SoftBank-Backed Farming Startup Plenty Is In Talks to Raise Cash

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Gillian Tan and Katie Roof

Bloomberg

March 29, 2020

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(Bloomberg) -- Indoor farming startup Plenty Inc. is in talks to raise $100 million or more in a fresh round of funding, according to people familiar with the matter.

SoftBank’s Vision Fund is in discussions to lead a new fundraising round for Plenty at or below the $1 billion valuation that was ascribed to it in its most recent round, said the people, who requested anonymity because the matter is private. They cautioned that no agreement has been reached, and that one may not be finalized.

“Plenty does not comment on financing proposals and has not committed to any new financing rounds,” a spokeswoman for the South San Francisco-based company said in an emailed statement. “We are not in need of new equity financing, and evaluate any proposals opportunistically,” she added.

A representative for the Vision Fund didn’t immediately respond to a request for comment.

Plenty has raised about $400 million in capital over the past four years, according to PitchBook. In addition to the $100 billion Vision Fund, other backers include Data Collective, DCM, and funds that invest on behalf of Amazon Chief Executive Officer Jeff Bezos and former Google CEO Eric Schmidt.

The startup aims to be more efficient than traditional farms, yielding more produce in a given space, while requiring less water.

Last fall, Plenty said it intended to expand beyond the Bay Area and had identified Compton, Los Angeles, as the location for its next farm, with building slated to begin in late 2020.

SoftBank is seeking $10 billion so its Vision Fund portfolio companies can support portfolio companies battered by the coronavirus pandemic, Bloomberg News reported earlier this month.

Some of the Vision Fund’s companies have laid off employees this month including co-working giant WeWork and residential real estate brokerage Compass.

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Corona-Update: 'US & Europe Already In Recession'

In the US, potatoes are a hot item across the nation. Unfortunately, in other news, the US & Europe already seem to be in recession. On a lighter note, UK farming leaders have stated that surplus food supplies caused by the closure of major restaurant chains like McDonald’s will now be redirected the consumers. There is also a general directive about what New Zealand growers need to know in the current environment, as well as news on markets and initiatives in India.

Potatoes flying off US retail shelves
All over the US, potatoes are suddenly a hot item across the nation and there are reports of goods flying off grocery store shelves. “It’s been really remarkable how fast … potatoes have been flying off the shelves,” said Blair Richardson, president, and CEO of Potatoes USA, the nation’s potato marketing organization. “Potatoes are being purchased as soon as they come into stores in many areas.”

“You can hardly find retailers with potatoes on the shelves” in some places, Idaho Potato Commission CEO Frank Muir told postregister.com.

The sale of potatoes through foodservice channels has dropped significantly as many restaurants and schools have shut down because of the coronavirus outbreak, Muir said.

But retail sales have jumped significantly and the IPC has sent out a communication to retailers, foodservice customers and shippers trying to facilitate a quick shift of spuds from foodservice to retail channels.

A farmer from Hammett said he’s heard that “retail can’t keep up with the demand for potatoes right now.” He said the industry, with the help of the commission, is undertaking a major effort to move potato cartons from food service to retail.

Even though spuds are a hot item right now, industry leaders said there is no shortage of potatoes in this country, nor will there be next year.

US & Europe already in recession
The closure of retail chains, offices, and workplaces is freezing economic activity, tipping the US into recession. The US and global economies are already falling into recession, with forecasts being revised on the fly as the coronavirus disease 2019 (COVID-19) spreads around the world, putting an end to a 10-year US economic expansion, according to IHS Markit Chief Economist Nariman Behravesh.

“There’s no question we’re in a recession,” Behravesh said Thursday during the JOC webcast, TPM20: What We Missed — The Economic, Trade, and Container Shipping Outlook. “The only question is how deep.” As of Thursday, IHS Markit, parent company of JOC.com, forecast the US economy would contract 0.2 percent in 2020, “but that will very soon get revised down to at least -1 percent,” perhaps by the end of the week, Behravash told the more than 1,100 logistics executives who attended the webcast.

The direct cause of the recession is the spreading coronavirus, or more precisely the precautions taken against the coronavirus, he said. “So far, it looks like the only way to stop it (COVID-19) is by freezing economic activity, and that plunges the economy into recession,” Behravesh said. “The virus itself isn’t killing the economy, but the response to it is sending us into recession.”

UK farm supplies diverted to retailers after McDonald’s closes
Farming leaders said the “huge surplus” of food supplies caused by the closure of major restaurant chains like McDonald’s will now be redirected to shops where consumers can buy it.

Concerns over the spread of coronavirus have forced the fast-food giant to temporarily close all of its 1,270 restaurants – which source £600m of ingredients each year from 23,000 British and Irish farmers, including many in East Anglia.

But the region’s agricultural leaders are confident that supplies of beef, potatoes, and pork – originally destined to become takeaway fries and burgers – will be quickly diverted to retailers via their “incredibly flexible and nimble” supply chains.

Andrew Blenkiron, estate director of the Euston Estate near Thetford, is also vice-chairman of the Red Tractor assurance scheme and vice chairman of the Suffolk branch of the National Farmers’ Union (NFU). “Everyone is so integrated in this supply chain that they have the ability to easily redirect product from one customer to another,” he said. “The people who process and pack for McDonald’s will also process and pack for supermarkets as well. So instead of minced beef for fast food burgers, it could be prime cuts for the supermarkets.”

Neil Shand, a director at the National Beef Association (NBA), said: “From the NBA’s perspective, we are living in a country that is now on lockdown. We are less than 70pc self-sufficient in beef and we have surplus created by some organizations, such as McDonald’s, not operating in their normal way.

“Any meat produced by farmers that is not going to be used for trade-in McDonald’s will be redirected in the food chain to make sure everybody is catered for and used to keep the country fed.”

South Africa reserves R1.2 billion aid package On March 24th, Ms. Thoko Didiza, South Africa’s Minister of Agriculture, Land Reform and Rural Development sent out a message to the Agriculture and Food Sector of South Africa. Full statement here.

“As you may be aware, that last night the President announced measures to deal with the COVID-19 pandemic, which include a 21-day lockdown. Several businesses will be affected, but the agriculture and food supply sector is one of the essential systems for livelihood and therefore will remain operational.

Our food supply system will remain functional during this period. Agricultural production in all its forms will remain uncompromised. This includes all services including provision of veterinary and advisory services. Live auctions of livestock and sale of other agricultural commodities will continue but under the strict conditions, a prescribed by the President. Exports and imports of critical agriculture commodities and the logistical measures will continue during this lockdown period to ensure global and national food security."

“The Department has set aside a package of R1.2 billion to address effects of the corona virus and ensure sustainable food production post the pandemic. The Department soon will make the details of this package together with the application channels available. The Department has also presented R100 million to the Land Bank to assist farmers under distress. Together with the industry, we are working on a sector operational procedures that would ensure adherence to the measures announced by the President this includes the provision of sanitation to employees within the sector especially farmworkers.”

“To wholesalers and retailers, we urge you not to engage in price gouging, at such a crucial time for the country. You have an important role to play in the supply of food, and the fight against COVID-19. We ask that you continue to serve the nation and help ensure food security at this critical juncture.“

California Citrus Mutual wants letters for essential workers
As part of the state effort to control the Covid-19 (coronavirus) pandemic, California Governor Gavin Newsom announced a state-wide stay-at-home order that went into effect last Friday, March 20. The order does not apply to workers in essential businesses, which includes agriculture.

In some parts of the state, the order is being aggressively enforced by local law enforcement. Reports are circulating that some employees have been stopped on their way to and from work and asked to return home.

California Citrus Mutual (CCM) recommends all members provide their employees with a letter stating that they are an employee of an essential business. All employees should keep the letter with them while traveling to and from work.

The letter should be on company letterhead and signed by a company manager. CCM recommends the following wording: “According to the Department of Homeland Security’s Guidance On The Essential Critical Infrastructure Workforce, dated March 19, 2020, food and agriculture are deemed a critical infrastructure that must be maintained during the COVID-19 crisis. (Company Name) is an agricultural business that is critical to the food supply chain, and (Employee Name) is an essential employee of the business.”

COVID-19 shuts down Miami farmers markets
At this point in time, keeping fresh produce in the house is tough when online delivery is limited and Miami’s farmer’s markets are mostly shut down. But the Urban Oasis Project has found a way to keep bringing veggies to the people during the coronavirus pandemic.

The non-profit, which operates several of Miami’s farmer’s markets including the ones at Legion Park, Tropical Park, and Surfside Market, is upping its game with delivery service and pop-up pick-up sites around town. In states like California and New York, farmers’ markets have so far been deemed “essential businesses” and allowed to stay open in the wake of coronavirus measures. That’s simply not the case in Miami, where the cancellation of temporary event permits has shut down the markets.

Coronavirus: What New Zealand growers need to know
More information has been provided on how those working in the agriculture sector will operate during the COVID-19 lockdown restrictions. Primary industries and those who supply them have been deemed an essential service, however, will need to follow strict rules to stop the spread of the virus.

Agriculture Minister Damien O'Connor says the Ministry for Primary Industries (MPI) has been working closely with food producers and other government agencies to ensure safe operations.

"The primary sector from the biggest companies, co-operatives, large orchards, right down to the smallest farms must keep high standards in workplaces for their own safety and others' wellbeing," he says.

MPI has set up a registration system for those businesses which intend to continue to operate during the lockdown.

Nagpur markets deserted, prices of fruit & vegetables rising
With the entire state concerned by the recent curfew, most of the markets in the city had a deserted look on Tuesday. "The markets are not the same anymore in the light of social distancing advisory to prevent the spread of the coronavirus. Sales have drastically dropped due to virtually no footfall," said one retailer.

The sale of fruits and vegetables has drastically dropped even in local vegetable markets like Khamla, Gokulpeth, and Itwari as a result of the low footfall. Many shopkeepers sold vegetables at discounted rates fearing that these would rot and turn into waste. To maintain social distancing at local markets, the Nagpur Municipal Corporation has used chalks and demarcated lines outside every unit in almost all markets.

Even orders at food chains, especially kitchen restaurants, have dropped drastically. The owner of a kitchen restaurant from Sadar, requesting anonymity, said that online food orders have dropped since Monday. Prashant Sahare, a professional and a bachelor staying in an apartment in KT Nagar, said that he continues to get food online since his firm has asked him to work from home.

India: AMC will sell vegetables door-to-door
Beginning tomorrow, the Ahmedabad Municipal Corporation is sending e-rickshaws full of fresh goods to people’s doorsteps. The AMC wants to do away with hordes gathering at vegetable markets and ensure maximum compliance to the government's lockdown orders.

