The Case for Vertical Farms

The global food industry is at the centre of the worlds growth. The world’s population will grow to about 10 billion people by the year 2050. That population will demand almost 1 billion tonnes of cereal, up about 50% from today. Food production could be one of the major issues of the next few decades.

Scaling production to those levels isn't easy. We've had droughts and losses in soil quality, which have lowered crop yields. Global events have had an affect on the food supply. Technologies, like Vertical Farms can help bring quality nutrition to millions of people.

What the &$^# is a Vertical Farm?

Vertical Farms grow crops in stacked layers in a controlled growth environment. They also consume less resources, like land water and fertiliser. The industry is expected to grow from 5.37 billion USD in 2021 to over 30 billion by 2030.

There are many kinds of farms varying in scale and type, but hydroponic farms are the most common. They bring nutrients in liquid form to plants within a controlled environment.

What's interesting about Vertical Farms?

Vertical Farms are very efficient for land and water use. Some companies, like Plenty, claim to get yields of over 350 times the produce per acre on one percent of the water used by dirt farming. Produce from vertical farms has different features than traditionally grown fruits and vegetables. Farms use various light recipes to affect the qualities of the food. Some products can be grown to fit a specific flavor profile, or improve yield. The farms use no pesticides and friendlier nutrients to encourage growth.

When your salad is grown closer to you, its strain on the environment goes down. Plus the Vertical Farms don’t use the heavy machinery, like tractors and plows to cultivate their products. Most of these Farms are powered with Solar Panels on top of their facility. These ones can even contribute back to the electricity grid.

What makes these hard?

Ahhh… I see you’ve noticed things aren’t all rainbows and waterfalls in the land of Vertical Farm... aren’t you a smart cookie. Vertical Farms are a challenge to operate. Because of the enhanced control of lighting, temperature, nutrient mixtures and more; the farms have a high operational complexity.

Because the technology is still so novel, it is expensive to purchase and set up the appropriate infrastructure to support a farm. The LED lights as well as climate control and nutrient mixtures are not cheap. While the cost of LEDs will decrease in cost, at the moment they are still quite expensive.

Farms must produce high margin foods to be economically sustainable. In their current state, Vertical Farms can't compete on price with most conventionally grown food. More expensive Micro-greens like Basil, Sprouts and Lettuce can make a Vertical Farm sustainable. Companies like Plenty have built multi hundred million dollar businesses selling premium Vertically Farmed products. While this sounds great, the people who need access to the nutrition Vertical Farms offer, are often priced out.

Vertical Farms require a prohibitively long timeline to recoup their initial investments. However, as technology improves and economies of scale begin to take effect costs will become manageable. Automation is often described a way to lower expenses in Vertical Farms. It would minimise time to market, reduce distribution, production, and environmental costs, and standardise the high quality. Because the appropriate automation technology is still so young, the value it adds is not worth the headache that complexity creates.

As the technology develops, and necessity of a more automated farming system become reality those costs will drop.

What do we think?

While Vertical Farms do have their challenges, they require two things... time and scale. Bigger Farms in the right places will allow more food to be grown in a sustainable manner. The most important question is how long will it take for economies of scale and technology to catch up to demand. As time goes on and technology develops, it will become cheaper and cheaper to scale these farms.

While they aren't the silver bullet, Vertical Farms could be one of the solutions to challenges in the global food supply. Combined with renewable energy and improvements in technology they could become a cheap way to mass produce high quality foods and feed the world.