Farms are shooting up in cities. From Singapore to New York, they promise urbanites fresh veggies that cut GHG emissions, water use and pesticides, while boosting food safety, nutrition, and variety — all critical to building sustainable food systems. However, as with any emerging industry, not everything is rosey, and some challenges need to be weeded out.
Aidan Lethem, Board of Innovation Business Designer, has founded a vertical farm, Raiz, located in Lisbon. He advocates for the need for coordinated stakeholder action and business model innovation to harvest the rewards of such a promising industry, and outlines the role corporations can play to make it happen.
The current landscape
While not strictly a novel phenomenon, the recent wave of vertical farming has been further enabled by technological advancements in crop science and LED lighting and the greater consumer demand for fresh, local, green produce.
Vertical farms offer closed environments that allow for substantially greater control over growing conditions. In theory, crops can be grown anytime and anyplace, creating the potential for out-of-season produce grown in local warehouses, rooftops, or even in abandoned air-raid shelters.
These stacked hydroponic or aeroponic cultivation structures with their closed environment and controlled lightning has a land productivity twice the capacity of traditional agriculture. They could potentially also yield significantly more due to the stacking and multiple harvests. This makes vertical farming a viable candidate, at least theoretically, for our race to multiply food production by 60% by 2050. With a range of businesses deploying different combinations of technologies, locations, and crop types, the industry is expected to exceed $1 billion by 2030.
The challenges to overcome
Despite considerable economic, social, and environmental benefits that these farms promise, vertical farm business models still face challenges.
The energy problem
While vertical farms can deliver what they promise in terms of produce, they’re not there yet when it comes to fulfilling their potential in terms of sustainability and industry growth — controlled environments, artificial lights, and powering of the structure all add to the heavy energy consumption. More or less 90% of vertical farms use energy from the fossil fuel power grid. Sourcing energy from the grid is becoming increasingly expensive with the rising global energy prices.
Without finding alternatives to be driven by clean energy, they won’t be able to become an alternative to traditional farming.
Competing for market share
Being tech-enabled and having controlled environments, vertical farms offer an alternative to fertilizers, chemical, and pesticides used in traditional agriculture. But technology and high energy costs add to shelf prices, making it hard for vertical farms’ produce to compete for market space. To become profitable and competitive with traditional agriculture on produce pricing, vertical farms would need to switch to an alternative energy source.
With an increased market share, urban vertical farms would be draining uncertainty from the industry, and attracting investors needed to speed up their evolution.
Making it happen by reshaping our approach
With energy as a barrier and the high prices of vertical farms’ infrastructure, it’s challenging enough to make urban vertical farming a reality in places with easier access to the necessary resources to set the farms up. Imagine what it would take to build them in locations with scarce resources.
If vertical farming is meant to be the future of agriculture, we need to turn to business model innovation to make it a reality. This means involving new stakeholders and building a truly sustainable ecosystem. The key to implementing these is figuring out creative ways to fund urban vertical farms and engage with consumers, providing an enticing value proposition at both ends.
This pivot in the approach is this is the golden nugget for corporations to play a part.
Corporations and urban vertical farms
While the vertical farming industry is known to consist mainly of start-ups and scale-ups, there are multiple roles corporations can play as key implementation partners. Solving growth challenges, and delivering on the initial industry promise, they stand to benefit across ESG credentials, greater consumer interaction, and the financial returns of a space predicted to be worth 20 billion USD by 2029.
To build a thriving ecosystem, we need coordinated action from a range of different stakeholders, taking vertical farming from an emerging industry into an established success case. This dream isn’t far fetched — some of the biggest corporations in the world are no strangers to the potential of vertical farms.
How corporates play a role
IKEA has been exploring the space since 2019, reimagining consumer needs, including working with infarm to start location trial units in Germany. IKEA’s restaurants could also start playing a major role in steering consumers towards at-home farming systems.
Supermarket chains including Marks & Spencers, are increasingly incorporating vertical farming units into their stores.
Additionally, restaurants and hotels are prime customers for the high quality produce and reliability that comes from local vertical farms. The Ritz-Carlton JBR in Dubai recently opened their eco-friendly vertical farm on site, supplying the restaurant with local produce.
Meanwhile, Cargill has partnered with AeroFarms to research the potential of cocoa in vertical systems, potentially improving yields and making the crop more climate resilient.
Understanding the brand awareness vertical farming can offer, businesses like Microsoft have started deploying vertical farms within their office spaces. As the global approach to the future of work undergoes major shifts, the potential for farms onsite grows with it.
Other potential areas for partnerships include:
- Circular systems can be deployed as produce is exchanged for organic waste, which anaerobic biodigestors can break down into fertilizer and natural gas, powering the farm’s cultivation systems
- Energy companies can coordinate the integration of renewable energy systems and work towards improving efficiencies
- Property development firms can build integrated vertical farms in new housing developments, increasing real estate value and consumer desirability
An industry ready to peak
Vertical farming needs to be reconsidered beyond its initial hype or pipe dream status. It needs to be looked at as a booming industry that’s beginning to show its major potential — generating environmental, social, and financial impact on a global scale, and doing it long-term.
This industry is fraught with challenges that will require business model innovation and coordinated partnerships to overcome today’s barriers and shape it into what life needs next, and we are excited to take on the challenge.
Does vertical farming have a place in your ecosystem? Let’s explore the opportunities for you in this space.