The Smart City and Urban Community Development departments will work together to implement the same. Deputy Municipal Commissioner Nitin Sanghwan said, "We are yet to fix the timings. We are in the process of preparing a road map and decide on which areas to cover first and how to go about it."

In all, there will be 10 e-rickshaws that will cover all the areas under seven zones."Women's self-help groups will be in charge of providing a steady supply of vegetables. The purpose is to avoid large congregations and keep people safe in their homes. There won't be issues pertaining to hygiene; said Mukesh Gadhvi, Deputy Municipal Commissioner. In keeping with the lockdown orders, only a few vegetable shops in the city are open and that too only for limited duration. Besides, citizens have been complaining about hikes in retail prices of potato, lemon, carrot, and cabbages. However, the prices have not been affected, largely.

Indian Supreme Court receives appeal to three-month export ban
The Supreme Court was requested to redirect the ban on export of vegetable and fruits for three months, so that the people could get fruits and vegetables at affordable prices. Advocate Zulfiqar Ahmed Bhutta filed a petition in the Supreme Court under Article 184(3) of the Constitution making federation through secretary Establishment Division as respondent.

He called on the court to direct the federal and the provincial governments to formulate export policy by which hike in prices of food and vegetable be stopped. The petitioner submitted that due to the rapid spread of coronavirus across the globe, everyone was terrified about his/her survival and several countries had imposed mandatory lockdown recommending around 1.7 billion people to stay at home.

Philippines: Vegetable deliveries hampered  at checkpoints
Despite the Department of Agriculture’s (DA) assurance that Metro Manila will continue to have a stable food supply despite the crisis, the price of goods —particularly of vegetables— have continued to surge during the past days.

Since September 2019, The Murang Gulay Shop has been sourcing vegetables from farmers primarily from the provinces of Benguet and Pangasinan. However, the declaration of the Luzon-wide enhanced community quarantine as a result of the COVID-19 pandemic has disrupted the transport of produce to Metro Manila, giving other traders an opportunity to jack up their prices.

Cargo trucks from Benguet are held up at several checkpoints and reach Metro Manila only days later. Meanwhile, vegetable farmers from Pangasinan and neighboring areas are not able to transport their harvest because tricycles have been banned from traveling in some areas, even if they’re ferrying foodstuff.

Turkey: Fines to be imposed on those with exorbitant prices
Turkey’s Competition Authority has stated that “Nowadays, the global COVID-19 epidemic is experienced in the food market of our country, especially in the fresh fruit and vegetable market. It is observed that exorbitant price increases were made with an opportunistic approach.”

The Competition Authority, which is empowered to protect consumer welfare and prevent actions and transactions that disrupt effective competition conditions, closely monitors the price increases and all actors contributing to this increase.

In this context, the heaviest administrative fines determined by the Competition Law will be imposed on individuals and institutions (all kinds of actors such as producers, intermediaries, carriers, end sellers) engaged in anti-competitive actions in the food market, especially fresh fruits and vegetables.

Vietnamese agro exports to US & EU badly affected
With Vietnam’s main agro-forestry-fishery export markets after China such as the US and Europe being hit by the new coronavirus, Vietnamese exporters are suffering.

Nguyen Dinh Tung, Chairman, and CEO of Vina T&T Group, which exports fresh fruits to several demanding markets, said fruit exports by air to the US and EU were down 70-80 percent since many airlines had stopped flights. "Shipments by sea are relatively stable but customs clearance in importing countries is expected to be prolonged because workers and officials are absent from work due to the pandemic, which could affect the quality of the goods. Therefore, at least in the next one month, vegetable and fruit exports to these markets will drop sharply."

After that, the export situation would depend entirely on how the countries control the pandemic, he said. His company now exports only three items, coconut, longan, and durian, because they last long, and temporary stops exporting other fruits.

Kazakhstan restricts agricultural goods export Kazakhstan has introduced restrictions on export of agricultural goods for the period of emergency state in the country, Trend reports with reference to Kazakhstan’s Ministry of Healthcare.

The list of products that were prohibited from export includes buckwheat, sugar, potatoes, carrots, onions and white cabbage. The corresponding decree of Kazakhstan’s Agriculture Ministry said that the prohibition on the export of these goods from Kazakhstan to third countries is valid from March 20 till April 15, 2020

On March 15, 2020, Kazakhstan’s President Kassym Jomart Tokayev signed a decree introducing an emergency state in Kazakhstan due to coronavirus outbreak, which will last till April 15, 2020.

The first two cases of coronavirus infection were detected in Kazakhstan among those who arrived in Almaty city from Germany on March 13, 2020. The latest data said that the overall number of coronavirus cases in Kazakhstan is 68 people.

Russia bans potatoes from Kazakhstan
The order to ban the export of certain goods from the territory of Kazakhstan was enacted in accordance with the presidential decree "On Further Measures to Stabilize the Economy." The Ministry of Agriculture of the country called food products that are forbidden to be exported to third countries until April 15, Tengrinews.kz reports.

The list includes buckwheat, white sugar, potatoes, carrots, onions, and white cabbage.

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Publication date: Wed 25 Mar 2020

India’s Answer To Vertical Farming Raises $5.5m Series A

February 13, 2020

Richard Martyn-Hemphill

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India’s fresh produce industry has severe shortcomings. Bottom line: Not enough of it gets produced; nor can its consumers rely on its consistency or freshness. For the producers themselves, getting their tomatoes or lettuce to market at a fair and timely price is fraught with financially hazardous uncertainty.

Does this all herald an opening for vertical farming in India’s vast urban and peri-urban areas? Not quite, says Omnivore’s managing director Mark Kahn, speaking to AFN by phone to disclose his firm’s latest investment deal: “Vertical farming is not especially relevant in India,” he said. “Land is plentiful and the cost of energy is very high.”

$5.5m for ‘India’s Plenty’

Nevertheless, he said, there is still a large and growing demand for more nutritious produce that has not been doused in chemicals and has been grown in a place not far from where it is consumed. There is also an urgent and substantial need for more climate resilience, Kahn noted. So India’s venture capital equivalent to North American indoor farms like Plenty, Bowery or Brightfarms, he concluded, is a company that galvanizes and coordinates the tens of thousands of already existing greenhouses dotted on the outskirts of India’s major cities.

That resulted in Kahn’s team at Omnivore jointly leading a $5.5 million in Series A into Clover — a greenhouse agritech platform, which partners with farmers across India with the aim of marketing premium quality, branded, greenhouse-grown fresh produce via B2B and B2C channels. Clover “is partnering with the asset owners that are largely disorganized right now. Then aggregating the high-quality produce,” said Kahn. Most of the greenhouse owners are smallholders with about an acre to work with — “not enough to make a brand,” he added. In his due diligence process, Kahn and his fellow investors saw how this platform boosted the yields, the quality, and the profit margins of fresh produce at participating greenhouses. “We visited all the farmers they were working with,” he said. “The farmers we spoke to were all making much more money. There’s a stickiness to the platform.” Consumers, meanwhile, seemed happy with the added reliability of the quality on offer.

Two towering existing investors

Fellow leaders of this round were two towering existing investors: Mayfield and Accel. Both had invested in Clover’s seed round back in December 2018 while the company was still in stealth mode in Bangalore, having been co-founded by Avinash BR, Gururaj Rao, Arvind Murali, and Santhosh Narasipura

“Clover is transforming the perishables supply chain to better serve the new-age Indian consumer who values high quality produce,” underscored Prashanth Prakash, a partner at Accel, which recently closed its sixth India fund on $550 million.

It is the first time, despite years of investing on similar turf, that Omnivore and Accel have been side by side on an investment round; the same goes for the joint presence Omnivore and Mayfield in an investor lineup — Mayfield has been investing in India since 2006 and cumulatively manages $219 million on the subcontinent. In a statement, Vikram Godse, a managing partner at Mayfield, gave his view on what drew in this gigantic Silicon Valley VC firm: “Clover operates in the highly-fragmented but large agriculture market of India. By using cutting edge technology, systems, and processes, the Clover team, led by Avinash, is disrupting the agriculture value chain for fruits and vegetables. This not only brings about economic benefits to Clover’s B2B customers but also ensures significantly improved quality of produce is delivered to the end B2C consumer.”

Any insights on greenhouses in India? Let us know at richard@agfunder.com

Freight Farms Announces New Horticultural Funding From Ospraie Ag Science

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Maury Wright

Mar 2nd, 2020

A Series B venture round of $15 million will allow Freight Farms to invest in plant science, add features to its software control platforms, and expand the customer base for its vertical farms housed in shipping containers.

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Vertical-farm supplier Freight Farms has received $15M in Series B funding from investment first Ospraie Ag Science for its all-in-one, shipping-container-based agriculture model. (Photo credit: Image courtesy of Freight Farms.)

Shipping-container-based, vertical-farm manufacturer Freight Farms has announced that it received $15 million in Series B venture funding from investment firm Ospraie Ag Science. Freight Farms will use the investment to further optimize its Farmhand software platform, invest in plant science, and expand the customer base for its LED-lit Greenery container farms.

Freight Farms originally branded its container farms The Leafy Green Machine but has since simplified the product name to The Greenery. A Greenery farm includes everything a grower needs to launch a hydroponic farm all integrated into a shipping container. The outfitted Greenery container includes LED lighting, plumbing for nutrient supply, climate, and environmental control, and the Farmhand software to automate the operation of the farm.

The idea of a shipping container for a vertical farm is not a new one. For example, we covered a Dallas grocery store that uses a shipping-container farm to grow some produce right outside the store’s back door. And we covered a Los Angeles area farm using shipping containers right in the downtown metropolitan area back in 2016.

Freight Farms, however, brings unique aspects to its business both in the science behind Greenery and in the company’s business model. Taking the business model first, Freight Farms is specifically in the business of selling turnkey farms. Some other players have vacillated between selling technology and operating as growers.

The configuration of the Freight Farms product is also unique. When we first covered vertical farming back in 2016, the term was primarily utilized to describe growing operations where horizontal trays of plants were stacked in layers vertically to more fully utilize a space, especially for crops such as leafy greens and herbs where there is not much space needed between layers and where LEDs that don’t radiate heat can be placed in close proximity to the plant canopy.

We have since seen other concepts. Plenty, for example, is based in California’s Silicon Valley Area, has received more than 200 million in funding from well-known investors such as Amazon’s Jeff Bezos, and utilizes a system where plants are placed horizontally into the growing structure but run continuously in a vertical row from floor to ceiling.

