Seizing the moment

In early April, an investment in a Newark, New Jersey-based revitalization project was announced to some fanfare. Goldman Sachs, via its Urban Investment Group (UIG), would be picking up the lion’s share of a $39 million tab for a project called the Makers Village. One of the key tenants in that project (and the tenant getting the most ink in the press) is a vertical farm operation called AeroFarms.

While the exact definition may vary, depending on who you ask, vertical farming is the process of growing plants in a controlled environment using a stacked system, so that growing units are built atop each other, climbing upwards. For some growers, that means multiple floors of growing systems in a building. For others, it means a single floor of stacked systems.

“The UIG team was excited about the opportunity to transform an underutilized building in the Ironbound neighborhood of Newark into efficient light industrial space that would be occupied by a tenant as innovative and committed to the community as AeroFarms,” says Leslie Shribman, spokesperson for Goldman Sachs.

Part of AeroFarms’ appeal was its focus on data. Vertical farming has an innate appeal to both tech companies and investment groups because of its radical emphasis on the relationship between horticulture and data. The company tracks things like LED spectrum performance on certain varieties, turnaround time and individual variety performance, among a host of other categories.

“Every one of our harvests has over 10,000 data points that we’re constantly looking at. This is a new phase of horticulture because we’re marrying data-mining, data-engineering and horticulture into a new way of growing,” says Marc Oshima, chief marketing officer for AeroFarms.

The investment, and the press it garnered, was the latest in a series of headline-grabbing successes for the vertical farming industry. Companies like FarmedHere and Podponics have seen similar spotlights, particularly in their local markets. In Chicago, for instance, FarmedHere is a well-respected, well-recognized brand.

“The growth we’ve seen has been fairly contributable to the brand we’ve developed locally,” says Mark Thomann, chief executive officer of FarmedHere. His company now services 75 grocery stores in the Chicago area.

But why all the interest in vertical farming?

By 2050, 9.6 billion people will be roaming the planet, according to the United Nations. The majority of those folks will call an urban hub their home. They will drive their cars to work and spend their days in office buildings in downtowns. They will want to eat lunch with coworkers and come home to a fresh-cooked meal. They’ll eat out on weekends, seeking out the hippest, most chic restaurants. Combined with the loss of arable land and the development of the local food movement, pressure on the global food system could increase exponentially. The next century will be a crucial one for the global food system and pundits are curious as to what role vertical farming will play.
 

Hanging gardens and beyond

It may be the future, but in some senses, vertical farming is a concept as old as time. The mythical Hanging Gardens of Babylon, supposedly built by Nebuchadnezzar II for his wife, were a type of vertical farm, with levels of plants stacked atop each other. While the Hanging Gardens lack the hard evidence of the other Ancient Wonders, the very existence of the myth suggests that vertical farming has been a concept embedded in our species since B.C.

Gilbert Ellis Bailey introduced the term to the United States in 1915 with his book “Vertical Farming” (though the book has almost nothing to do with indoor agriculture). And over the last three or four decades, interest in vertical farming has exploded. A chunk of that growth can be attributed to a book by Dickson Despommier, professor emeritus of microbiology at Columbia University. Despommier published a book called “The Vertical Farm: Feeding the World in the 21st Century” in 2010. The book details an elaborate vision of skyscrapers and other buildings serving as farms.

In the last five years, vertical farming has launched from concept to reality. Perhaps technology is finally catching up to ambitions for the concept, or maybe pressures on traditional agriculture are forcing a change. Either way, vertical farming is evolving into something new.

“I’ve been involved with the North Central Extension and Research Activity (NCERA)-101 Committee on Controlled Environment Technology and Use (a branch of the USDA) for many, many years,” says Cary Mitchell, professor of horticulture and landscape architecture at Purdue University. “We’ve been talking Controlled Environment Agriculture for 25 or 30 years. During the last five years, it’s just really gone bonkers. Every time I turn around, I hear about another enterprise somewhere.”

An event that helps track the growth in the industry is Indoor Ag Con, an annual event held in Las Vegas. This year marked the third iteration of the event and marked a significant uptick in both presenters and attendance. In addition to the event serving as a barometer of industry growth, the 3rd Indoor Ag Con also published a whitepaper that found 15 vertical farms or rooftop greenhouses currently operating in the United States, with another 30 planned to open sometime in 2015.

“Two years ago, I could give you a few examples [of vertical farms]. And four years ago, I could give you maybe one or two. And six years ago, I didn’t know of any,” he says. “So in the matter of five or six years, this idea has become reality, particularly in other parts of the world.”

With technology evolving and a steady decrease in arable land, the weight of expectation continues to increase for vertical farming.
 

