Vertical farming is growing quickly. The concept of vertical farming, the idea that crops can be grown far more efficiently indoors under controlled environmental conditions than would be possible on conventional farmland, has captured the imagination of entrepreneurs and investors alike, with dozens of start-ups being founded across the world raising ever increasing amounts of investor capital. The recent IDTechEx report, “Vertical Farming 2020-2030” explores the technologies and market factors that are shaping this rapidly expanding industry.
An ongoing argument within the industry is a question of size – is it better to focus on building a large, highly automated plant factory to minimize production costs, or is a small, more flexible approach the best way to set up a vertical farm?
This question stems from some of the challenges facing the vertical farming industry. Setting up and running a vertical farm is not cheap and many vertical farming companies have struggled to overcome spiraling labor and power costs, alongside unforeseen logistical complexities, and issues with maintaining an optimum growing environment.
A potential solution to some of these problems is to build a very large vertical farm, which allows the power costs to be averaged out over a large quantity of crops. Additionally, large vertical farms make it easier to justify using advanced automation systems that can help reduce labor costs, with the cost of the automated systems also being spread out over large quantities of crops.
These sorts of economies of scale can help a vertical farm begin to reach price parity with a conventional farm, something which has long eluded smaller vertical farms, which are often forced to sell produce in premium categories. Large vertical farms producing large quantities of crops can also be more easily incorporated into existing food supply chain structures, for example, next to a supermarket’s main distribution center.
One company attempting to use this scale-based approach is Jones Food Company, a British vertical farming start-up that currently operates Europe’s largest vertical farm. The company believes that the only way that vertical farming will be successful in the long term is by reaching price parity with conventional farming, which it hopes to achieve through automation and by operating large scale facilities close to distribution centers.
The company takes its inspiration from car factories – it is far more cost-effective to produce cars in a large central facility than it would be to produce them in small facilities near the dealerships and Jones Food Company believes this same logic applies to vertical farming. Crops grown in distribution centers are still able to reach consumers rapidly, often within a day of harvest, and the company doesn’t believe that the hyper-local model promoted by certain competitors is worth the inefficiencies and costs of many small facilities located in city centers.
Several other vertical farming companies are following this approach, with New Jersey start-up AeroFarms announcing in 2019 that it was investing $42 million to construct a 150,000 square foot facility in Danville, Virginia, which the company claims will be the largest in the world. Jeff Bezos-backed Plenty operates a 52,000 square foot facility in South San Francisco, with the company aiming to maximize production efficiency to improve the economics of vertical farming.