Freight Farms partitions its systems in the close confines of the shipping container. There is a dedicated area where horizontal racks are used in the initial stages of sprouting. But later plants are transplanted into a vertical row structure where nutrients can drip from the top of each vertical row of plants and unused nutrient is recaptured at the bottom of each row.

Freight Farms said its 328-ft2 container can produce equivalent vegetables to a two-acre outdoor plot. And the container farm uses less than five gallons of water per day. For Freight Farms, the mission is solving the looming issue of feeding a growing global population. “With the Greenery and Farmhand, we’ve created an infrastructure that lowers the barrier of entry into food production, an industry that’s historically been difficult to get into,” said Jon Friedman, Freight Farms COO. “With this platform, we’re also able to harness and build upon a wider set of technologies including cloud IoT, automation, and machine learning, while enabling new developments in plant science for future generations.”

And make no mistake that controlled environment agriculture farming is becoming big business. We recently ran an article that discussed the investment capital coming into the market. Clearly, Ospraie sees an opportunity in the container concept. Freight Farms says it has sold farms into 44 states and 25 countries.

“Freight Farms has redefined vertical farming and made decentralizing the food system something that’s possible and meaningful right now, not in the future of food,” said Jason Mraz, president of Ospraie Ag Science. “Full traceability, high nutrition without herbicides and pesticides, year-round sourcing – these are elements that should be inherent to food sourcing. Freight Farms’ Greenery makes it possible to meet this burgeoning demand globally for campuses, hospitals, municipal institutions, and corporate businesses, while also enabling small business farmers to meet these demands themselves for their customers.”

New Date Announced For Women in Agribusiness Summit Europe: July 2-3

PARIS, March 5, 2020 – A new date has been set for this year’s Women in Agribusiness Summit Europe: 2-3 July at Les Salons Hoche here. Previously scheduled for 9-10 March, the conference was rescheduled out of concern for the welfare of all participants with respect to the coronavirus.

Joy O’Shaughnessy, chief operating officer for HighQuest Group (parent company of WIA) and event director for Women in Agribusiness (WIA) initiatives, explained that while the decision was a difficult one to make, “due to an abundance of caution and concern for the welfare of all of our event participants in regard to the threat of the coronavirus, we felt it was best to postpone the event.” O’Shaughnessy conferred with sponsors, speakers, and attendees, as well as reviewing the recommendations from the World Health Organization, before announcing the postponement.

“We are grateful for the support and collaboration among our participants regarding this decision, and look forward to welcoming the Women in Agribusiness community to Paris in July where they can expect in-depth industry insight, detailed outlooks of the agri-food sector, and boundless opportunities for networking,” said O’Shaughnessy.

The jam-packed agenda will remain the same for the July event and include topics such as:

• Geopolitical Overview of European Agriculture

• Reforming the Agricultural System

• Reducing Food Waste

• Farming 4.0 - Ushering in the Age of Digital Agriculture

• Green Funding: Critical or Counterproductive?

• Agricultural Trade After Brexit

• Executive Roundtable: A Spotlight on Senior-Level Women in Ag

  The annual Women in Agribusiness Summit began in the U.S. in 2012 and is now renowned for annually convening close to 1,000 of the country’s female agribusiness decision-makers, with 30 percent at the CEO/executive level and another 25 percent at department management level. The European event is modeled after this successful series and includes the support of a community that engages 365 days a year via news blogs, social media, content for women-owned businesses, job opportunity postings, scholarships for young women, networking Meet Ups, leadership training and more.

  Find out more about the Women in Agribusiness Summit Europe at womeninag.com, or follow us at @Womeninagri, on Facebook and LinkedIn. Register for the event with a 10% discount using promo code: PARIS2020. Additional sponsors and event partners are welcome for this event.

Farming 4.0 - Ushering in the Age of Digital Agriculture

Green Funding: Critical or Counterproductive?

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About Women in Agribusiness

Women in Agribusiness is a business unit of HighQuest Group, a global agribusiness consulting, events and media firm, based north of Boston, Mass., USA. The Women in Agribusiness initiative took root in 2012, with the first conference held in New Orleans. WIA initiatives have grown to include the WIA Membership, WIA Demeter Award of Excellence, Scholarships, and WIA Today. Learn more at womeninag.com.

CONTACT:

Michelle Pelletier Marshall

Senior PR/Media Manager
10 South Main Street, Suite 209 Topsfield, Mass. 01983 USA mmarshall@highquestgroup.com +1.978.790.0565

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8 Keys To Getting Funding Through Contain

Nicola Kerslake

February 28, 2020

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Figuring out financing is one of the big challenges every new indoor farmer faces. Like death and taxes, it’s nearly inevitable. According to research from software provider Artemis, indoor farmers’ greatest challenge is finding funding.

Contain’s mission is to change that, and in our work using tech to better connect growers to vendors and lenders, we always get the same question: how do you up your odds of securing equipment leases? Well, we’ve got answers.

We put together this guide to help anyone considering working with Contain up their odds of funding. We hope it helps demystify the funding process in general, too.

1. Where are you based?

We work with growers across the U.S. and Canada, but our best lender coverage is in the lower 48.

2. How long have you been farming?

We work with lots of startup farms. They’re great. But those with at least a two-year history of operations are more appealing to lenders. They’re viewed as a safer bet. Occasionally, lenders are willing to consider the track record of a different kind of business as you finance your farm.

3. Is your farm profitable?

Naturally, lenders prefer to work with profitable farms. That said, they also understand that increasing a farm’s scale will transform its economics, too. Don’t count yourself out if you’re still building towards the black.

4. What lease size are you looking for?

For a startup farm, we’ve found that it’s best to start small, sell out your produce and then scale to meet your customers’ demand. A common mistake we see is new growers trying to launch with a large setup, more than $1 million in equipment. Lenders rarely back farms like this at the get-go.

5. How much deposit will you put down?

Lenders generally want at least 20% down, and up to 50%. Of course, higher deposits often mean lower interest rates and, generally, better funding odds.

6. Do you have other collateral?

Lenders like to see other collateral for the lease, such as land or an existing property—especially if you’re a new grower. It’s not always necessary, but it definitely helps.

7. Do you have agreements with customers?

We know that most farmers sell produce without a prior written agreement but — at least where it makes sense for your business — lenders always appreciate letters of intent or even letters of support from customers. No bank has ever been mad because it got too many documents vouching for you.

8. How does your credit look?

A good credit rating with no recent bankruptcies usually translates into better leasing offers.

So that’s what you need to get started! Want to calculate your own odds of finding lease-funding? Take our quiz here.

Photo credit: Steve took it on VisualHunt.com / CC BY-NC-SA

Tags: Startup Funding Agriculture Sustainability Small Business

WRITTEN BY

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Nicola Kerslake

We’re Contain Inc. We use data to improve access to capital for indoor growers, those farming in warehouses, containers & greenhouses.

Discussing Green Funding At WIA Paris

Giving the Green Light to Green Funding

Green Funding or Impact Investing is when lenders and investors make their decisions based on if the company in question has environmentally conscious business practices such as alternative energy, water, and waste management, or socially positive goals. Companies like Danone and General Mills, as well as the major financial players in ag, are leading the path to responsible funding in the industry.

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Green Funding: Critical or Counterproductive

We’ll be discussing how the practice of green funding is affecting the ag space. What are the current metrics being used to determine if a company is green enough, and how are they being tracked? On the flip side, will this practice make a positive impact or is it just an opportunity for companies to “green wash” themselves to get through the funding hoop? Join us to learn more!

Visit our website for more details

Subscribe to receive updates about

Women in Agribusiness Summit Europe.

Thank you to our sponsors

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Thank you to our event partners

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Shipshape Urban Farms $1 Million Financing, K Dale Speetjens Submitted Nov 29 D Filing

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Posted by Jean Kramer on November 29, 2019

Shipshape Urban Farms Financing

Shipshape Urban Farms, Inc., Corporation just had published form D announcing $1 million equity financing. This is a new filing. Shipshape Urban Farms was able to sell $150,000 so far. That is 15.00 % of the round of financing. The total offering amount was $1 million. The offering form was filed on 2019-11-29. The reason for the financing was: unspecified. The fundraising still has about $850,000 more and is not closed yet. We have to wait more to see if the offering will be fully taken.

Shipshape Urban Farms is based in Alabama. The firm’s business is Agriculture. The form D was signed by K Dale Speetjens President and CEO. The company was incorporated in 2019. The filler’s address is: 600 Clinic Drive, Mobile, Al, Alabama, 36688. Kenneth Dale Speetjens is the related person in the form and it has the address: 600 Clinic Drive, Mobile, Al, Alabama, 36688. Link to Shipshape Urban Farms Filing: 000179551019000001.

Analysis of Shipshape Urban Farms Offering

On average, firms in the Agriculture sector, sell 63.30 % of the total offering amount. Shipshape Urban Farms sold 15.00 % of the offering. The financing is still open. The average fundraising size for companies in the Agriculture industry is $287,000. The offering was 47.74 % smaller than the average of $287,000. Of course, this should not be seen as negative. Firms raise funds for a variety of reasons and needs. The minimum investment for this financing is set at $1. If you know more about the reasons for the fundraising, please comment below.

What is Form D? What It Is Used For

Form D disclosures could be used to track and understand better your competitors. The information in Form D is usually highly confidential for ventures and startups and they don’t like revealing it. This is because it reveals the amount raised or planned to be raised as well as reasons for the financing. This could help competitors. Entrepreneurs usually want to keep their financing a ‘secret’ so they can stay in stealth mode for longer.

Why Fundraising Reporting Is Good For Shipshape Urban Farms Also

The Form D signed by K Dale Speetjens might help Shipshape Urban Farms, Inc.’s sector. First, it helps potential customers feel safer to deal with a firm that is well-financed. The odds are higher that it will stay in the business. Second, this could attract other investors such as venture-capital firms, funds, and angels. Third, positive PR effects could even bring leasing firms and venture lenders.

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Vertical Farming Transforms The Farm-to-Fork Supply Chain

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February 3, 2020

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Steve Banker Contributor - I cover logistics and supply chain management.

Indoor vertical farming has been around for quite some time, but leading companies in this industry are starting to garner a great deal of attention from the business press even as investors have poured money into the industry. As the world population continues to expand, so too does the amount of fruits and vegetables needed to feed the world. We are not creating new farmland to accommodate the increase in fresh food required. Vertical farming can be part of the solution to this problem.

Vertical Farming is a High-Tech Endeavor

Vertical farming is the practice of growing crops in vertically stacked layers. Vertical farming incorporates controlled-environment agriculture, which is a fancy way of saying that it provides protection and maintains optimal growing conditions throughout the development of the crop.

