppHarvest has plans in place to expand into leafy greens in a major way in the next 5 years, however. With their 60-acre farm (and 9 more facilities on the way), AppHarvest is planning to ramp up production in a major way.

AeroFarms is not expected to grow as fast as AppHarvest. Currently, the only things they are building is an R&D farm facility in Abu Dhabi, and another farm in Danville. The Abu Dhabi facility plans on breaking ground this month. They do, however, have a total of 3 farms, their biggest and only cash-generating farm bring their vertical farm headquarters in Newark, New Jersey. On April 29, 2021, AeroFarms announced that they are breaking ground and starting construction of their second farm, located in Danville, Virginia. Their third farm is the new facility in Abu Dhabi.

Clearly, both of these businesses are growing at a very fast rate. and there is no doubt that it will continue. Although they are not directly competing currently, they will likely be competing in the leafy greens area quite soon. In terms of technology, they are using similar kinds of tech, although I believe that AppHarvest has a very slight edge.

Source: Investor Presentation

The main thing that gives AeroFarms an edge over AppHarvest is how they commercialize their product. One of the weaknesses I have with AppHarvest is how they sell their product. Simply, AppHarvest partners with a distributor, Mastronardi, who then is the sole buyer of AppHarvest's product and they distribute it out to larger companies. This results in a customer concentration for them. AeroFarms does not do this, but rather they partner directly with large businesses like Whole Foods. I like AeroFarms' distribution model much more than AppHarvest's.

I would be remiss if I did not briefly mention some of the private competitors. First, Bowery Farms, another vertical farming company that is private, is a major threat to AeroFarms. First, they are roughly double the size of AeroFarms. Second, they are operating in the same rough geographical region that AeroFarms is selling in. Bowery operates in New York, with plans to expand into Pennsylvania.

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Source: Bowery Website

Bowery has 2 operating farms compared to just one for AeroFarms, and they are building one more today. These farms are in New Jersey and Maryland, which is quite intrusive on AeroFarms' market. Bowery also is planning on expanding into berries, tomatoes, and carrots, while they currently grow leafy greens. Due to greater size, they have been able to reach better economies of scale than AeroFarms, so their prices are actually lower currently. Bowery also sells in 850 grocery stores. Like AppHarvest and AeroFarms, Bowery is using a similar structure of technology that enables sustainability and limits pesticides in their farming.

Another strong (and private) competitor is Gotham Greens. They operate a very unique business model: instead of building large facilities, Gotham builds its greenhouses on the rooftops of its customers. This enables extreme freshness for its customer and nearby customers.

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Source: Gotham Greens Website

Gotham Greens obviously has more greenhouses built and producing crops than any of the businesses mentioned. They have 8 greenhouses, encapsulating the Northeast, as well as the West of the U.S. Currently, they are operating and selling in 40 U.S. states. Freshness is clearly Gotham's edge over AeroFarms, however, their business model can be both a blessing and a curse. Gotham is limited to small greenhouses, whereas large, 60-acre greenhouses like AppHarvest's are much more cost-effective. AeroFarms sits in the middle of these sizes for its facilities.

All of these businesses have their own edge, and it is still unknown which will make the greatest difference. However, farming is by no means a winner-take-all market. There will be many winners in this space, and potentially even all of these competitors could be successful along with AeroFarms. To quickly summarize, each company has benefits that separate them from the pack. AppHarvest has its central location (Kentucky), Bowery has strong economies of scale due to its size, and Gotham has its ability to deliver the freshest products. Now, I am going to take a look at what makes AeroFarms special compared to some of its competitors.

The Edge

Compared to traditional farming, AeroFarms' technology and sustainability is what separates them. Due to the nature of greenhouses, AeroFarms can have tight control on conditions that the plants experience, so AeroFarms can create the most optimal environment for the plants to grow faster, and be of the highest quality. They also excel at full automation of their farm. Everything from seeding to packaging their produce is fully automated.

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Source: Investor Presentation

AeroFarms uses data science and a fully-controlled technology platform that enables it to better understand plants and optimize farms while improving quality and reducing costs. Simply, they are analyzing plant biology to optimize the growth of these plants.

Teams of plant scientists develop custom algorithms to precisely define the conditions each plant needs to thrive. This understanding allows AeroFarms to optimize performance, cultivate new varieties, improve quality, lower costs and optimize efficiency.

