Humans passed the 8 billion mark almost two years ago. This incredible feat has shown how far ahead we’ve come as a species. The effort to sustain such a large population requires a lot of planning and execution. This includes developing housing, limiting conflict, accessing resources, job opportunities and much more. However, a facet that is very important for humanity’s survival is food. In a world where more than 800 million people don’t have access to food, things become very concerning when we realise that the global population is still growing.

I wrote an article about this very topic here, where I discussed how we can create a more sustainable food system. In short, current farming methods need to align with our future survival. A farming method that might help in this endeavour is vertical farming. So in this article, I will be looking into vertical farming, and whether it can solve some of the world’s biggest food security challenges.

What is Vertical Farming?

Vertical farming is a modern phenomenon, proposed in 1999 by Columbia professor Dickson Despommier. Despommier and his students designed a skyscraper farm that could feed 50,000 people. Although this farm doesn’t exist, it birthed the idea of vertical farming. As the name suggests, vertical farming is a practice of growing, and stacking, crops. The aim of vertical farming is to eliminate the need for large expanses of land. As such, the locations typically chosen for vertical farming include high-rise buildings, warehouses and shipping containers.

How it Works

Vertical farming occurs in a controlled environment. This means that every aspect of the farm, like water, temperature, light, and farming technique, is precisely monitored. Compared to conventional farming, the soil medium is removed in order to preserve space. Since roots extend searching for nutrients, it’s imperative to keep space between plants to avoid root tangling. As such, vertical farms rely on non-soil based farming techniques like hydroponics, aquaponics, and aeroponics. This makes it easier to grow crops with limited space. In fact, vertical farming uses 90% less land, while harvesting around 80% more yield per area unit.

In addition to less land usage, vertical farming requires less water as well. The reason for this is multifold. As mentioned, vertical farms control the environment, which means temperature adjustment. By having the ideal temperature in place, farms can prevent excessive water evaporation. Furthermore, not all the water that goes onto the soil is absorbed by the roots. It’s quite common for water to dissipate, especially in excess, and runoff elsewhere. Water runoff can pose an environmental hazard as it usually ends in waterways like rivers, carrying with it harmful (chemical) fertilisers and herbicides. Vertical farming eliminates this via different methods such as precision irrigation, hydroponic and water recirculation systems.

The factors above, including sophisticated nutrition delivery and monitoring, allow vertical farms to produce high yields. For instance, AeroFarms, a vertical farming company, states that it can produce 390 times more crops (lettuce) per square foot than conventional farming, all while using 95% less water. By using vertical space and ideal conditions, vertical farming does seem like a viable solution for tackling future food security problems. With a growing population, humans will have to produce 56% more food by 2050 to meet the demands of 10 billion people. So, are vertical farms the solution?

Barrier to entry

Although vertical farms have many upsides, they do however come with their drawbacks. For starters, vertical farms are not cheap. Vertical farms rely on unused space, which either requires repurposing an existing building or constructing a new facility from scratch. This is costly, especially in areas where square footage is expensive. Additionally, vertical farms require various equipment implementations to function accordingly. A vertical farm that runs on hydroponics for instance will have its own costs. This includes choosing different growing systems, lighting (LED), insulations and HVAC (Heating, Ventilation, and Air Conditioning), and water management. Furthermore, the farm will include operational costs like nutrient management, plant health and pest control, monitoring and automation systems, and salaries among others.

The costs above cover some ground, but in reality, there’s much more than that. Running a vertical farm requires capital, and the know how. According to Savills, a premium vertical farm can cost 750% more than a basic glasshouse. Based on their calculations, an entry-level commercial farm that’s 5000 square meters will cost a minimum of £10,000,000. To give an example, AeroFarms’ facility is 6410 square meters and cost £33 million to build. The result of this is a facility that is capable of producing 2 million pounds of leafy greens every year – not bad.

The State of Vertical Farms

When I first learned about vertical farms, I thought that the concept was revolutionary. On paper, vertical farming seems like the cure to our food problems. If we’re able to scale domestic food production, and cut down on transportation emissions (especially in a country like the UK that imports nearly 50% of its food), then we can surely meet future demands and environmental targets. However, the reality of vertical farms has been a bit different.

Unit Economics

Firstly, vertical farms are very limited with what they can grow. Vertical farms are ideal for growing leafy greens and herbs. The reason for this is because of their shallow roots, their ability to be vertically stacked, and their short growth cycle. On the other hand, current vertical farming technology doesn’t allow us to grow staple crops like grains, root crops and large fruit trees. This is because these plants have complex root systems, need significant space, and take a longer time to grow. Until vertical farming technology can develop mechanisms that accommodate staple crops, it will fall behind conventional farming.