At the leading firms, vertical farming is a big data, high tech endeavor. At AeroFarms, a leader in the space, their plant scientists monitor millions of data points every harvest. The company says their LED lights are used “to create a specific light recipe for each plant, giving the greens exactly the spectrum, intensity, and frequency, they need for photosynthesis in the most energy-efficient way possible.” This lighting allows them to control size, shape, texture, color, flavor, and nutrition of their plants.

The company has received $100 million in venture capital and has two patents. The titles of their personnel sound much more like what you would find at a high-tech company than at a big farm conglomerate. They have a chief technology officer, engineers, scientists, risk managers, and even a director of intellectual property.

Why Vertical Farming?

As with any new or emerging technology, there need to be benefits. Vertical farming has proven itself to benefit in a different way. In recent years, there have been a number of E. coli outbreaks from green, leafy vegetables. What many people may not have realized was just how the outbreak occurred. In most cases, the E. coli outbreak was related to the washing practices of the vegetables. With vertical farming, this is a moot point; vertical farming is dirt-free and requires no washing of the vegetables. This alone can prevent foodborne illness outbreaks.

Vertical farming can assist in achieving maximum yields. First, plants only need about 10 minutes of darkness a day. Getting light all day long allows the plants to grow faster. Also, traditional farmers usually apply fertilizer once, water the crop and hope it grows. AeroFarms, meanwhile, applies fertilizers many times, adjusting along the way to optimize plant growth. AeroFarms at one point said they were making fertilizer adjustments every 15 minutes. They also tightly control humidity and water consumption.

Vertical farming enables more harvests throughout the year. Since harvests are not climate-related, they can be done year-round. For some fruits and vegetables, this means having up to 30 harvests in a year rather than five or six. Consumers no longer have to wait for produce to be “in season.” There is also no worry about spoilage due to weather conditions, which enables maximized production.

Sustainability is a top concern for consumers and companies alike. Vertical farming plays a significant role in sustainability efforts as well as the greater good of the earth. According to recent studies, vertical farms use up to 70 percent less water than traditional farms. Additionally, given their isolated nature, pesticides and herbicides are not needed to thwart would-be pests.

Vertical Farming and the Farm-to-Fork Supply Chain

The benefits mentioned above do not even take the supply chain into account. From a supply chain standpoint, there are two major benefits to vertical farming.

First and foremost, vertical farms can reduce the number of miles fresh fruits and vegetables must travel in order to reach supermarket shelves. This also reduces fuel consumption, driving down the total cost to consumers. Studies have shown that the US imports about 35 percent of the produce that lands on supermarket shelves, with the average item traveling 2,000 miles. With this distance traveled, the produce has been picked roughly two-weeks before consumers can get their hands on it. Even for domestic produce, the time and cost to pick, pack and ship the produce from California to the East Coast is five to seven days. However, with a smaller footprint, vertical farms can be set up in urban areas, allowing for fresh produce to get to the shelf faster.

Secondly, as alluded to in the previous paragraph, less space is required for vertical farming. Every square meter of floor space of vertical farming produces approximately the same amount of vegetable crops as 50 square meters of conventionally worked farmland. According to a recent report by Cushman & Wakefield PLC., over the next few years, warehouse supply will outpace warehouse demand. This means that excess warehouse space could be turned in to vertical farming facilities. The use of vertical farms in densely populated places can get more fresh produce on supermarket shelves faster and could even spur home delivery to consumers. Think of it as a vertical farm share.

Of course, there are downsides to vertical farming as well. For instance, the start-up cost to get a facility up and running is a deterrent to many would-be vertical farmers. Also, while water consumption is significantly reduced, there is still the problem of using energy to run the facility. While traditional farms rely on natural sunlight, vertical farms do not. Renewable energy sources are one way these companies can try to offset the cost and environmental impact of traditional energy. And LED lights are becoming more efficient at a rapid pace.

The economics of vertical farming should not be overstated. Wegman’s organic kale sells for $2.89 for a five-ounce container. Dream Greens, an AeroFarm brand, Baby Kale retails for $4.50 at Shoprite. The premium some consumers are willing to pay appears to be more related to the quality, freshness, and the health benefits of these products.

Final Thought

Traditional farming is clearly not going away any time soon. In fact, if it did, the world be in a whole lot of trouble. However, as the population continues to grow, and more emphasis is put on environmental sustainability, vertical farming can help to fill that void. Vertical farms have shown the ability to eliminate foodborne illness outbreaks (especially E. coli), maximize crop yields, and reduce water consumption. From a supply chain standpoint, vertical farms are reducing the miles on our fresh produce as well as getting it on our shelves faster. The future of vertical farming looks bright. It will be an interesting market to watch over the next few years.

The primary author of this article was Chris Cunnane, a Research Director for Supply Chain Management at the ARC Advisory Group.

Follow me on Twitter. Check out my website. Steve Banker

I am the Vice President of Supply Chain Services at ARC Advisory Group, a leading industry analyst and technology consulting company. I engage in quantitative and qualitative research on supply chain management technologies, best practices, and emerging trends. I’ve been published in Supply Chain Management Review, have a weekly column in Logistics Viewpoints (www.logisticsviewpoints.com), and can be followed on Twitter @steve_scm or contacted at sbanker@arcweb.com.

UK Agri-Tech Firm Raises £2.3m To Advance Vertical Farms

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9 January 2020 | by FarmingUK

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LettUs Grow has designed a patent-pending indoor farm system for greenhouse and vertical farms to address global food concerns

Team | Arable, News, Renewables and Environment

UK agri-tech company LettUs Grow has raised £2.3 million in seed funding as demand for vertical farming technology continues to rise.

The Bristol-based firm raised the significant amount in an investment round led by Longwall Venture Partners LLP.It comes as the recent Intergovernmental Panel on Climate Change report states that climate change is threatening global food security with severe potential risks for traditional methods of food production.

The report makes it clear that the level of risk will depend on how production, technological development, and land management evolve.

LettUs Grow was founded to mitigate these risks posed to agriculture and to lessen the environmental impacts of growing fresh produce.

The firm has designed a patent-pending indoor farming system for greenhouse and vertical farms to address global food security and sustainability concerns.

These indoor farms need no fertile land to operate, use zero pesticides and provide a 'consistent, predictable and climate-resilient food supply all year round'.

The company's offering is centered around two core products: a novel aeroponic system and an integrated farm management software called Ostara.

Growth rate increases of over 70% across a range of crops has been seen using this system, compared to current vertical farming methods such as hydroponics.

Ostara automates and controls the whole indoor farm, whilst collecting data on plants, overseeing inputs to crop growth and allowing farmers to trace crops from seed to sale, making operations more efficient.

LettUsGrow built one of the world’s most advanced indoor aeroponic growing facilities in 2019.

The investment will now allow the company to build their second aeroponic research centre, scale existing technology and accelerate new product lines to market.

Charlie Guy, co-founder of LettUs Grow:

“This investment gives us a platform to really accelerate in 2020 and scale-up the delivery of our game-changing technology to farmers across the country.

“We’re seeing rising demand from around the world for new technologies to help farmers grow crops in ways that mitigate against the effects of climate change and ever-increasing extreme weather events.”

The seed fund round also included follow-on investment from the University of Bristol Enterprise Fund, Bethnal Green Ventures and ClearlySo, with legal representation from VWV LLP.

Hydroponic Entrepreneurs Farming For The Future

Startup Saturday: Hydroponic entrepreneurs farming for the future

The alternative agrarian method has taken root in the startup landscape. Greens are first on this healthy menu

PUNE, INDIS Jan 04, 2020 Namita Shibad

Hindustan Times, Pune

Hydroponics is no buzzword when speaking about the “future” of farming. A growing population, shrinking land base and water resources suggest a reinvention of the agrarian process is more than needed. In India, hydroponics meets less than 1% of the total food basket.

Israel is the hydroponics leader when it comes to feeding its people, but India still has enough land... for now.

What role can hydroponic startups play in a market that is dominated by traditional agriculture? Are people willing to buy hydroponically grown fruits and vegetables?

FarmingV2, set up in 2018

Founder: Rohit Nagdewani

Indoor and outdoor hydroponic farms.

Why hydroponics?

Our food is full of harmful chemicals. Besides, I am a big foodie and a home-cook and was finding it impossible to source high quality produce in the market. I began researching a small kitchen garden and heard about hydroponics. With its major USP being the ability to grow anything, anywhere, it didn’t take a lot of time for me to venture into it commercially.

Setting it up

I started experimenting with small imported setups but couldn’t scale due to the lack of information and equipment. A lot of research and calls later, I found two companies that help set up hydroponic farms – Urban Farmer and Valens Arbor in Mumbai. With their help, I set up my first commercial farm. The challenge for hydroponic farmers like me is the fact that the technology is at a very nascent stage, so getting access to the right people, equipment and process is not easy. No government permissions were needed.

Investment

I started with a small 300 sq ft indoor farm that cost me Rs 4 lakh. Now I have expanded to a 6,600 sqft indoor farm and one 6,000 sq ft outdoor farm. All this cost me Rs 45 lakh.

The challenges

Both the capex and the opex of a hydroponic farm is higher than soil-grown produce, which results in a higher selling price. In the case of commodity crops like wheat and rice, the price will be four times more than soil-grown crops.I saw the opportunity in the greens business. Last year India grew 15 crops tonnes of greens.

There is a market for it and producing greens costs marginally more than traditional crops, about 2-3%. With the nutritional benefits, there are people who will pay more. I have 500 customers who are subscribers and a few restaurants who buy regularly. (Rohit does not wish to share his turnover.)It is impossible to even think about growing hydroponically at the scale at which traditional farmers do. Currently, it is not viable for commodity crops. But yes, once we deplete our freshwater sources and arable land in a couple of decades, the shift towards hydroponics would be much more apparent.

Future

Education! If we are able to educate people about the availability of such chemical-free, healthy produce, the product will sell itself. Since the capex of setting up a hydroponic farm is high, funds are also an issue, but we are already witnessing a global focus on such indoor farms (Softbank invested $200m in a vertical farm called Plenty).

Salad Growers, set up June 2019

Founder: Yash Patel

Grows a variety of greens and herbs; sells by monthly subscription

Why hydroponics?

The demand for exotic greens and gourmet salads is at an all-time high and unfortunately, with our horrible weather conditions, it is impossible to get consistent quality greens and herbs all-year-round. With hydroponics, we are able to grow exotic greens and herbs all-year-round, and with consistent quality always.

