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Is Vertical Farming Falling Flat?

By Jessica Carroll, Women in Agribusiness Media (April 11, 2023)


With the world’s population rising and available farmland dwindling, producers have taken creative measures to ensure a sustainable food supply for the future. One option thought to be a viable long-term solution was vertical farming. These vertical farm systems, or VFS, can be placed in city centers where access to fresh produce, and farmland, is limited. There are numerous benefits to VFS, such as year-round access to fresh produce, greater nutrient availability, and decreased water usage. Vertical farming also limits the amounts of pesticides used due to the enclosed and highly controlled environment (Rodríguez).

Although vertical farming has numerous benefits, there are certain aspects that are less than favorable. To control the temperature and humidity level within the facility, VFS require costly heating and cooling systems (Jiang). Also, VFS currently only grow plants with a large quantity of edible biomass content, like microgreens or lettuce. Many food staples, like rice, have a low biomass proportion and cannot be economically grown inside vertical farms (Vertical). Even though VFS have many advantages, traditional farms are still needed to grow a majority of our food sources.


The global vertical farming industry experienced many hardships towards the end of 2022. Funding decreased substantially throughout the year and the price of electricity increased dramatically due to the invasion of Ukraine coupled with rising inflation (McDonald). In September, Bloomberg reported that August electricity prices were 15.8 percent higher than the prior year (Malik). This placed a large financial burden on VFS because lights are utilized to grow the plants indoors (McDonald).


Labor for VFS typically must be highly skilled, resulting in steep personnel costs (Rodríguez). Plantise suspended production in the Netherlands due to increased labor costs and outrageous energy prices (Achard). In November, Infarm laid off over half of its workforce and IronOx laid off employees as well (McDonald).These soaring prices for two key inputs placed too much pressure on many players in the vertical farming industry.


In August 2022, Kalera either delayed or stopped construction projects for several new facilities so that attention could be placed on the profitability of existing farms. The company also was delisted from NASDAQ. Two other companies, GlowFarms and Fifth Season, shut down completely. AppHarvest, which reported opening the largest indoor farm in the world, accumulated a deficit of approximately $270 million by the end of September 2022 (McDonald). In AppHarvest’s Q3 2022 earnings report, doubts were even expressed about the company’s ability to carry on (McDonald).

Although vertical farming’s environment was tumultuous in February of this year, there was one company in particular, Bowery Farming, that had a positive outlook for the future (McDonald). However, this was before the fall of Silicon Valley Bank (SVB) in March 2023. SVB was a large supporter of numerous agtech startups and companies, including Bowery Farming (--- “Silicon Valley”). According to VerticalFarm Daily, Bowery Farming was thankfully not affected by the fall of the bank (Rectification).


Humans will continue to need food, this is guaranteed. As time progresses, increased sustainability will only become more integral in food production. Hopefully Bowery Farming’s ability to withstand the soaring prices and ripples from the bank collapses will be indicative of the vertical farming industry’s resilience. Perhaps Bowery Farming and other vertical farms that survive will share their lessons learned to ensure the viability of this important niche sector of the farming industry.


WORKS CITED


Achard, Sepehr. “2 Vertical Farms Closed in The Past Week.” iGrow News,

Achard, Sepehr. “Silicon Valley Bank: How Exposed Are AgTech Companies?” iGrow News,

Accessed 8 April 2023.

Jiang, Georgia. “Vertical Farming - No Longer A Futuristic Concept.” United States Department of Agriculture Agricultural Research Service,

Malik, Naureen S. “US Power Prices Rise Most in 41 Years as Inflation Endures.”

McDonald, Jordan. “Why the vertical farming industry wilted in late 2022.” Tech Brew,

“Rectification: Bowery Farming not affected by SVB bankruptcy.” Vertical Farm Daily,

Rodríguez R., Edgary. “Vertical farming as a sustainable trend.” Global Comment,

2023.

“Vertical farming: three key challenges the industry must overcome.” Agri Investor,


ABOUT THE AUTHOR

Jessica Carroll is the operations manager for the Agribusiness Division at HighQuest Partners. She obtained a Bachelor of Science in Equine Studies and Agribusiness from Texas A&M University - Commerce, and a Master of Agribusiness from Texas A&M University.


Agriculture and writing have been two of her greatest passions throughout her life, evidenced by numerous leadership positions in organizations such as 4-H, Sigma Alpha, and TAMUC’s Equestrian Team. During high school and college, Carroll completed internships in animal health, strategic intelligence, and marketing, which allowed her to explore various forms of writing and communication. In her spare time, she enjoys hiking and kayaking with her little Corgi, Howdy.




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