Vertical Farming Grows Up And Comes Of Age

Growing food without sunlight or soil is now a reality, but the economics leave little room for error

By Jennifer Blair Reporter

Published: April 25, 2017

Olds-area greenhouse operator Wayne Lohr and business partner Ulf Geerds are dreaming big — they want to grow an acre of strawberries.

That may not sound like a big deal until you consider that acre will take up just 360 square feet and produce strawberries year round. And even though they’re grown in racks on a shed, these berries will, the duo says, taste just as good as ones picked fresh in the field on a nice summer day.

“They taste like they’re from the field because they actually get the same treatment as from the field. We mimicked the environment that’s outside,” said Geerds.

“At the end, you’ll end up with a crop that has the same taste as from the field, but you can have it year round.”

The duo is talking about vertical farming, a relatively new industry birthed by the advent of LED lights and ‘aeroponics’ — rather than soil and sunlight — to produce fruit and vegetable crops in a small indoor area.

What was, until fairly recently, the stuff of science fiction is now a reality. Sales of produce grown via this method topped US$1 billion in 2015, and with production increasing by nearly 30 per cent annually, sales are forecast to surpass $15 billion by 2025.

And although it’s touted as a way to grow food in cities (as well as in countries where land is in short supply), vertical farming has also arrived in Alberta. And it’s winning over traditional growers such as Lohr and wife Carolyn, who have been in the greenhouse business (mostly growing ornamentals) since 1982. They got into vertical farming a year and a half ago, forming Lohr-A-Lee Indoor Gardens with Geerds and his wife, Sangeetha Varghese.

They started small, with two integrated upright systems purchased from Indoor Farms of America. The vertical panels take up a floor area of about 16 square feet in one of Lohr’s outbuildings, and have 650 plants in total. That’s an incredibly dense 40 plants per square foot of floor space — normally strawberries need one square foot per plant. At that density, their plan to scale up to 360 square feet will give them the equivalent of an acre of strawberries. (Aeroponics means there is no growing medium and roots are kept moist by misting.)

 

The pair has tried their hand at lettuce, basil, kale, arugula, Swiss chard, and bok choy, but so far, strawberries are the real star. There are no weather, disease, weed, or insect pressures, and with “total control of the environment,” the strawberry plants will grow for up to 14 months before needing to be replaced. Normally, the growing season for strawberries is two months, so the potential yield per plant is much higher.

“Effectively, you create an environment that’s consistent, so as far as this plant’s concerned, it’s July 15 every day,” said Lohr. “The target is to get four pounds per plant per year. We feel that that’s more than achievable. That’s the target. The goal is to beat it.

“We don’t need to import this stuff. We can grow it here.”

‘Lots of unknowns’

Despite their belief in vertical farming’s future, both men warn that this is not a way to make a quick buck.

That view is echoed by horticulture consultant Cees VandenEnden, owner of HortiSource Consulting in Mountain View County.

“I truly believe that 50 per cent — or maybe even more — of the startups will not see their fifth anniversary,” VandenEnden said at a workshop last month. “There are plenty of opportunities. I’ll be the last one to say this is not working. But there are some big question marks.”

But VandenEnden is being “optimistic,” said Lohr, who expects 80 to 90 per cent of startups will fail in their first year.

While vertical farming has many attributes — including a reduced carbon footprint, zero pesticide use, high nutritional value, good water-use efficiency, and local production — anyone taking a “romanticized” view will be in for a rude awakening, said Geerds.

VandenEnden agrees.

“There’s a lot going on, and I think it has a lot of potential — it’s ‘sexy,’” said VandenEnden. “In the public mind, local produce and knowing your producer is good.

“(But) this piece of the industry is attracting people who have no agricultural background and no growing knowledge. Your learning curve is tremendous and very costly. There are hyped-up expectations, and your startup cost is high. Making an income is not easy.”