Setting it up

We had a great idea and we were certain that we wanted to execute it at some point in time. The question was - would it be possible to run an actual business? I did a lot of research and even zeroed in on one international firm that specializes in vertical farms, but their estimate was about 10 times the cost I finally paid to a domestic company.

Extensive market research revealed that people don’t like to eat salads every day, but prefer it twice or thrice a week. With the rising trend of veganism, people like their salads to be vegetarian. We on-boarded a chef and a nutritionist and developed gourmet salad recipes that we are currently testing in the market. We intend to have a subscription model and aim to sell our salads at Rs 300 a plate (400gms). Once I reach 100 subscribers I will break even.

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Yash Patel currently owns a 500 sqft farm.( HT/PHOTO )

Investment

invested Rs 15 lakh to set up a 500 sqft farm and that changed the game for me. Today, my farm can churn our 1,500 plates of salad per week. I am also planning to set up another farm of 4000 sq ft.

The challenges

Our primary challenge is to educate our potential customers on the benefits of our product. This topic is gaining momentum on social media and more people are aware of the benefits of eating hydroponic food.Our product – greens and herbs - is something that traditional farmers do not grow or rather cannot grow due to the weather conditions, so there is no issue with that at all. We only grow varieties that you don’t usually get at the local farmers’ market.

Future

We are in the final stages of validating our product and have planned on expanding to a farm that is almost 10 times the current size next year. Our marketing strategy is also in place, but we are waiting to execute everything at the right time as we don’t want a bandwidth we are not able to manage.

The big picture

Shyam Agarwal, Perusal Global (Financial research and advisory)

Markets and Markets, a market research company, the global hydroponics market is estimated to grow from $8.1 billion in 2019 to $16.0 billion by 2025, registering a CAGR of 12.1%. The primary drivers for this handsome growth include growing population and the need to ensure food security through alternative high-yield farming techniques as arable land and water have been depleting.

Hydroponics globally has grown because of the high yield (20-25%) and 2-5 times productivity. This system eliminates the use of artificial ripening agents and pesticides creating nutritionally superior vegetables. That said. India’s overall fruit and vegetables (F&V) market was estimated at around Rs 5,00,000 crore in 2015. Even if we assume a meager 0.5% of this overall market, it translates into a humongous opportunity of around Rs 2,500 crore for hydroponic produce, which may take at least five years to materialize. Renowned business groups such as DS Group and Patanjali are also considering hydroponics on a commercial scale.

A growing awareness and the focus on healthier lifestyles amongst people in India should help hydroponic producers reap benefits in the long term. Moreover, an evolving demand of produce not grown in India such as swiss chard, kale, parsley, oregano, and cilantro, provides the necessary tailwinds to hydroponics producers.

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Shyam Agarwal, Perusal Global (Financial research and advisory) ( HT/PHOTO )

What to watch for?

The lack of tax cuts and incentives is a key factor that hinders the growth of hydroponics in developing regions, as the high set-up costs and running, costs can often render operations difficult to sustain. The founders of hydroponic farms should first identify the market/distribution channel to sell its produce. Since hydroponics involves the high cost of production, it is imperative for hydroponics growers to keep a check on the competition arising from the local produce in the price-sensitive Indian market. The founders should then work backward to decide whether the project provides the desired ROI, which is in sync with invested capital and efforts.

Another issue that is a major hindrance to hydroponic farmers is the threat of waterborne diseases. Considering that the nutrient-enriched water is recirculated throughout the system, any kind of waterborne disease that enters the nutrient reservoir often affects the whole crop. As a result, growers often keep their plants spaced out to prevent crowding, which is often how pathogens enter the system.

Lead Photo: Rohit Nagdewani currently has a 6,600 sqft indoor farm.(HT/PHOTO)

Indoor Farming Becomes Decade's Hottest Trends, Millions Invest Globally

Indoor farming becomes one of the hottest trends in the past 10 years and millions have invested money globally that is expected to become a $700 billion market.

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Written By Sounak Mitra | Mumbai

Indoor farming has become one of the hottest trends in the past 10 years. According to the Union Bank of Switzerland report, food and agriculture innovation have marked remarkable amounts of investor capital in recent years and is expected to become a $700 billion market by 2030. A lot of money is being invested globally in indoor urban farms because of their accountability to produce more food with less impact. Dozens of large scale projects have been launched in Dubai, Israel, the Netherlands, and other countries.

Indoor farming may be hampered in the US by high start-up costsBut, it may be hampered in the US by high start-up costs, high urban rents, and lack of safety net in a food system that is highly dependent on subsidies. Trump administration announced in September that it would go back to the Obama era energy-saving measures that would have effectively eliminated the standard pear-shaped incandescent variety. This move is expected to lower the demand for LED bulbs which lasts longer and consumes less electricity as compared to any other type.

The new move to be effective from January is being fought by 15 states and a group of environmental and consumer groups that claim the changes will contribute to climate change and raise consumers' energy bills.

According to Irving Fain, chief executive of Bowery Farming, indoor urban agriculture is a threat to scalability and profitability. The indoor vertical farming company has raised funds of about  $122.5 million from celebrity chefs Tom Colicchio, Jose Andres and Carla Hall, Amazon worldwide consumer chief executive Jeff Wilke and Uber chief executive Dara Khosrowshahi.

READ: Schools In Kochi Promote Organic Farming

Department of Energy's proposal

Some indoor farms stack plants vertically to the ceiling in shipping containers or enormous warehouses and the plants' photosynthesis is achieved via high-tech light-emitting diode (LED) bulbs.

According to Fain, the US Department of Energy's proposed reversal of energy efficiency standards could hamper the emerging agricultural sector. Indoor vertical farming became economically viable when LEDs became popular, cheap and efficient.

Previously, indoor growing lights produced an enormous amount of heat. After the passage of energy legislation bill in 2007, the Department of Energy ruled that the general lightbulbs must emit at a minimum efficiency of 45 lumens per watt by the beginning of 2020. Incandescent bulbs and halogen do not basically meet the efficiency standard.

It’s Time To Redefine Indoor Agriculture

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Nicola Kerslake

Dec 17, 2019

If you think about indoor agriculture as exclusively the preserve of small mom and pop farms selling leafy greens, or of a handful of VC-funded plant factories, you might want to think again.

Although this misconception is understandable — there are many indoor farms that grow leafy greens and operate at a smaller scale — the proposition doesn’t even begin to capture the scale or the diversity of the indoor agriculture industry.

So how should we think about indoor agriculture?

Let’s get one thing straight: the indoor growing sector isn’t small — no matter how you spin it.

Let’s start by looking at the finances of indoor growing. According to a Global Hydroponics Market Source, the global market size is currently valued at $8.1 billion and is expected to grow to $16 billion in 2025. In 2019, the indoor agriculture sector raised $56 million in the first quarter alone — that would be a lot of mom and pop shops!

Media coverage portrays indoor agriculture as the exclusive purview of large scale plant factories, tech-focused entirely controlled environment facilities. These plant factories focus on economies of scale and farm economics. Sometimes, the focus on securing large corporate partnerships, establishing their own produce brands or franchising their approach.

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Companies like San Francisco-based Plenty, have raised a total of $226 million; AeroFarms raised $138 million; Bowery raised $118 million; BrightFarms raised $113 million. Oasis Biotech has had a listed parent, SananBio, committed a hefty one billion dollars to indoor agriculture development. Some assume that these raises end up solely in more production, but that’s rarely the case as companies compete to create ever-better tech and recognizable brand names.

But is that the whole picture?

According to Nicola Kerslake, founder of Contain Inc, part of the reason that we think about indoor agriculture as only being large scale plant factories growing leafy greens is because of how we define indoor agriculture.

“Part of the challenge is that some define indoor agriculture as just being a small group of plant factories, such as AeroFarms and Plenty Ag. But we define it to include all forms of protected agriculture, such as greenhouses, hoop houses, and container farms in addition to warehouse farms, which is a much more diverse group,” she said.

As a result, we need to rethink and redefine indoor growing.

To be sure, indoor farm sizes are on the rise regardless of the form they take. We are starting to see more, bigger farms, and see those farms represent a larger percentage of the overall capacity of indoor farming. Greenhouses, in particular, are seeing a revival in fortunes with labor-saving automation technology becoming more common. In California, a state that represents a large portion of indoor growing in the United States, 28 percent of capacity consists of large greenhouse operators of 30 acres or more. We also have the farms that have broken the 100 acre, and 300-acre threshold, like Nature Sweet in Arizona, which is 336 Acres or Windset Farms-Calif which is 125 acres. Produce major Mastronardi announced just this week that it is close to completing the largest single greenhouse in the country, in New York.

Large companies, that historically haven’t been involved with agriculture, are starting to take up indoor agriculture. The globally known Swedish furniture store, Ikea, announced that they would start sourcing their greens from container farms right on site. Singapore Airlines partnered with New Jersey-based AeroFarms to grow food to serve on their flights right at the airport itself.

But this still leaves plenty of space for other players in a market that is growing at 12%+ CAGR. According to the USDA, more than 90% of America’s farms are small, and there is no reason to believe that indoor agriculture will not replicate this pattern as new farmers opt to serve their communities with year-round leafy greens, manufacturers grow their own ingredients or schools and hospitals grow for their own needs.

Indoor agriculture should not be defined by leafy greens, but by the diversity of its offerings.

“At Contain Inc, we cover both traditional leafy greens, and other types of produce, mushrooms, fish, insects and licensed hemp.” says Kerslake.

As time passes, technology develops and indoor agriculture continues to change. A diverse sector becomes even more diverse. One great example of this is strawberries, a newer crop for indoor systems, now moving indoors apace.

Indoor growers are finding that strawberries grow particularly well in an indoor setting — especially in combination with new growing technology.

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One vertical farm in The Netherlands saw a 300 percent increase in strawberry yield when compared to traditional cultivation. In a piece for HortiDaily, they told the website that they grew a year’s worth of harvest in just one season using new LED technology.

And others are starting to hop on to the trend. The city of Murray Utah is getting the world’s first commercial farm dedicated to growing strawberries with 40,609 square feet for operations.

There is a role for every kind of grower in indoor agriculture, not just the small ones. Now, it is just a matter of giving indoor farms, big and small, the right resources to get started.

“We’ve seen in other industries like solar, that — when the right financing mechanisms are in place — the industry grows rapidly. At Contain Inc, we’re aiming to do the same for indoor agriculture.”

In the view of Kerslake, “indoor agriculture is inevitable as it starts to be adopted by outdoor farmers, newcomers and mega corps alike.”