Source: Investor Presentation

This understanding of the biology of plants is extremely important for AeroFarms. One of the primary benefits they have over traditional farming is that they can create the best-looking and tasting produce. Understanding exactly how plants thrive and do this is crucial. If they were to expand into different products, such as berries or tomatoes, they would have to do this again. This knowledge may take time to learn, and if they are testing environments to see which one produces the best crops, it could take a while. However, once learned, this can be easily replicated in dozens, if not hundreds, of other facilities. Once AeroFarms learns that leafy greens thrive under (and these numbers/metrics are not accurate but for the example) 75-degree heat with high sun exposure and light water levels, they can replicate those conditions in whatever facility they grow leafy greens in. This intellect is somewhat time-consuming to learn, but once it is learned, it gives the company a massive advantage.

Through the integration of these disciplines, AeroFarms achieves up to 390 times greater productivity per square foot annually versus traditional field farming while using up to 95% less water and zero pesticides. Therefore, due to the productivity, clearly the knowledge that they learned from the data and plant biology is paying off.

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Source: Investor Presentation

Another thing that most traditional famers do not have is data. AeroFarms can create lasting network effects and benefit greatly from scale if they can efficiently use and act on data they receive from their facilities.

Lastly, AeroFarms has been creating a strong library of IP since its founding. With over 250 invention disclosures and a vast library of data collected over 15 years of operations, AeroFarms is continually improving its systems to understand plants at unprecedented levels and solve agriculture-related supply chain issues. Currently, AeroFarms has 15 granted patents, with 38 more pending approval. They also have 46 designated trade secrets. The vast amount of trade secrets show that they want to keep its operations relatively unknown to its competitors, so they do not elaborate much on what those secrets entail. However, their strong number of patents show that they have actual technology that is working effectively and it is independent to them. No other greenhouse or direct competitor could do the same thing AeroFarms is doing in some of its capacities.

AeroFarms plans on bringing these trade secrets to future facilities, with plans to start construction on three farms, none of which have been announced or actually planned yet, by the start of 2023. AeroFarms also sees strawberries as a major growth avenue. Strawberries are highly cyclical due to growing conditions and they carry lots of pesticides, both of which AeroFarms is trying to solve in the farming universe.

AeroFarms has a clear edge above traditional farming, just as AppHarvest, Gotham, and Bowery do. Where I struggle to find an edge is between the technology of these businesses. After looking at the technology for all of these businesses, the results seem to be the same: more efficient production and productivity, better tasting produce, less use of water, greater sustainability. Also, all of these businesses have some sorts of patents that make their business stand out. Personally, I believe that it is not the technology that gives AeroFarms an edge over its competition, nor do I think it is vertical farming (itself).

Vertical farming alone does not provide any greater benefits over non-vertical farms in terms of quality of produce. However, I believe the optionality that comes from vertical farming when it comes to growth is the edge for AeroFarms. Unlike AppHarvest, where they need 60 acres of land to have a 60-acre farm, AeroFarms only needs a small portion of that land. With even a 48-towered farm, AeroFarms could theoretically create the same sized farm in a fraction of the horizontal size of one of AppHarvest's farms. This is beneficial in one primary way: AeroFarms would be able to go to places AppHarvest would not. For example: AeroFarms' HQ is in Newark, New Jersey. AppHarvest could never find a large enough space in that city to build a farm, but AeroFarms can.

Simply, AeroFarms has the agility in its farms to travel to cities and more urbanized geographies that competitors like AppHarvest cannot. This can give them an edge, for if both AppHarvest and AeroFarms are selling in the same city, but AeroFarms actually has a greenhouse in the city, grocers would likely sell more AeroFarms' products because of locality and freshness.

Financials and Valuation

Financially, AeroFarms is quite lacking. AeroFarms has over $48 million in cash and no long-term debt, which is wonderful, but that is just about where the good news stops. Their net revenues were $2.5 million for the FY 2020, yet their cost of goods sold was almost $8 million, resulting in a gross profit loss of $5.4 million. As they continue to scale, at least for a while, this number can get worse too. AeroFarms is spending a whopping $17 million in SG&A compared to only $1 million in R&D. This is exactly the opposite of what I want to see in a business. I want their R&D expenses to be high, because it shows me that they are heavily investing in the future of their business.

