As the climate changes and becomes more unpredictable, the idea of farming indoors might seem more attractive. It certainly has to big money investors.
For years, vertical farms have been a popular pick for private capital. The only problem is, they keep closing.
Eden Green Technology, based in Cleburne, recently announced that it will shut down its greenhouses at the end of this year. It’s just the latest in a string of closures by these kinds of companies.
Mark Bomford, director of the Yale Sustainable Food Program at Yale University, spoke to the Texas Standard about what might be behind this trend.
This transcript has been edited lightly for clarity:
Texas Standard: I know you’ve spent years looking into how vertical farms operate, what the business model is behind them. And they’re operations that obviously take a lot of money to get started because they require lots of equipment, labor and space. Why has it been relatively easy for some of them to attract significant investment right now?
Mark Bomford: You mentioned the expense. That’s one thing that everybody agrees on. These are expensive.
The other thing that almost everyone agrees on is they are just really cool. So they spark the imagination. People really, really like the idea. They like the vision. And I think that’s one of the reasons why it continues to attract a lot of funds is just because it’s so charismatic.
Farming outside is not easy, but sometimes it’s a big trade-off. You are taking all of the unpredictabilities of weather that you get outdoors. And you introduce new unpredictabilities indoors; some of them actually have to do with the availability of the equipment that you need to have on all the time.
Like what, just the LED lights, that sort of thing?
There’s the LED lights, there’s the HVAC, there is all the pipings, there is all of the drainage, there’s all of the injectors, there’s all of the filters – it goes on and on and on. And you have to be on top of absolutely every variable, everything that comes in, everything that goes out.
When I heard about these closures of vertical farms, I thought, well, gosh, LEDs have gotten a whole lot cheaper. What other costs are we talking about, though? Labor, I suppose, would be one.
Labor is a really big cost. That’s one of the things that a lot of these farms have struggled with, is trying to figure out how to move towards automation.
And it turns out there’s a lot of things that are just very difficult to do without actually having the judgment of a real person there.
Oh, interesting, so AI is not able to replace the human farmer, huh?
No, quite frankly. It’s a wonderful idea. But so far, we haven’t got there. And I’m not exactly bullish on that proposition.
But if you want to be profitable with this – I know that there may be an investor listening right now thinking, you know, I’ve been hearing a lot about this – what would it take? What are the biggest hurdles to vertical farming’s continued success? Is it technological? Are we talking about the labor issue primarily, or what?
I think it’s finding the niche and recognizing the limitations of that niche. The sky is not the limit.
There’s lots of room for indoor agriculture. I think that many of the specialty crops are actually going to go in that direction. Many of them have gone in that already.
But those benefit from being in greenhouses. You still have the sun overhead. Your lighting can be partial and supplemental. And in general, there’s just a lot more of those checks and balances that are taking care of you by all of what nature gives you.
Well then, if not vertical farming, what would you say are the sorts of investments that might make more sense to help create more sustainable food systems?
You talked about unpredictability. One area where I’m really interested in what AI can do is in figuring out variation, figuring out difference.
As we get stranger weather, for example, we’re going to also have stranger crops. Some of the uniformity that’s been demanded by the market in the past is not gonna be available. How can we figure out a very non-uniform farm output and match that up with the demands for uniformity that are coming especially from urban consumers?
There’s a lot of work in the middle there when it comes to processing and sorting and the reformulation of new food products and this kind of stuff, where I think there’s tremendous potential for investment.
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Where do we stand when it comes to indoor farming? Let’s expand it beyond vertical farming – where’s the growth most likely to happen at this juncture?
For indoor farming, I mean, I do see a lot of growth in the specialty horticulture sector. Those are the areas that are already very advanced, like in Netherlands and in Europe. And we haven’t seen the same level of advancement in the U.S., for sure. That is more going on in Canada.
So I do think there’s area for growth there. It’s just a question of how it’s approached, right? There’s been attempts to take it kind of Silicon Valley-style: very high capital, very high tech, very high marketing budgets, all of the bells and whistles.
And in many cases the turnaround of those companies has been facilitated by bringing in people who know what they’re doing from the Netherlands, where there’s a much more pragmatic approach focusing on unit costs, focusing on operations, focused on cutting overheads.
And they’ve shown it can be done, but it might not necessarily meet the kind of more imaginative dreams of the Silicon Valley visions of complete replacement of everything that happens in agriculture with something that is shiny and techy.
As I hear you talk, it sort of seems like a lot of the disappointment, one of the reasons we’re seeing many of these closures that we began our conversation talking about, is driven by the backside of hype. You get a lot people excited about this stuff and big dreams, aspirations, but not a whole lot of detail about what will keep these farms working.
I think you’re absolutely right. And the other thing that happens there is when you do have investors eager to put their funds into something which is exciting and new, there’s a little bit of an arms race of over-promising.
If the next guy who’s coming in the door to make the pitch is going to promise 10 times more than you could ever fulfill, there is a little bit of an incentive to stretch what you’re able to do a little more, because otherwise you might not be the one who gets that investment.
And so inside this ecosystem of investment and innovation, especially when it is within that Silicon Valley culture, there is this ratcheting up of the promises that are just too difficult to fulfill.
So maybe what we’re seeing right now is a correction.
I think that’s an accurate way to describe it. Yeah, I think it was an over-promise, and I think this would be a correction right now. And I think it’s gonna be around in the future, but it’s gonna be a much smaller niche than was promised, say, six years ago.