Indoor agriculture is large-scale, 100-acre farms. Indoor agriculture is also smaller farms. Indoor agriculture includes growing insects; it includes leafy greens. Indoor agriculture is all of this, and more. All of these sectors together, the big and the small make indoor growing the industry that it is today.

Agriculture Greenhouse Indoor Agriculture Hydroponics

WRITTEN BY Nicola Kerslake

• We’re Contain Inc. We use data to improve access to capital for indoor growers, those farming in warehouses, containers & greenhouses. https://www.contain.ag/

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The Promise And Peril of Vertical Farming

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August 10th, 2018

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MARIYA KHANDROS

As part of the Anchor Procurement Initiative, Economy League staff investigate new and emerging industries that could yield opportunities to localize institutional spend. Over the last 4 months, Mariya Khandros, Economy League’s Director of Shared Solutions, has been investigating the current state and future promise of the indoor, vertical farming industry. Conceptually, vertical farming can meet the institutional demand for produce via high-tech, indoor, commercial-scale urban farms. Mariya attended the Aglanta Conference, Indoor AgTech Innovation convening, and participated in working sessions at USDA’s Innovation and Design in Vertical Agriculture & Sustainable Urban Ecosystems conference to help define USDA's research agenda on the subject of indoor agriculture.  The following article is a summary of her findings. 

The indoor agriculture industry spans centuries-old growing methodologies and high-tech, computerized urban farms.

For most people, the concept of indoor farming typically conjures images of neat rows of greens in futuristic self-contained boxes under violet LED lights. But indoor farming – known as Controlled Environment Agriculture (CEA) among those in the industry – has been a reality in Pennsylvania since 1885. Kennett Square mushroom farms produce half of America’s mushrooms, primarily indoors. CEA encompasses a wide range of farms, ranging from lower-tech plastic hoop houses to greenhouses, to high-tech vertical farms. While great advances have been made across the spectrum, significant media and investor attention have homed in on high-tech vertical farms – large plant factories that grow vegetation indoors primarily using LED lights, and relying on sophisticated computer systems to track, measure and, often, harvest crops.

The rest of this article investigates the newest addition to the CEA family - the vertical farm.

As the population grows, arable land shrinks and water becomes scarce, the world faces a looming food crisis.

The growth of the global population, combined with a looming water crisis is moving the Earth towards a global food crisis. Feeding the projected population of 2050 (9.7B) requires an additional 109 million arable hectares, a landmass larger than Brazil. Given that 80% of arable land is already in use, absent major changes to traditional agriculture practices the world faces a significant food shortage.

Water scarcity, likely to be made worse by climate change, is another threat to the global food system. According to the United Nations, by 2025, two-thirds of the world's population will live in water-stressed regions as a result of use, growth, and climate change. Currently, 70% of the world’s freshwater is used for traditional agriculture, so a water crisis will inevitably reinforce the food crisis. 

The impact of climate change will be variable and unpredictable, which will also add pressure on the food system. For example, higher CO2 levels will increase some plant yields, but will reduce their nutritional values. Warmer temperatures may lead to the growth of many new pests and weeds. Extreme temperatures may lead to droughts or extreme rainfall, both of which can prevent crops from growing. 

Vertical farming could be part of the solution because it uses less water and allows farmers to control the growing climate

Dr. Dickson Despommier, who popularized the idea of vertical farming in the US, has estimated that a 30-story building covering one city block (5 acres) could have the productivity of a 2,400 acre traditional farm, because of the year-round growing season and the ability to use vertical space to stack vegetables. Because a controlled environment allows easier water recapture and reduces evaporation, vertical farming is estimated to use 70-95% less water than traditional agriculture. For this reason, areas with limited water supplies are early adopters of vertical farming. The United Arab Emirates is building the world's largest indoor farm, as the country's arid climate, poor soil quality and occasional locust plagues make indoor farming a more financially viable alternative.

However, the industry is young and grappling with many open questions.

The vertical farming industry today can be compared to the home video industry when VHS was still competing with Betamax. There are no standards around technology or growing processes. Data on growing efficiency and financial sustainability is just starting to emerge.

Most vertical farms are struggling financially. According to an Agrilyst survey, only 27% of indoor vertical farms are profitable, as compared to 67% of greenhouse farms and 50% of container farms. Despite a year-round growing cycle, vertical farms can only profitably grow a limited number of crops. Excluding cannabis, the most lucrative crops in 2016 were reported to be tomatoes and other vine crops, strawberries, herbs, and microgreens, salad greens and edible flowers. The single biggest reason for low profitability are the massive start-up costs – an estimated $4 million of up-front investment is needed for a 30,000 square-foot farm, and that does not include the sizeable electricity bills associated with farm operations. 

Critics are also concerned with the environmental impact of indoor farms, pointing to the inefficiency of replacing natural light with fossil fuel-powered lights. A study completed by Cornell suggested that vertical farms have a much higher carbon footprint than greenhouses. Critics see vertical farming as an over-engineered solution to the problems plaguing the food system and suggest that improving crop diversity, reducing food waste and maintaining soil integrity in traditional agriculture will address the long-term nutritional needs of the planet.

As a city, Philadelphia has seen first-hand the ‘over-promise and under-deliver’ downside of the indoor farming industry, with the recent revelations about the legal and operating troubles of the much-hyped Metropolis Farms. It also saw the rise and fall of a once-promising aquaponics endeavor in the early 2000s.

Despite early struggles, the industry may be reaching a tipping point; rapidly falling cost of LEDs, artificial intelligence and the global water crisis may tilt the scale in favor of vertical farms.

In the United States, there are an estimated 40,000 CEA farms producing $14.1B of market value each year; when compared to 2.1 million farms overall, with $395 billion in agricultural products, the number of vertical farms seems negligible. However, despite comprising a small portion of farming, indoor farms seem to take the lion’s share of investor attention. In 2016, investment in vertical farming grew from $36 million to $271 million (+653%), driven primarily by Plenty Farms. Several technological and environmental developments are driving this trend.

Despite murky profitability prospects associated with vertical farms, investors see potential because of rapid development in two technologies – LED lights and artificial intelligence. Many companies made their fortunes on the falling cost of a technology: Google on the cost of data storage, CRISPR on the reduced price in DNA sequencing. This is what ultimately convinced prominent investors, including Amazon’s Jeff Bezos, to give $200M to Plenty, a fledgling, but ambitious vertical farm company.

The second development driving down the cost of indoor farms is the leaps and bounds being made in the realm of artificial intelligence. Labor is one of a cost that indoor farmers are open about seeking to minimize. A familiar debate tends to emerge around the question of job destruction; with vertical farmers saying that they are replacing hard, back-breaking labor of harvesting with family-sustaining technician jobs, while critics allege that the new jobs will not benefit individuals who are losing the low-end job. However, by and large, vertical farmers are not aiming to replace traditional farming, but capture untapped demand generated by a growing population and an increased appetite for greens and other produce. Anecdotal evidence demonstrates that so far, the job creation story aligns with this vision. Vertical farming is creating entirely new jobs and drawing from a young, urban, highly-educated population that would be unlikely to pursue traditional farming jobs. 

The third economic lever is related to environmental change. Historically, water has been highly subsidized in the US. However, as water becomes scarce, and in regions such as the Middle East, where it already has, the cost of traditional agriculture will rise, compared to the more-water efficient vertical farms.

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Aquaponics Bed, CC Image courtesy of Plant Chicago on Flickr

In the US, vertical farming has the potential to provide numerous benefits to cities, including the revitalization of vacant spaces, job training programs and an innovative approach to nutritional education.

Around the country, cities have employed vertical agriculture as a tool for education, food system resiliency, job training, and community-building by incorporating vertical farms into broader community initiatives and building deep connections with neighborhoods in which farms are located. 

For example, in Washington DC, Urban Food Hubs are small scale systems centered on high-efficiency urban food production (traditional urban farming methods combined with hydroponic and aquaponic systems), co-located with commercial kitchens and community spaces for education. These centers provide nutritional education, vocational training in vertical farming and food processing, and help address nutritional deficiencies in neighborhoods by growing food for local distribution. 

In 2017, a Baltimore company, Urban Pastoral, partnered with workforce training organization Humanim, a nonprofit that creates sustainable social enterprises, to build a vertical farm that will train workers in “new generation farming.” This year they are slated to open another farm on the grounds of a high school to teach students about farming and running a business.

In Chicago, Plant Chicago is a collective of businesses with a mission to cultivate ‘circular economies’ (systems where waste from one process is repurposed as inputs for another to create a closed-loop model of material reuse). An aquaponic vertical farm is one of the components of the system, interchanging CO2 and oxygen with a co-located kombucha producer and beer brewer.

Atlanta sees vertical farming as a puzzle piece in their urban agriculture landscape and another way of increasing the resiliency of their food system, under the Smart Cities initiative. Additionally, their policymakers work to attract farms to vacant lots and buildings in order to help increase surrounding property values. 

It should be noted that although the initial pitch of a vertical farmer to a city typically starts with the promise of job creation, this is not a benefit most cities seek from vertical farms. By design, vertical farms are not very labor-intensive. One of the most successful indoor growing operations, Gotham Greens, is building the world’s largest rooftop farm (140,000 sf) in Chicago’s 9th Ward. It will create 60 permanent jobs. Despite this limited workforce development potential, policy makers see value in vertical farms as a tool for community engagement and education, at least while the industry is in its early stages.

Philadelphia should be positioning itself to capitalize on the vertical farming opportunity while implementing policies to mitigate risks associated with the industry.

Vertical farming can benefit Philadelphia’s economy in a variety of ways: indoor farms can help improve the utilization of abandoned warehouses and buildings, provide another means of nutritional education and help a new generation become enthusiastic about farming through workforce development initiatives. At the same time, vertical farming is an industry in flux, making it difficult for policymakers to predict the success or failure of any given venture. In order to mitigate risk, rather than picking winners for large tax incentives, policymakers should create an ecosystem that allows many vertical farms to thrive.

The following are policy areas that Philadelphia should consider to encourage the growth of vertical farming while limiting the city's exposure to the industry's downside.

 Including Vertical Agriculture in City Planning Efforts

Rather than seeing vertical farming as a stand-alone industry, policymakers should consider it in the broader context of the regional food system. Not only does Pennsylvania have a robust farming industry, Philadelphia’s traditional urban farms have been a vehicles for lot beautification, food justice, and income generation for decades. Consequently, any urban farming plans or zoning policies should take existing urban and regional farms into account. Atlanta offers a great example of comprehensive planning. Atlanta included urban food policy into its Resilient Atlanta Strategy and promotes every type of agriculture, from lot farming to high tech indoor farming through Aglanta, a program under the umbrella of the Mayor’s Office of Resilience. Aglanta, in turn, cooperates with the state-wide Georgia Grown program.