This brings me to my next point and that is scalability. When it comes to feeding a growing population, we quickly realise that vertical farming doesn’t fill the gaps. We can’t expect to feed billions of people lettuce, and nor should we. This leads to a big problem, and that is unsustainable unit economics. Simply put, vertical farms need a lot of money to start and to maintain, but the result of this hefty investment doesn’t pay the bills. If farms are only selling leafy greens, they’re then shrinking their total addressable market compared to a conventional farm. As such, it becomes more difficult to generate net positive revenue due to high operational costs.

Because of this, vertical farms have to charge a premium for their products in order to make ends meet. There will always be customers who can afford pricier lettuce in Tier I cities, but the number diminishes in lower tier cities. As such, having access to vertically farmed produce becomes more exclusive, which is counterintuitive to solving food insecurity. Fortunately, and I think optimistically about these things, this problem will drive vertical farms to become more sustainable, and innovative businesses. For example, Fork Farms is an agri-tech company that provides hydroponic systems for people to grow their own food. They believe that everyone is a farmer, with the proper education and technology. Fork Farms enables homes, schools and communities to be self-sufficient – cutting down costs on food and energy, all whilst feeding more people.

Hype?

COVID-19 taught us how fragile our supply chains can be, especially from a food security perspective. Closing borders meant that countries took the risk of limiting incoming food imports that are vital for their food system’s survival. This sparked an opportune moment for governments and investors to pump money into vertical farms. Vertical farms can act as a future-proof for food systems in case of an emergency like COVID-19 or drastic weather conditions. This allows supply chains to continue operating uninterrupted. Additionally, vertical farms reduce soil and water usage, which is important for a sustainable future.

Countries like the UAE and Singapore that import 90% of their food, commissioned and launched grant schemes for vertical farming. In fact, the UAE has built one of the largest facilities in the world. In 2020, Europe amassed half a billion pounds in Venture Capital for vertical farms. This also included a 100,000 square foot facility in Switzerland that is decked out in advanced technology. Many farms were receiving millions of dollars, and big promises were made to investors. It was clear that vertical farms were the future of sustainable agriculture, and everyone was looking to get a share of the pie.

And then, things went downhill. To keep things short, as financial markets contracted after COVID-19, vertical farms received less investment. This led many farms to face financial constraints because they weren’t generating enough money to run costly operations on their own. As such, many farms had to either reduce their operations or file for bankruptcy all together. Even AeroFarms, who once had plans to go public, filed for Chapter 11 (which it has now left) after a tumultuous reality check. Unfortunately, many vertical farms relied on outside investment rather than developing sustainable businesses. The result of this was a large crash.

Discussion

Although the vertical farming industry has suffered in the last years, there seems to be light at the end of the tunnel. Currently, the industry is projected to have a market value of $19 billion by 2028, with a compounded annual growth rate (CAGR) of 24.08% in the next four years. This is a definitely an optimistic stat, which shows that vertical farming is beginning to go through a renaissance. Now that the hype has died down, vertical farms can focus on creating sustainable businesses. This will involve creating long-term business models, reducing operational and environmental costs, and have the opportunity to expand current offerings beyond just leafy greens and herbs.

However, the road towards feeding 10 billion people requires much more than just a positive outlook. In the short and medium terms, vertical farming cannot compete against conventional farming in terms of food security. Vertical farming is restrictive, and does not cover enough grounds to pose a threat to the status quo. Over time though, we could definitely find food systems that combine both conventional and vertical farms. This scenario would involve bringing two ‘opposing’ forces together in hopes of creating a more efficient and environmentally sustainable food system. As such, countries can become more equipped at feeding their populations as they scale.

Conclusion

I learned a lot about vertical farming whilst writing this article. Vertical farming is a very interesting and complex industry. It’s interesting because it deviates from the norm. Imagine having to explain to a farmer a hundred years ago that we can grow lettuce without soil – I’m sure that they wouldn’t believe us. Vertical farming is also complex because it tries to bring human ingenuity and nature together. Finding a harmonious balance between both, without ruining the integrity of either, requires a lot of fine tuning. It’s truly amazing to think what we can do with vertical farming, if we stick on the right path. I personally describe it as a re-discovery of one of the most ancient human activities. As vertical farming continues to mature, we will begin to witness the value that it can offer to humanity and the world. For now though, there is a lot of work to be done.

Anis