All of this combines for a grand net income loss of over $25 million. However, as most SPACs do, they are projecting monstrous growth.

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Source: Investor Presentation

They are expecting their current one farm to grow to 16 farms and their revenue to grow to $553 million (from the $4 million today) by 2026. They also expect their gross margins to be roughly 50% by 2026, which is high for any farming business. EBITDA margin is also expected to reach a whopping 35%. AeroFarms is clearly spinning an optimistic story with these growth projections, and I am not sure how confident I am that they can get that done. Transitioning from negative to positive gross margin is going to be hard enough for them, and I think it will take at least until 2023 for them to do that. Therefore, the fact that they believe that they will have margins of 50% just 3 years after turning their gross profit positive is a bit of a stretch to me. I have no doubt that this company will grow, but I do doubt that they will be able to grow at such a high rate.

Also, they project that they will be able to get 3 new farms up and running and producing every single year until 2026. That is extremely optimistic growth. AeroFarms only broke ground on 2 farms recently, and they are expecting to build both of those up to production capacity in 1.5 years? That is quite aggressive. Not to mention that they would still need to find another area to build a farm, build it, and start producing crops in that same time frame. That is an extremely tall order, just to meet 2022 estimates. Then they have to do that again, and again, until 2026, just to meet guidance. Not exceed, just meet.

Clearly, I am quite skeptical about how rapidly they will be able to grow. Personally, I do not think they will be able to do this, and for me, a company that does not meet their own expectations is not worth an investment. For me, missing expectations gives me a lack of confidence in the ability of management, and therefore I lose trust. AeroFarms has not missed any expectations yet, but they have a tall order ahead of them, and any small slip in any form would likely cause consistent misses on growth estimates.

Considering that this business has not become its own public company yet, the valuation metrics are slim. Also considering that this business is gross profit negative, operating income negative, EBITDA negative, and net income negative, the only valuation metric available is Price-to-Sales Ratios.

Valued at $1.2 billion, AeroFarms has $2.5 million in sales (let's say $3 million to be super generous). At these metrics, AeroFarms' P/S Ratio would be 400. This is absolutely ludicrous. Even at AppHarvest's insanely optimistic revenue estimates, their forward 2023 P/S Ratio is over 22.

It does not help that I am skeptical on AeroFarms' own estimates for the success of their business, but 22x forward sales is quite an expensive multiple. At those high forward multiples, I would stay far away and make sure they execute and (hopefully) beat their expectations. If they can meet or beat their revenue guidance, maybe these valuations can be justified, but until they prove my skepticism wrong, this company is extremely highly valued for no good reason at all.

Why I'm Not Buying Today

Today, this business should not be touched with a 10-foot pole. The reasoning for this ultimately comes down to two concepts: Their technology is not drastically different than its direct competitors, and their financial situation is simply miserable. The first one is going to be hard to fix, which is why I am likely to remain bearish on the business, but the second one could change within the next 2-3 years. In which case, I would likely take another look at this business and rethink my thesis. For the meantime, while they are still gross profit negative, investors should definitely stay away.

Lastly, I must mention again that the valuation and AeroFarms' guidance are insane. AeroFarms' guidance assumes some of the largest growth we have seen in any modern day company, within only 5 years. These growth estimates might be accurate if they were placed out 7-10 years in the future, but 5 years for this business to go from its first sales to fully-scaled economics is highly unlikely. Even if we assume these drastic growth rates, their valuation is still quite high.

Investors should stay away from AeroFarms for now, but watch it closely for the next 2-3 years. As this business operates, we can watch to see how they prove themselves out. If they can consistently meet their own guidance and expectations, then AeroFarms' might be investment material. Until, however, they have some time to prove themselves out, AeroFarms is merely a company with little edge that is hopeful to grow at astronomical rates. Today, this business is not worth the high risk of investment.

This article was written by

Jamie Louko

Long Only, Growth, Long-Term Horizon, Tech

Contributor Since 2021

I am a college student who has found a deep thirst for learning and investing. Being very young, I have leaned toward very long-term investments and growth stocks, primarily in tech. I do, however, love consumer goods companies as well. Currently, I am studying International Business and Economics.