Tax Incentives

Both Philadelphia and the Commonwealth of Pennsylvania offer extensive tax incentives and grants to new companies for job creation, investment in disinvested neighborhoods, property renovation, and environmental sustainability. Additionally, there are programs at the state and federal levels specifically targeted to farmers. Rather than adding new incentives, Philadelphia policymakers should assemble relevant tax breaks into a package that entrepreneurs can use to identify applicable incentives and navigate the process of applying for each program.

Defining the Market

A market study that quantifies the demand for locally grown produce, identifies distribution centers, institutional buyers and other potential clients can catalyze the creation or expansion of farms by demonstrating the opportunities available in the Philadelphia market. The Economy League’s assessment of the Philadelphia food economy can serve as the foundation for such a study. Beyond a report, actively making connections between farmers and institutional food buyers can support fledgling ventures by providing a stable source of revenue. 

Due Diligence

Because vertical agriculture is a new and evolving industry, few investors and clients have the skillset to assess the technological capabilities, revenue projections and growth forecasts of vertical farms. Policymakers can help build credibility with both set of parties by identifying organizations or companies that provide due diligence. For example, Eric Stein is developing a Center of Excellence for Indoor Agriculture in Pennsylvania. Nationally, Agrictecture specializes in helping municipalities develop policies and foster the creation of vertical farming economies. By identifying a skilled and neutral party to help investors and buyers distinguish between promising and floundering ventures, policymakers will help build a local knowledge base and reduce risk.

Industry Networking Opportunities 

Many entrepreneurs in the vertical farming space are not focused on building and managing farms, but on producing different parts of a whole (lighting, fertilizer, irrigation system). For this reason, creating a space to bring together technology companies, farmers, customers and funders will be critical to the success of the industry. However, limiting these events to vertical farmers would be a mistake. Rather, these events should provide an opportunity to create linkages between urban and rural farmers, as well as Philadelphia's traditional and high-tech farms, to facilitate knowledge and technology transfer.

Education and Workforce Training 

Building out a workforce requires breaking down siloes between technology and agriculture, working with universities (such as Philadelphia’s two nearest land grant universities – Rutgers and Penn State) to create opportunities for training and knowledge transfer. When it comes to equity, vertical farming is in danger of repeating the mistakes of Silicon Valley – creating opportunities almost exclusively for an ethnically homogenous group of wealthy individuals. Placing growing towers in public schools and community centers, creating multi-functional food hubs and developing job training program are ways that cities have worked to distribute opportunities more equitably. Working with vertical farms to ensure they are growing culturally appropriate products for their neighborhoods will deepen linkages to surrounding neighborhoods and, consequently, a more diverse workforce.

The Economy League's Anchor Procurement Initiative team will remain attentive to developments within the industry. 

Vertical farming alone will not solve food deserts, nor eliminate unemployment. However, it is an exciting new industry that promises to revolutionize many aspects of agriculture, while redefining local by bringing farming into our most intimate spaces: homes, offices, and schools. If Philadelphia approaches this new industry with discipline and intention, our city will be poised to reap the benefits for many years to come.

Although the vertical farming industry is currently in too early of a stage to be able to provide a stable supply of produce to anchor institutions, it is developing very rapidly.  The API team will keep track of the developments within the industry, in order to identify viable opportunities as they appear in our city.

5 Things You Need To Know About Financing Your Farm

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By urbanagnews

December 11, 2019

By Chris Rawley, CEO of Harvest Returns

More producers are turning to indoor farming today to meet the demand for locally-grown produce, for its environmental benefits, and as a sustainable way to transform the food system. Building a new greenhouse or equipping a vertical farm can require significant amounts of capital. Indoor growers are faced with an agriculture finance system in the United States that is anything but innovative and hasn’t changed significantly in 50 years. USDA guaranteed loans and similar debt vehicles are optimized for land loans and operating agreements for row crop farmers, because that’s where the most significant amount of money is to be had for lenders. 

Equity investments can be an alternative for indoor growers. According to PitchBook, about 15% of the $2.1 billion invested by Venture Capital firms in AgTech in 2018 was in indoor agriculture. That said, very few companies actually receive VC investments. Investments of a hundred million dollars or more like that in AppHarvest are the rare exception, not the rule. For a producer who needs to raise between say $200,000 to a few million dollars, the options are much more limited.

How to Finance your Farm

Here are five things indoor producers should know about financing their farm:

1. What’s your purpose?

The first step in any project is to ask yourself why you are doing this? Are you simply in it to make money? If investors understand that you have a vision that goes beyond yourself, they are more likely to trust you with their funds. Without a doubt, investors want to make a good decision based on the math and how it increases their returns, but more and more investors are putting their money into things they believe in. A mission driven opportunity shows that you are thoughtful, focused, and determined – all aspects of a good investment.

2. What’s your plan?

You need to develop a concise, articulate business plan or pitch deck that clearly explains how you will develop or expand your farm, and how investors will benefit from it if they trust you with their money. What is your exit strategy for investors in terms of time line and sources of liquidity? There are several resources online or consultants that can help you put together a professional business plan for your controlled environment agriculture project. In most cases, a 50 page business plan with appendices is not necessary, at least at this stage. A good start is a well-structured slide deck and maybe a one page offering summary. Investors are inundated with opportunities so its better to be short and memorable, then long and complex.  

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3. Build your team.

People invest in people, not just ideas, or projects, or companies. Investors want confidence that they are entrusting their money with a capable, trustworthy team who can successfully execute a plan. No one is an expert at everything. You may be able to make tomatoes grow on an iceberg, but if you or someone on your team doesn’t know the difference between a balance sheet and an income statement, you’re going to have a hard time running a successful company. So if you are lacking in farming skills, or accounting skills, or marketing skills, you need to surround yourself with people who make up for your shortfalls. A team doesn’t have to be partners or employees. It can be an advisory board, consultants, or contractors. But build a team and ensure your investors know about it.

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4. Understand and control your risks.

Above all, investors are afraid of losing their money. They want to understand the ways they could possibly get burned. Indoor farms face market risks, technology risks, and agronomy-related risks. It is crucial to identify, disclose, and explain the ways you are going to reduce the impact of these risks on investor returns. 

5. Engage your network.

Before even thinking about approaching an equity funding source, be it a VC or a funding platform, you should run your plan by your internal network. Building a network of industry experts is important, and can be jump-started by attending any of the large number of agriculture or food related conferences. Share your idea and practice pitching it to your friends, family members, or business savvy colleagues. Have a short “elevator pitch” ready to go to talk enthusiastically for whomever you meet about how your new farm is going. Start building your network by attending industry events and conferences. Ask your contacts for honest feedback and referrals to people who may be looking into investing what are doing. Also, don’t be afraid to ask friends and family to take a chance on investing in your farm. Many great companies were started because of these types of early stage investments. 

These five items apply to pretty much any type of agriculture business, including the increasing numbers of legal cannabis growers. A solid strategy is required to raise capital whether you are producing hemp or tomatoes and no matter what type of production method you are using.

• TAGS Business Financing Greenhouse Greenhouse Technology Indoor Ag Technology

• Indoor Farming Technology

Netled Partners Up With Contain Inc.

Netled announced that they have started a financing collaboration with US-based company Contain Inc. Contain Inc. will start offering financing services for Netled’s customers in North America.

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Contain Inc. works with private lenders facilitating leases for indoor growers and creating custom insurance solutions. The company organizes financing for all indoor farming, for example, LED, growing systems and greenhouses.

The partnership will further strengthen Netled’s position in the US market and offers new possibilities for their customers. Netled International Sales Manager Niko Kurumaa comments: “Netled offers a fully integrated large-scale vertical farming system Vera, which highlights automation and productivity. We always try to find a comprehensive solution for our customer’s needs, and now with Contain, we can offer a solution for customer financing, which is often a crucial part of the sales process.”

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For more information:
Netled
netled.fi

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Publication date: Thu 5 Dec 2019

Farmshelf Gets Angel Investment From Singapore’s she1K, Liberty Produce Launches UK Vertical Farming Project

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by Jennifer Marston

DECEMBER 2, 2019

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Angel network she1K has syndicated an early-stage investment in Farmshelf, according to an article published today on AgFunder News. Singapore-based she1K, which is known for its global female executive leadership, did not disclose financial terms of the deal. Farmshelf is the third company to join its portfolio 

Whereas many companies in the vertical farming space right now have massive indoor facilities aiming to produce millions of heads of leafy greens, Farmshelf differentiates itself by staying focused on smaller spaces like supermarkets, offices, hotels, and restaurants. Its bookcase-sized farm grows leafy greens and herbs using a combination of custom LEDs, sensors, and software that deliver water, nutrients, and the optimal amount of light needed for each crop. The system, which can simply be plugged into a wall and connected to WiFi, is already at a number of restaurants, hotels, and other spaces, including NYC chain Tender Greens, Marriott Marquis Times Square, and the Condé Nast offices. 

The Farmshelf system is currently available to businesses in parts of Texas and California and will be available to customers “in most major markets” in 2020.

Farmshelf isn’t the only indoor farming initiative kicking off December with big news. Across the Atlantic, agtech company Liberty Produce has finally launched its vertical farming project that looks to improve both crop yield and operational costs for vertical farming through improved, more automated tech.

According to a press release sent to The Spoon, Liberty Produce has partnered with several entities for the project. While most were not disclosed, a major one is Crop Health and Protection (CHAP), a network of scientists, farmers, researchers, academics, and businesses developing new ways to use technology to improve the farming system in the UK. Work on the Liberty Produce project is being done at CHAP’s Fine Phenotyping Lab at Rothamsted Research in the UK, with experts experimenting with plants’ responses to different light intensities and studying the best LED “recipes” for crops.

“There’s lots we don’t know about growing plants in this artificial environment and we’re not giving them optimal conditions,” Liberty Produce founder Zeina Chapman told The Spoon earlier this year. “With lighting, there isn’t an option to control it in a way that maximizes plant growth. So we might be putting plants under stress.”

Liberty also wants to use more automation to make the concept of vertical farming easier for anyone, something Farmshelf also appears to be striving for with its plug-in-and-go system.

It’s an admirable goal to strive for, especially if it can get more locally grown produce into the hands of more cafeterias, universities, local businesses, and, eventually, individual homes.

The test — and something we’ll hear more about in 2020 — will be whether the vertical farming industry can find a way to do this cost-effectively. There’s plenty of hype right now around the promises of vertical farming. As to whether it can actually become an everyday reality for the everyman, the jury is still out.

