Significant investment suggests credibility of vertical farming systems

12 February 2021
video

The UN expects population to rise to around 9.7 billion by 2050 so global political and industrial leaders will need a return from technology to cope, while still satisfying the requirement to combat climate change.

COVID-19 has also fed momentum as conventional supply chains feel the strain and stakeholders look to get around disruption.

A considerable amount of investment is pouring into the sector at the moment, although much needs to be done in terms of R&D, if the technology is to fulfil its promise.

Barclays Research calculate the global vertical farming systems market was worth £2.29bn in 2019 but predict it could reach as high as £12.3bn by 2027.

Green credentials of vertical farming systems

The environmental credentials associated with the technology present a complex picture. Water scarcity in arid regions of the world make CEA an ideal solution in many ways.

Plant Lab Analysis of Academic Literature makes some interesting comparisons.

For example, water used to grow 1kg of lettuce in an open field worked out as approximately 250 litres, in a greenhouse the figure is down to 20 litres, while in a vertical farm the corresponding figure is just 1 litre.

The space argument is compelling too. A recent study saw lettuce yield per square metre of ground space in an open field equal 39kg, while yield amounted to 100kg per square metre in a vertical farm.

On the downside critics point to the huge amount of energy required to run CEA operations, while the high upfront cost of the technology, or CAPEX, is also seen as a substantial drawback.

Proponents counter by pointing to the subsidies consistently enjoyed by conventional farming. They assert that as the technology evolves and adds to proof of concept, the financials will improve.

For now, some vertical farming system companies, who have been mainly technology actors, are also becoming farm operators and even consumer brands in a bid to bring down overall costs and become viable.

Proponents counter by pointing to the subsidies consistently enjoyed by conventional farming. They assert that as the technology evolves and adds to proof of concept, the financials will improve.

For now, some vertical farming system companies, who have been mainly technology actors, are also becoming farm operators and even consumer brands in a bid to bring down overall costs and become viable.

In addition, the tech’s backers contend that if facilities are sited close to where the produce is needed, the reduced food miles will act to claw back on emissions from energy used.

Critics also note the lack of crops (confined to a small range of herbs and leafy greens) that can currently be grown in CEA facilities, but again many see this as temporary, and ultimately ‘anything can be grown.’

Investors undeterred by potential tech drawbacks

Critics also note the lack of crops (confined to a small range of herbs and leafy greens) that can currently be grown in CEA facilities, but again many see this as temporary, and ultimately ‘anything can be grown.’

Despite room for improvement, investors have seen enough to gamble on a bright future.

These include Japanese media giant SoftBank, Alphabet’s Eric Schmidt and outgoing Amazon boss Jeff Bezos’ funding of San Francisco vertical farming systems start-up Plenty. The aptly named Plenty has now raised more than $500m in venture funding.

The Middle East is leading the way, with the world’s largest vertical farm being built in Dubai, by a joint venture between US firm Crop One and Emirates Flight Catering.

The $40m, 130,000 sq ft-controlled environment facility will produce 6,000 pounds of high-quality, herbicide and pesticide-free leafy greens, harvested daily.

Meanwhile AeroFarms last year announced it was building a 90,000 sq ft vertical farm in Abu Dhabi, which will be the world’s largest indoor agriculture research centre.

 

Significant investment suggests credibility of vertical farming systems

12 February 2021

The UN expects population to rise to around 9.7 billion by 2050 so global political and industrial leaders will need a return from technology to cope, while still satisfying the requirement to combat climate change.

COVID-19 has also fed momentum as conventional supply chains feel the strain and stakeholders look to get around disruption.

A considerable amount of investment is pouring into the sector at the moment, although much needs to be done in terms of R&D, if the technology is to fulfil its promise.

Barclays Research calculate the global vertical farming systems market was worth £2.29bn in 2019 but predict it could reach as high as £12.3bn by 2027.

Green credentials of vertical farming systems

The environmental credentials associated with the technology present a complex picture. Water scarcity in arid regions of the world make CEA an ideal solution in many ways.

Plant Lab Analysis of Academic Literature makes some interesting comparisons.

For example, water used to grow 1kg of lettuce in an open field worked out as approximately 250 litres, in a greenhouse the figure is down to 20 litres, while in a vertical farm the corresponding figure is just 1 litre.

The space argument is compelling too. A recent study saw lettuce yield per square metre of ground space in an open field equal 39kg, while yield amounted to 100kg per square metre in a vertical farm.

On the downside critics point to the huge amount of energy required to run CEA operations, while the high upfront cost of the technology, or CAPEX, is also seen as a substantial drawback.

Proponents counter by pointing to the subsidies consistently enjoyed by conventional farming. They assert that as the technology evolves and adds to proof of concept, the financials will improve.

For now, some vertical farming system companies, who have been mainly technology actors, are also becoming farm operators and even consumer brands in a bid to bring down overall costs and become viable.

Proponents counter by pointing to the subsidies consistently enjoyed by conventional farming. They assert that as the technology evolves and adds to proof of concept, the financials will improve.

For now, some vertical farming system companies, who have been mainly technology actors, are also becoming farm operators and even consumer brands in a bid to bring down overall costs and become viable.

In addition, the tech’s backers contend that if facilities are sited close to where the produce is needed, the reduced food miles will act to claw back on emissions from energy used.

Critics also note the lack of crops (confined to a small range of herbs and leafy greens) that can currently be grown in CEA facilities, but again many see this as temporary, and ultimately ‘anything can be grown.’

Investors undeterred by potential tech drawbacks

Critics also note the lack of crops (confined to a small range of herbs and leafy greens) that can currently be grown in CEA facilities, but again many see this as temporary, and ultimately ‘anything can be grown.’

Despite room for improvement, investors have seen enough to gamble on a bright future.

These include Japanese media giant SoftBank, Alphabet’s Eric Schmidt and outgoing Amazon boss Jeff Bezos’ funding of San Francisco vertical farming systems start-up Plenty. The aptly named Plenty has now raised more than $500m in venture funding.

The Middle East is leading the way, with the world’s largest vertical farm being built in Dubai, by a joint venture between US firm Crop One and Emirates Flight Catering.

The $40m, 130,000 sq ft-controlled environment facility will produce 6,000 pounds of high-quality, herbicide and pesticide-free leafy greens, harvested daily.

Meanwhile AeroFarms last year announced it was building a 90,000 sq ft vertical farm in Abu Dhabi, which will be the world’s largest indoor agriculture research centre.

 

Chaitanya GRK's featured publications

See All Posts

Food & beverage

Chaitanya GRK of Farrelly & Mitchell UAE on the prospects for the MENA agrifood sector

Farrelly & Mitchell UAE’s Regional Director Chaitanya GRK on the work of the consultancy in the UAE and MENA region.

Video

Food & beverage

Dedicated food & beverage consultants key to effect guidance

Farrelly & Mitchell’s food and beverage consultants have a strong track record in quality and efficiency guidance.

Video

Agtech & foodtech

Significant investment suggests credibility of vertical farming systems

Controlled environment agriculture, and particularly vertical farming has caught the eye of investors, but what are its pluses and minuses?  

Blog
See All Posts

Join our latest webinar on climate change and food safety.

Get in touch with us or find an office closest to you.
Register now