Disclosure: I am/we are long APPH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

AgriTech - A Hotspot For Investments

AgriTech - The Sought After Technology Breakthrough 

In recent times, AgriTech or AgTech solutions are gaining their popularity factor because individuals and entities alike, are becoming increasingly aware of the efficiency technology adds to their daily processes, which otherwise would have been tasking to follow through with. The ‘revolutionary’ factor has been highlighted in the AgTech space and hence, it has caught the eyes of investors and big corporations.

AgTech represents that specific niche category of technology buffs that intermingle the age-old occupation of agriculture with the new age specs and wonders of technology.

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The specifics of Agronomic Processes:

 The agronomic processes encompass diverse solutions in every step, ranging from the sowing of seeds to the harvesting of crops. The processes comprise of integrated resolutions to enhance efficiency within agricultural organizations, along with benefiting smallholder and marginal farmers. 

AgriTech, breaking barriers and records:

The upward curve of investments and profitability within the industry does not seem like it would dip anytime soon, with a continuous maturity, breaking barriers, and records. Since 2013, funding within the AgTech sector has increased by roughly a whopping 370%. According to an AgFunder report, specifically, startup investments bucked global venture capital markets across all sectors to $4.7 billion in 2019. The 695 deals were carried out across 940 unique investors.

COVID-19 comes into play:

Similar growth cannot be expected for the remainder of 2020, due to Coronavirus governing industries across all business streams. However, there is less chance of the investments cutting to a freefall wherein they would dip way lower than initially expected. New investment projects may be put on hold, however, ongoing funding is expected to be perennial.

Localizing our viewpoint, we notice that most of these investments are still being carried out within the United States. However, investments in India continue to rise at a rapid rate, representative of a two-way flow (up-stream as well as down-stream) of funding, again highlighting the maturity of the sector.

The reasoning:

WHY? Every action has an equal and opposite reaction. Sir Isaac Newton was well aware of the specifics of investment and the network within which it functions. Our world is at a point today, where overpopulation is a severe problem in various countries, along with the overall population set to increase by 30% over the next 35 years, according to Global-Engage.com. According to a report conducted by FAO, agricultural production will have to increase by 60-70% to feed the world population by 2050. To work towards an increase in the production of food, along with keeping a tap on the factor of ‘sustainability’, it is essential and integral to adopt smart farming and smart agricultural practices, allowing processes and outcomes to become more efficient in the long run.

The Need for Emerging Trends:

The importance of utilizing ‘big data’ and ‘predictive analytics’ to counteract the issues faced by farmers daily is now more than ever. They will allow farmers to achieve and maybe even surpass their targets for the seasons, resulting in an influx of productivity. In a survey conducted with farmers, 60% mentioned that precision farming is an influential trend to look towards for a structural and foundational change in the way daily practices take place. With the risk of climate change looming overhead at all times, it is crucial to understand the essential need to channel funds towards projects that solve difficult and foreseen problems.

The Agricultural 4.0 wave:

Today, 25-30% of all food produced is wasted, which incurs a social, economic, and environmental cost of $2.5 trillion annually. An outdated supply chain with no digital integrations or climate-smart advisory results in around 20% of the crops produced in developed countries being left in the field itself. To spark a change and make a difference, socially conscious investors who look to profitability as well, view the AgTech sector as a gold mine, essentially killing two birds with one stone.

AgriTech today is an area that is ripe for innovation with limits imposed solely due to constraints in terms of available capital. When this constraint is counteracted, creativity applied to AI and food production will be ten-fold.

Sanjay Borkar

Founder, CEO of FarmERP

VIDEO: Automated Vertical Indoor Farming Set To Sprout

Vertical Farms Could Make Use of

Abandoned Professional Spaces As The Pandemic Grinds On

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By Greg Nichols for Robotics | August 20, 2020

To View the Video, Please Click Here

A Finish startup has been climbing the walls during the pandemic. At least the crops it helps grow in vertical gardens have been, including greens, berries, and vegetables in areas like the Middle East.