FILED UNDER: AG TECH BUSINESS OF FOOD FEATURED FOODTECH FUNDING MODERN FARMER

STARTUPS VERTICAL FARMING

Netled’s Niko Kurumaa On The Potential of Indoor Agriculture In North America

Nicola Kerslake

Nov 29, 2019

When we dialed Niko Kurumaa, sales manager at Netled, he took Contain’s call from the rooftop of a hotel in Los Angeles. When asked how his day was going, the tone of his voice was as bright and cheery as the California sun, “Well, it’s nice here so you could say that I’m doing pretty well,” he said.

But Kurumaa was pretty far away from his home-base in Finland. So, what brought him all the way from the cold of Finland to the American west coast?

He was there for one reason: the promise of indoor agriculture in North America.

Kurumaa is the sales manager at Netled, a Finnish company that sells indoor agricultural tech like LED lights for indoor growing and fully integrated vertical farms. And now he’s in the United States to lead sales at the company as it enters the North American indoor agricultural market.

“We at Netled think that there is a huge potential for our products in North America.” He continued, “We have always been a global company, but now we see that North America has the need and the market for indoor growing technology.”

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Photo courtesy of Shutterstock

Netled is new to the indoor agriculture market — Kurumaa has been working in the United States for around five months now and has one LED lighting project in the United States so far. Although their experience working in the United States may be limited, this is just the beginning, and they see the potential for future business.

Growing North American indoor agriculture

When Kurumaa talks about Netled’s reasoning behind entering the United States, it all comes down to the economics of indoor farming and the quality of greens grown by their indoor farms.

“Our [vertical farming] system doesn’t just grow better quality greens; it’s economically feasible when you compare it to the traditional ways of growing greens and herbs” Kurumaa explained.

But the Company has seen some challenges to entering the U.S. market, like communicating its feasibility to possible customers.

“There are times when we need to explain the process of indoor agriculture when we meet potential growers. Some people don’t even believe that this technology exists, because people know less about it.”

This makes selling their technologies a challenge, but they find ways to overcome misunderstandings.

“We have two reference farms. One in the UK to go with our customers and a larger one in Finland that has around 47,000 square feet of growing space,” he told Contain.

The company can take growers there so that they can see first hand how vertical farming works. In addition to the farms, Netled has even set up their office as an indoor farm just so that visitors can see their technology in action when they come in for meetings.

Proving the value of indoor agriculture may be a challenge, but to Kurumaa, the promises dwarf any barriers they face to entering the market.

“South California has a long drought season and forest fires are raging. We need to think about how we use land and water. Systems like ours use about 99 percent less than conventional farms,” he said.

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He told Contain, “most leafy greens are grown with pesticides in California and Mexico and then are shipped thousands of miles all over North America. People are starting to see that this isn’t an ethical way to produce food.”

He paused and then said, “Now we can produce much better lettuce in urban areas right next to the consumer. There is no reason to ship lettuce the long distances.”

It just goes to show that for this company, the call for indoor agriculture isn’t just about economic feasibility. It is about providing a brighter future for the regions of the United States like the American west. As Netled expands the business to the United States, they bring an economic rational, and an ethical imperative to live more sustainably.

• Agriculture Hydroponics Led Lighting Led Lighting Industry Indoor Agriculture

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WRITTEN BY

Nicola Kerslake

We’re Contain Inc. We use data to improve access to capital for indoor growers, those farming in warehouses, containers & greenhouses. https://www.contain.ag/

Plenty’s Plans To Shelve Its Seattle-Area Operation Raises More Questions About Vertical Farming

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by Jennifer Marston

NOVEMBER 18, 2019

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Indoor ag-tech startup Plenty is shelving its plans for a Seattle-area vertical farming operation, according to an article published over the weekend on GeekWire.

Plenty, who also runs a facility in the San Francisco Bay Area, announced plans for a 100,000-square-foot vertical farm in Kent, Washington in 2017 — the same year the company nabbed a $200 million investment that included contributions from Softbank and Jeff Bezos. The Kent facility was supposed to grow 4.5 million pounds of greens annually using a combination of LEDs, sensors, and cameras inside a completely climate-controlled environment.

However, Christina Ra, Plenty’s senior director of integrated marketing, told GeekWire that the company’s farming facility, Tigris, was too tall to fit inside the Kent location and that Plenty had “ceased operations” there one year ago: “As a relatively lean company, we had to just make a decision about where we were going to put our focus and we felt like building Tigris, while also focusing on Seattle as a new and really important market, was something that we couldn’t do well,” Ra said.

Meanwhile, seven former Plenty employees recently spoke with Business Insider and highlighted problems inside the company that allegedly range from unsafe working conditions to the fact that “Plenty’s leadership had exaggerated the company’s capabilities on more than one occasion.”

Plenty will carry on with its planned location in the middle of Los Angeles, which the company recently announced, and it still operates a facility in the SF Bay Area. But as this news about the Seattle operation indicates, what Plenty (or any vertical farm startup) promises versus what it actually produces aren’t necessarily aligning right now.

Perhaps unsurprisingly, that refrain around expectation versus reality in vertical farming is one we’re going to hear more in the near future. As an industry, vertical farming has yet to prove itself as an environmentally and economically efficient piece of the agriculture system, and along with the hype are more and more stories about complications or outright closures of vertical farms. Already, a company called FarmedHere shut down in 2017, Plantagon went bankrupt in March of 2019, and just recently, MIT halted work on its controversial Open Agriculture Initiative project after reportedly exaggerating results of its vertical farming experiments.

While it’s bad news pretty much anytime a company goes under, for vertical farming, it’s also good information to have. As Paul P.G. Gauthier, who started the now-shelved Princeton Vertical Farming Project, told The Spoon this year, we need the stories about what isn’t working (e.g., operational costs, failure to break even, etc.) as much as we need the success stories.

And we need those stories not just to give lessons on how to employ vertical farming more effectively but how much effort (and money) we should even be investing in it as the agricultural industry continues to look for alternative forms of farming.

FILED UNDER:

• AG TECH

• BUSINESS OF FOOD

• FOODTECH

• MODERN FARMER

• VERTICAL FARMING

The Second Generation of Vertical Farming Is Approaching. Here’s Why It’s Important

November 4, 2019

Boaz Toledano

Editor’s Note: Boaz Toledano is a business consultant specializing in vertical farming and other agtech markets. His website is: www.EconoMind.co. Here he writes about how vertical farming is progressing into its next stage. Disclosure: Toledano independently included mention of one of the AgFunder’s portfolio companies IGS (Intelligent Growth Solutions).

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Vertical farming practitioners claim to be pioneering the third agricultural revolution.

Vertical farming is the practice of growing produce in vertical stacks using soil, hydroponics or aeroponics to deliver water and nutrients to the plants.

With seemingly higher-quality produce that is grown efficiently, locally and with a potentially lower environmental footprint, the industry appears to be a promising answer to the rising need for sustainable farming methods. 

The market was valued at $2.3 billion in 2018 and investments grew significantly from $60 million in 2015 & 2016 to $414 million in 2017 & 2018. What’s less commonly known, however, are the challenges vertical farming companies face and the prospects of overcoming them in order to establish the viability of this industry.

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Not surprisingly, capital expenditure (CAPEX) is high. A smallscale, low-tech vertical farm employing 1st generation technology (more on this later) can cost around $280 thousand to start. However, when we consider the more complex operations, those that employ 2nd generation technologies, the setup costs may surpass $15 million. 

In order to understand why these figures are so high, we must first understand the difference between the two generations of vertical farming technologies, and why the transition between the 1st and the 2nd is the most important process in this industry’s short history.

First-generation technology enables the basic functions of a vertical farm to occur without the constant intervention of human operators. Second-generation technology enables the growing process to not only be automated but also be continuously optimized to the requirements of the plants being grown. These two generations can be further divided into five levels, detailed below. Generally, the more a company has advanced down these levels, the better its competitive advantage.

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When vertical farms were being established around the world about a decade ago, they employed 1st generation technology. These operations showed it was possible to grow food — and other plants — in vertical structures, thus enabling a more efficient use of land. On average, 2nd generation vertical farms yield 55 times more produce per unit of area compared with conventional farms. For the first time in modern history, food could be grown in cities, where it is eaten.

It has also become possible to remove problematic sections of our food supply chain, for instance, transportation and the pollution that goes with it, excessive packaging and preservatives. Also, we could finally reconnect to the source of (some) of our food, a privilege that was removed from our lives around the 17th century, when the Second Agricultural Revolution — also known as the British Agricultural Revolution — sparked the industrial revolution that led to mass urbanization.

Next, vertical farms had to prove their economic viability. Virtually the only way companies were able to become profitable is by using technology to cut down on the high operating expenses (OPEX), which mainly consist of lighting and labor (~30% of OPEX each).

Enter 2nd generation technology.

In a vertical farm, LEDs (light-emitting diodes), which provide light to the plants, are more efficient than other forms of artificial lighting that were used in the past (fluorescent and incandescent), resulting in lower operating costs. According to the International Energy Agency (IEA), LED lighting efficiency is expected to increase by an extra 70% by 2030. The pricepoint also continues to drop.

Labor expenses will be tackled by automation. Many startups and some capital-backed growers are developing technologies to help vertical farms reduce their dependence on human labor, with remarkable achievements. A noteworthy example is IGS (Intelligent Growth Solutions), which has developed an automated system that enables highly efficient production using modular structures. The company claims to have reduced labor by up to 80% and power by up to 50%. Its plan is to sell its technology to companies that want to improve the efficiency of their vertical farms’ operations.

Another example is Plenty, an industry leader and one of the best-funded vertical farming groups globally, which was able to improve the energetic efficiency of its newest facility, Tigris Farm, fivefold, compared with its previous facility. Though quite secretive, we now know that the company uses plant management automation to transfer its growing towers around the warehouse, as well as harvesting automation.

These are examples of the OPEX reduction trends the industry is seeing. Lighting improvements should reduce OPEX by 12%, and automation should cut OPEX by a further 20%+.

Since vertical farms have thus far introduced mediocre returns on investment (ROIs), these reductions in OPEX are crucial for the industry to prove itself to investors, governments, and companies considering entering the market. Although CAPEX will remain high compared with conventional and organic farming, the 30%+ expected reduction in OPEX makes a compelling case for vertical farming.

Current market prices for 1 kg of leafy greens are around $33 for vertically-grown produce and $23 for organic produce. As vertical farms invest and employ higher levels of technology, they will be able to increase their competitive advantage by driving down costs and prices. Eventually, I believe, they will be able to compete with organic producers, who last year operated in a $100 billion market.