In addition to the typical challenges associated with agriculture, such as labour and marketing, vertical farming comes with its own set of problems, including picking the right growing system, climate controls, light sources, watering systems, and product mixes.

“There’s a lot of thinking and problems to solve,” said VandenEnden.

“At this point in time, it’s new, so we do not know what works and what doesn’t,” added Geerds.

Ready for takeoff

Figuring out the market is even trickier. Geerds points to lettuce, which is an “easy” crop to grow.

“Lettuce grows very well in here. In 26 days, we have a crop that we can sell, but the demand is not there,” said Geerds. “We want to grow what the market wants. Strawberries make a lot of sense to us because there’s a high demand and the quality is very poor from the imports.”

Lohr and Geerds have partnered with a retailer for “significant volumes of strawberries weekly” for a small price premium.

“We’re getting a reasonable premium over what they’re paying wholesalers, but it’s not huge,” said Lohr. “Economics will ultimately take the premium away, so it comes down to production efficiencies and cost efficiencies.”

VandenEnden predicts the fledging industry will quickly scale up.

“It took over 100 years for the greenhouses to go from small entities to the big greenhouses you see nowadays,” he said. “But (vertical farming) will not take 100 years to get to that point. It’s probably closer to five years or maybe even faster.

“When that volume comes on the market, your premium prices are gone. You’ll have to produce for regular market prices.”

Competition is already growing in Alberta, he added.

“I was surprised to learn how many people are already doing this in Alberta. That will only increase,” said VandenEnden. “Big producers will develop fairly soon, and they will basically drive the prices.”

When that happens, production will be “the least of your problems” when compared with marketing, he said.

“It takes time to grow, but it takes a lot of time to market as well,” he said. “I’ve seen very few people who are excellent at growing and do a good job of marketing, too. Most of the time, one of the two is mediocre.”

But ultimately, marketing vertically farmed produce is much the same as marketing any other crop, said Lohr.

“Know what it costs you to produce it, know what kind of returns you want, and that tells you what price you need to make money.”

A costly venture

Production costs will vary based on the crop and the system used to grow it.

“If a traditional crop costs $1 to produce, the closed environment systems are costing between $1.40 and $2,” said VandenEnden. “That’s something we have to work on because that is not sustainable.”

Generally, the cost of equipment is related to the size of the system, he added, and there will be power and labour costs on top of that.

“With the right setup, there are good prospects, but what is the right setup? You need to go over that in your mind to make the right decision,” said VandenEnden.

Geerds agrees.

“You can pretty quickly sink a lot of money into the system, and if you don’t do it right, you will definitely lose.”

Producers should look at the price per square foot of growing area rather than simply the price per square foot when costing out a system, said VandenEnden. Because vertical panels do more with less space, the growing area square footage is typically about double the actual square footage. The panels at Lohr-A-Lee Indoor Gardens cost $8,800 each, and Lohr and Geerds are in the process of scaling up with an additional 24 panels.

“It’s not cheap, and it does scare the financial world. The big system that would go in the whole building is about the same dollars as a new combine today,” said Lohr.

“We’ve done some pretty elaborate cash flow projecting but again, you’ve got to look at this on a per-plant basis. They’re still big numbers and the bill still has to be paid, but on a per-unit basis, it’s not near as scary.

“The ROI is definitely there. You’ve just got to make it produce.”

The test unit they’ve been running for the past year has helped them verify their cost of production — data that isn’t available for this new type of farming.

“Because it’s the first commercial system that we’ll have, the next system will tell us, do we make money or don’t we?” said Geerds, adding they have a few other ideas of crops they can try if strawberries don’t pan out.

“We’ve talked to a lot of people who want to grow very big very fast. I don’t think that’s the right way to approach it. You have to find the sweet spot. You don’t want to be too small but because the science is just developing, we have to really see where the sweet spot is. We’re not sure what that is yet.”

Lohr’s advice is to “start small and learn as you go.”

“Do your homework. Otherwise, there’s going to be a lot of roadkill.”