Vertical farming, which utilizes vertically-stacked layers of crops grown in climate-controlled facilities, utilizes significantly less water and soil than traditional agriculture. Increasingly we're seeing examples of the concept scaling to industrial-levels, which is good news with populations booming, arable land in ever-shorter supply, and waning interest in agriculture among city-bound youth.

iFarm has figured out a smart value proposition in the still-nascent market as a developer of vertical farm management technology, essentially an operating system that utilizes tremendous volumes of sensor data to fine tune automated crop growing. The company believes it's entering a market primed for steep growth.

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"Investors can participate in the worldwide network of vertical farms and receive a rate of return well above bank deposit rates.", says Alex Lyskovsky, co-founder and President of iFarm. "We already have a group of financial partners involved in the development of our farms, and now there is a direct opportunity for this type of investment in Finland, UK, Switzerland, Netherlands, Russia and UAE."

One of the interesting advantages of vertical farming, particularly in a pandemic when so many professional spaces stand empty, is that it's possible to utilize the urban environment to facilitate crop growing. By growing crops closer to city dwellers, the company can offer logistics efficiencies and unparalleled freshness. 

This at a time when traditional farming is less and less viable. Global agricultural productivity is suddenly slowing for the first time in decades. No one is quite sure why, but it's likely a systemic problem related to the rise of monocultures and the overuse of fertilizers, which add harmful salts to soils. Farmers are also aging globally as younger generations migrate to cities. That's largely because a productivity boom over the last century has kept food prices low, which makes farming unattractive economically. It's a double whammy now that that productivity can no longer be taken for granted without major rethinks to the food supply chain.

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Vertical farming and other smart agriculture innovations may offer realistic alternatives, and they've captured imaginations due to novel use of space and cutting edge technologies. iFarm's Growtune tech platform allows growers to leverage technologies like computer vision, machine learning, and huge volumes of data. The system can enable farming operations to spread vertical farms across distributed networks while still maintaining centralized control. And if there's any doubt that farming has changed, the level of control is staggering.

The Growtune platform can determine the plant's weight, as well as growth deviations or pathologies, and build a system that improves crop quality and characteristics on its own. According to iFarm, the optimization will reduce labor costs for crops like strawberries, cherry tomatoes, sweet peppers, radish, and others. 

"The 2020 pandemic exposed the problems of the global food system – food supplies, sowing, and harvesting were disrupted across the globe", says Mikhail Taver, Managing Partner at Gagarin Capital. "iFarm is taking a novel approach to agriculture, offering an automated solution to grow crops close to the consumer and ensure food security. We believe that the future of the food market lies in modern technologies and are excited to support the project on its way."

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What Are The Pros And Cons of Hydroponics?

AUGUST 28, 2020

Hydroponics is a type of aquaculture that uses nutrients and water to grow plants without soil. It is an increasingly popular growing method in urban areas and regions with extreme climates. There are many benefits to hydroponics as an alternative form of agriculture, including fewer chemicals, higher yields and greater water efficiency. 

However, hydroponics is not a perfect solution. The initial setup is expensive, and the whole growing system is heavily dependent on access to electricity and a clean water source. Here are just a few pros and cons of hydroponics.

Pros

The benefits of hydroponics are myriad and include:

1. More Water Efficient

Growing plants can require a lot of water, and conventional agriculture is historically wasteful of this resource. For example, a single walnut requires almost 5 gallons of water, and an orange uses nearly 14 gallons. Globally, over 70% of freshwater is used for agriculture. 

Compared to traditional growing methods, hydroponic systems are much more water-efficient. Growing in a climate-controlled environment allows cultivators to use the exact amount of water required for healthy plants, without any waste. Overall, hydroponics utilizes 10 times less water than conventional agriculture.

2. Higher Yields

Since crops are grown in a climate-controlled environment, hydroponic farmers are not limited by extreme weather or annual rainfall, resulting in higher crop yields. There’s more control over the setup of the system, and crops aren’t limited to a specific growing season. 

Additionally, when comparing vegetables grown in soil, hydroponics can sometimes grow plants at up to 16 times higher density. Hydroponics allows growers to do this without using significantly more nutrients or other inputs. 

3. Less Space

Some crops require a lot of space, and many conventional forms of agriculture are inefficient when it comes to using land. For example, row crops like soybeans and corn take up most of the arable land in the United States, but the harvest is used mostly for livestock and processed food, not human consumption. 