The viability problem

Vertical farming’s moment in the sun doesn’t mean it has struck gold quite yet. Many of the most optimistic projections for the growing method are decades and potentially even a century away from being realized. In fact, there is a splinter of true believers who think vertical farming may one day replace outdoor agriculture, or at least assume the throne of dominant agricultural production method. However, most prognosticators and growers think indoor agriculture will be lucky to serve as a significant supplement to traditional production.

Dr. Gene Giacomelli, director of the University of Arizona’s Controlled Environment Agriculture Center, thinks that vertical farming is at a crucial stage in its development.

“I don’t think it’s a flash in the pan and I don’t think it’s gaining a lot of steam right now. It is gaining a lot of press, a lot of discussion, a lot of hope and a lot of expectation. It’s at an important time [for vertical farming] because of what society is asking for,” he says.

The development of growing technology, particularly LED lighting, will greatly aid the development of vertical farming. But Giacomelli believes the limiting factor in growth lies with humans, not equipment.

“If you asked me the limiting factors, I would not say it’s the technology. You can do [vertical farming] without LED lights. LEDs are the future, particularly to reduce operational costs,” he says. “But the growers need to be developed and they need to get experience growing indoors, not just in greenhouses. Growing in greenhouses with solar energy is a start, but it’s not the same as growing with artificial light. Growing with artificial light is another level.”

Giacomelli notes that there is a dearth of educational programs for indoor agriculture growers. And a lack of growing experience could lead to an eventual shrinking of the industry, as large-scale growers with know-how absorb smaller competitors or put them out of business.

“Is everything designed perfectly with these vertical farms? I don’t think so,” says Cary Mitchell. “I think they just put shelves in there and try to work out the HVAC issues and the humidity issues and the CO2 issues. So we might see some stratifying of this industry over the next five to 10 years. I’m interested to see where it goes.”
 

Solving the equation

A key component of vertical farming is technology and data collection. To become profitable, vertical farms have to produce more yield per square foot than their counterparts in the field. Accomplishing that feat requires an eagle-eye focus on growing process and the health of individual plants.

“We’re building on our history,” Oshima says. “We made the move to LED lights five years ago. We’ve really had an opportunity to hone in on and find the right spectrum, the right intensity depending on variety, depending on plant maturation. We have a lot of key insights on how to have more effective photosynthesis.”

It also requires vertical growers to use as few resources as possible. Most indoor operations, vertical or greenhouse, use significantly less water than field growers. AeroFarms says it uses almost 95 percent less water to grow its leafy greens than traditional agriculture.

AeroFarms utilizes a type of aeroponics to grow its crop, spraying a fine mist across the roots of its crop and then recyling the water. FarmedHere uses both hydroponic and aquaponic growing methods for its greens. Both operations track and monitor crops from seed to finish, constantly looking for ways to better the process and make it translatable across markets.

“We’re out to prove that vertical farming is viable. You can’t be a vehicle for the greater good if you’re solely focused on being sustainable. You have to be profitable and we want to show the world this can be part of the ag equation now,” Thomann says.
 

Oshima also believes the future is bright.

“We’re focused on short-stem leafy greens so that we can get many levels of growing beds into a space. With the short turn for that crop, we’re able to have just-in-time growing for market. And we’ve been able to perfect our recipes. A seed that was grown in the field might take 30 to 35 days, and we’re down to 12 to 16 days, allowing us to do 22 or even 30 crop turns a year, depending on the variety,” he says.

But there is still much room to grow. Neither AeroFarms nor FarmedHere, two of the largest vertical farm operations in the United States, are profitable yet. Both companies are investing in their operations and are trending the right direction. However, definitive viability is still a quiet question lurking in the air.

“I think the industry will evolve over time,” Mitchell says. “I don’t think it’s a fad. I think Controlled Environment Agriculture is here to stay. But there will be a growth curve of maturation. I’m not sure we know what this will look like even a decade from now.”
 

The future is wide open

“You hear every day these things on drought and food safety and disease,” Oshima says. “That underscores the challenges that are there for traditional agriculture. Our way of growing can mitigate some of those variables.”

Pressure on traditional agriculture to increase its output will almost necessitate the emergence of vertical farming as a viable production method.

“The cost of traditional agriculture is increasing. The cost of land, the cost of water, the cost of labor are all going up. Our cost of operation is decreasing and at some point there will be an intersection,” Thomann says.

But there is little chance that indoor agriculture will ever replace traditional agriculture, Giacomelli says. Too many crops aren’t suited for under glass or factory environments. For instance, it’s very difficult to grow wheat, quickly enough or in large enough numbers, in CEA to turn a profit.

“The high technology cost and the expense in investment may limit when and where vertical farming is implemented,” he says. “What it can do is get people thinking about food systems and supplement field production.”

Vertical farming is having a moment. The question now is: Where does that moment take it?