Let Them Eat Lettuce

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A lot of money has gone into Vertical Farming…

If you ask to most people from outside the industry about AgTech; a beautiful image of futuristic LED-lit lettuces tended to by hipsters may well be what comes to mind.  Stories of tech billionaires piling in to invest in a silver bullet that will simultaneously address nutrition, sustainability & food security have got my hype-detectors blaring.

The problem, at least right now, is that the economics just don’t stack up. So, here I’ll set the scene for the ups and downs of this sector before we move on to what the future of indoor/urban agriculture is likely to hold.

Dealroom estimates $1.8bn has been invested in this space since 2014. What do we have to show for it?

One thing we do not have, is common terminology.  Few vertical farms are all that vertical, indoor or controlled environment agriculture could also include a greenhouse, grower units may or may not be urban.   The best term I’ve heard for fully-indoor-LED-driven growing is Totally Controlled Environment  (TCEA).  

TCEA has made only the tiniest dent in the production of fresh produce.  Rabobank estimates just 30HA of TCEA exist globally, compared to 500,000HA of glasshouses. What’s more these units are producing essentially only salad veg such as microgreens, herbs and edible flowers.   Mostly, they’re producing it unprofitably.

Why the excitement?

One reason for the interest is the promise of sustainability.  In a clinical, enclosed growing environment, the use of water, fertiliser, and biocontrol chemicals is dramatically lower than in traditional outdoor growing.  

In addition, the artificial growing environment and low water usage means leafy greens can be produced pretty much anywhere, any time.  Lovely crisp salads are possible during a dark artic winter or a Saudi Arabian summer.  Even in outer space.  

TCEA also holds the potential to reduce food miles and allow the support of local producers, key zeitgeists of the 21st Century food system.

Finally, super high-tech control of the growing process turns growing produce – or plant-derived compounds – into something closer to high value manufacturing than a pastoral, bucolic pursuit.  

•Totally Controlled Environment Agriculture (TCEA) companies have received at least $1.8bn investment in 6 years.
•The promise of sustainable, climate-independent, local food production is still a distant prospect while-ever high energy needs and running costs make it largely uncompetitive.  
• The sector is significantly over-hyped and a long way from having impact, but the technology has transformative potential in less eye-catching areas of food production & agriculture.

But…

The Achilles heel of the sector is cost.

Major capital expenditure is required to set up a TCEA operation.  Moreover, there are formidable operational expenses. High energy needs to maintain the required environment, plus a shortage of skills to run these operations are two major limitations on expansion.  One estimate suggests the energy to light and climate control a TCEA environment is 14x higher than glasshouse production.  

Even focusing on carbon accounting, despite the eco-rhetoric, a lettuce grow in a TCEA environment under artificial light loses out to one grown in carbon-free sunshine or even a state-of-the-art greenhouse.  

These facts of economic life lock TCEA growers into producing species which reach maturity within days and sell at a high price.  This is why herbs and salad veg are currently the only viable options when stacked against the use of free sunshine and water in a field, or free light (even if supplemented) in greenhouses.  

Although some would have us believe that TCEA “can grow anything except tree fruit and root vegetables … and sell at costs that are competitive with typical prices for organic vegetables” this is patently nonsense for the foreseeable future.  Growing, for instance, cabbage or sweetcorn with the economics of contemporary TCEA technology make it totally uncompetitive.    

For now, it is only the future of food production if we’re planning to subsist on lettuce and herbs.  

It is a waste of time?

Despite my scepticism, I do see potential.  Like many transformative technologies, the true impact is likely to be different to the vision painted by early entrants.   

To make a real difference on the food & agricultural system TCEA has to improve the economics, find new ways to exploit the consequences of total control over growing conditions, and find new sectors to deploy those same environmental control technologies.

Where next for TCEA?  See next week’s article.  

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