In contrast, hydroponic systems focus on cultivating fruits and vegetables, providing nutrient-dense food for consumers without taking up significant amounts of space. Additionally, researchers at NASA are studying how to incorporate hydroponic systems for longer-duration space missions by providing the right balance of light, carbon dioxide, and water. 

4. Community Resilience

Many cities have significant food deserts, and access to quality and affordable items is significantly limited. Urban hydroponic systems enable communities to cultivate their own crops, increasing food security for vulnerable populations. 

While hydroponics requires significant operational costs, there is also some proof that it may be a possible solution for countries that struggle with food insecurity or need back-up options during months of extreme drought. 

For example, in the United States, many agricultural enterprises grow food in one region but ship it to another for consumption. Many rural communities struggle with access to healthy produce because of this. Hydroponics may help foster community resilience by setting up an accessible system.

5. Fewer Chemicals

Many advocates of hydroponic systems stress that hydroponics reduces the need for synthetic chemicals. Since plants are most often grown in greenhouses with strictly controlled environmental inputs, pest pressure is almost nonexistent. Considering the detrimental impact of pesticides on the environment, using fewer chemicals is a huge advantage for hydroponics compared to traditional growing systems. 

However, there is an ongoing debate regarding how to qualify hydroponic crops, and whether they are eligible for organic certification. According to the USDA, this refers to the care and maintenance of soil without chemicals. Since hydroponics do not use earth, many traditional organic growers feel that they are not eligible. Regardless of how crops are labeled, the fact that hydroponics uses fewer chemicals is a definitive advantage compared to conventional agriculture.

Cons

Despite the many positives, hydroponics also has some challenges to overcome.

1. Technology Reliance

Hydroponics is a high-tech process. Most commercial operations utilize specialized equipment that regulates water temperature, as well as acidity and nutrient density. Because plants are cultivated in a completely climate-controlled environment, there is a significant reliance on technology. Hydroponics is considerably more high-tech than other growing methods, and there is an opportunity in agtech to improve yields and decrease inputs. However, the amount of tech also makes it cost-prohibitive for beginning growers.

2. Initial Investment

The hydroponics market is expected to grow from $9 billion to $16 billion in the next five years, so there is certainly an opportunity for investors to consider vertical farming as a viable operation. In traditional agriculture, is it hard for new and beginning farmers to get started, as many face difficulties with land access and infrastructure investments. 

However, getting into hydroponics is not necessarily any easier or cheaper. Despite a growing market, the initial investment in hydroponic systems is steep, especially on a commercial scale. For this reason, many of the largest growers are established agriculture corporations that already have capital in place. The initial investment limits profitable hydroponic operations to a few large farms, making it tricky for smaller growers to enter the market.

3. Organic Debate

As mentioned above, there is an ongoing debate in the farming community about whether hydroponic produce can be labeled organic according to USDA standards. Without a clear definition of the nutrient profile of hydroponics, nor stringent guidelines on which fertilizers or chemicals are permissible, many consumers remain cautious about hydroponic produce. This affects the industry’s success, as many consumers don’t know how crops are grown or what’s added to the water.

Without a clear definition from the USDA, there remains some question over self-labeling of hydroponic crops as organic when synthetic chemicals may still be added.

4. Equipment Requirements

While a home gardener can easily utilize some plastic bottles and storage containers to build a small hydroponic system, commercial farmers have significant equipment requirements. In addition to the initial costs of setup for infrastructure, there are also necessary and costly machines to consider. Pumps, tanks, and other controls can be expensive, not to mention electricity and access to filtered water.

5. Waterborne Diseases

While hydroponic systems may reduce or eliminate pest pressure, certain waterborne diseases are more prevalent in hydroponically grown produce. The most common ones affect the plant’s root structure, such as Pythium, which includes several water mold species. 

Proper hygiene and cleaning practices can reduce the risk of plant disease, but it is often impossible to avoid completely. Because of this likelihood, many hydroponic growers incorporate bio fungicides to prevent breakouts.

Soil-Free Growing

Hydroponic growing can increase crop yields while reducing water usage. The benefits of hydroponics are significant, and the industry is expected to grow astronomically in the next five years. However, there are also some disadvantages to growing hydroponically. Improving access to infrastructure and making technology more accessible will enable more beginning growers to enter the market.

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