The coronavirus pandemic has stimulated interest in vertical farming given supply change disruptions and labour shortages. Crops are grown in stacked indoor systems without soil and under artificial light.
About $1.8bn in investment has flowed into the sector since 2014, according to Dealroom. However, as with anything that is proclaimed the next big thing, some caution is necessary among the hype and boosterism.
The sector remains largely unprofitable and tiny. According to Rabobank analyst Cindy van Rijswick it occupies the equivalent of 30 hectares of land worldwide compared to half a million hectares for greenhouses and 50m hectares of outdoor cultivation.
High initial capital investment and running costs make it hard to make a profit. Electricity bills for lighting and ventilation can be high and specialised labour is required. This leads to a focus on higher value leafy greens, salad greens and herbs. Vertical farming won't be used for commodities like wheat and rice.
Even so, Nordic Harvest has linked up with Taiwan's YesHealth group to Europe's biggest vertical farm in Copenhagen. They claim they will be profitable in their first year, although I doubt whether there are significant economies of scale.
Because production can take place in urban areas food can be produced close to consumers improving freshness at point of sale. However, consumers can be resistant to change in food production and may believe that produce grown with soil and sunlight tastes better or is even healthier. There has been a history of yield being placed ahead of taste in greenhouses as in the tomato 'water bomb' scandal.
It is very much a niche method of production, albeit it one with growth potential.
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