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Scaling Vertical Farming and Reaching Net Profitability
This year’s virtual Indoor AgTech Innovation Summit on June 24-25 is already a “who’s who” gathering of greenhouse and vertical farming leaders from across the USA, Europe, Asia and the Middle East, ready to explore the trends, business models and technologies underpinning the sector wide boom.
Ahead of the summit, we spoke to four of our industry experts to get their perspectives on scaling indoor farming and reaching net profitability.
SCALING AT SPEED: DELIVERING THE PROMISES OF A MISSION-LED INDUSTRY
What is driving the rapid expansion of greenhouse operations across the world?
Sky Kurtz, Co-Founder & CEO, PURE HARVEST
“It has become obvious that traditional agriculture is not fit for purpose when it comes to the future of the planet. Consumers have become more attuned to what they are buying and are leaning towards organic, sustainable and pesticide-free options, even if the cost is slightly higher. By eliminating the environmental impacts on food production and reducing (or eliminating) the use of pesticides, controlled-environment agriculture allows for consistent, high quality production which leads to localized production whilst meeting consumers’ changing demands.”
Viraj Puri, CEO, GOTHAM GREENS
We see a bright and promising future ahead for indoor farming and the “Greenhouse Grown” produce category in North America and around the world. There is an incredible value proposition for growing highly perishable fresh food in close proximity to large population centers across the globe while using fewer natural resources. As consumers continue to demand more transparency in how and where their food is produced, I believe that the demand for safe, clean vegetables grown in greenhouses will continue to increase.
To what extent does location and regional demographics impact the crop varieties grown in new facilities? How can the “local” USP of indoor agriculture be preserved as operations scale?
Sky Kurtz, Co-Founder & CEO, PURE HARVEST
“Cultural and socio-economic demographics heavily influence what can and should be grown within controlled-environment agriculture (CEA). Some crops, such as premium quality leafy greens tend to target more affluent demographics and palates, whereas tomatoes, cucumbers, and some other greenhouse vegetables can be produced affordably in most places in the world. Solutions like ours at Pure Harvest have made growing produce affordably year-round a reality, even in the harshest climates. Large scale CEA solutions are necessary for the future not only in harsh climates but also for dense urban populations.”
REACHING NET PROFITABILITY: HOW IT’S DONE
Has the sector matured to the point where we can have an open conversation around the successes and challenges faced when building a profitable indoor farm?
Tisha Livingston, CEO, INFINITE ACRES
There are very few success stories where the industry has demonstrated how to build a profitable indoor farm. Profitability seems to be elusive, but investors continue to put money into the space with the hope of finding the business that can successfully scale. Focusing on the challenges associated with building a profitable indoor farm leads to a perceived vulnerability within the sector that while fundraising, no one wants to discuss. Until we have demonstrated enough success, I do not think the industry is mature enough to openly discuss successes and challenges.
Henry Gordon Smith, CEO, AGRITECTURE
Everyone should know by now that most large-scale vertical farms growing leafy greens are not getting a healthy ROI (yet). This shouldn’t hold us back from pressing forward to develop a more sustainable model for the future of vertical farming. The economics are improving, market fundamentals exist, and we know that smaller and medium vertical farms can recoup their investments so there is a future for the larger versions too. When it comes to vertical farming, at-scale profitable production will require more than just building the “biggest” or “most-automated”, it will require extended preparation.
How do growers draw the line between investing in their own R&D and collaborating with existing input and technology providers?
Henry Gordon Smith, CEO, AGRITECTURE
I look at the choice between integrating existing technology or building your own as I do the choice of being a farmer or a technology company. If your top priority is farming effectively, then build your farm based on best practices and then innovate only on those aspects of the operation that you cannot find a reliable solution for in the market. If you want to be a technology company, build a farm to showcase and improve your technology.
Will true industry wide profitability come from a fall in price of existing technologies or new developments in automation and seed varieties?
Tisha Livingston, CEO, INFINITE ACRES
True industry-wide profitability will come from a variety of innovations in the space. Being able to reduce unit economics through automation to reduce labor, smart design to reduce energy consumption and yield improvements through seed varieties will provide a basis for reasonable unit economics to pay back the capital investment of the farm. Technological advancement in the understanding of crop growth through AI will also drive significant improvements in yield, quality and flavor once there is a capability to control the environment and truly implement the learnings from AI. Until you can control the total conditions of crop growth, AI is nothing more than a nice way to collect data and generate theoretical models.
Hear more from the experts at the Indoor AgTech Innovation Summit on June 24-25. Henry Gordon Smith from Agritecture will chair a panel discussion on ‘Reaching Net Profitability: How It’s Done’ alongside Tisha Livingstone at Infinite Acres, Guillaume Fourdinier at Agricool, Jessica Naomi Fong at Common Farms and Omar Al Jundi at Badia Farms.
Sky Kurtz at Pure Harvest will share his insights on the panel: Scaling at Speed: Delivering the Promises of a Mission-Led Industry with Jonathan Webb at AppHarvest, Nona Yehia at Vertical Harvest, Viraj Puri at Gotham Greens and Steve Platt at BrightFarms.
The full program, speaker faculty and registration are available at indooragtech.com