As indoor farming systems allow for fruit and vegetable growers to ensure robust crop production in controlled environments, operators are increasingly farming in locations that would have once been impossible. In fact, the global vertical farming market is projected to grow to $25.1 billion by 2030, representing a compound annual growth rate of 23.3% since 2021, according to a Market Research Future report.
Last week, during SmartBrief’s SmartSummit titled “The role of vertical farming in efficient and sustainable food systems,” Marc Oshima, co-founder and chief marketing officer for aeroponic growing company AeroFarms, highlighted some of the major issues facing the outdoor agriculture industry currently, such as significant loss of arable land and food safety recalls of produce.
“We need to think differently about our farming practices,” he said as a panelist during the event, which brought together two other industry experts to discuss the state of the indoor growing industry and how controlled environment agriculture is beneficial to businesses’ sustainability and supply chain needs. “What are some of the solutions? We think that indoor growing, in particular, vertical farming, where you have an even greater level of control and precision, is going to be able to lead the way and be a catalyst for some of the pain points that we’re seeing here.”
A fresh, growing industry
There is a clear interest — and opportunity — in the indoor agriculture market as it continues to grow and develop. An audience poll during the event revealed that a majority of participants categorized themselves as having a beginner level of knowledge about the vertical farming industry, with no one selecting that they were an expert on the topic, signaling an appetite to learn and get involved.
As technology becomes more accessible and retailers and consumers become more familiar and comfortable with foods grown using vertical farming methods, new businesses are emerging. Investment firm S2G Ventures is focused on three main aspects of vertical farming businesses when seeking to invest: the cost to produce, aggregate productivity of the facilities and the catalog of products for customers, according to Dan Ripma, vice president of food and agriculture at S2G. He added that S2G is seeing companies transition from business-to-consumer to business-to-business models quickly as the indoor agriculture market continues to expand.
AeroFarm’s Oshima, who is also the board chair of the Controlled Environment Agriculture Food Safety Coalition, also shared that the level of control in vertical farming allows operators to focus on product quality and enhancing aspects such as nutrition and flavor.
Rick Vanzura, CEO of container farms manufacturer Freight Farms, agreed, adding that indoor farms’ immediate availability of food gives the product improved taste, texture, freshness and nutritional value over many other produce options.
“Our particular focus is on being able to put the point of production right at the point of need… Anywhere you have access to power and a minimal amount of water, you can be growing,” said Vanzura, adding that the Russia-Ukraine war has also highlighted supply chain challenges and helps reveal that we need to rely on other farming methods as demand and the population grows.
Supply chain solutions get “hyperlocal”
More than a third of respondents to another audience poll during the SmartSummit reported that their businesses have been experiencing supply chain disruptions for their fresh produce.
S2G is particularly looking for localized production to focus on the transparency and lifespan of products, which can often spend up to half of their shelf life on trucks when produced by outdoor growers. Labor and wage pressures are also currently affecting the outdoor ag industry.
“During [the pandemic], we really learned how exposed and fragile our food system is in terms of food security, supply chain shocks, labor,” said Ripma. “We see indoor and automation as a means to alleviate some of these structural economic realities that we’re currently living in.”
Freight Farms’ container systems, which are white labeled, are a part of resolving many supply chain disruptions because the farms create “hyperlocal” supply chains within a community. The systems are also portable through standard trucking methods, according to Vanzura.
Oshima shared that it is focused on large-scale solutions for both small and large retailers to provide “consistency, quality and year-round availability.” Partnerships with top chefs such as David Chang and Marcus Samuelsson benefited their restaurants because “menu planning is now starting back at the farm,” he added.
“We can be tied into their sales plan, their promotional calendar… creating greater efficiency in the marketplace,” said Oshima. “It’s how we can think about strategic resiliency and sourcing in a very different way.”
Sustainability: Accountability and measurement
A significant portion of consumers are more invested in products that are good for the environment, and food is a major category where shoppers focus on sustainable purchases. According to the Hartman Group’s Closing the Gap in Sustainability white paper, 28% of consumers say they base their purchases on sustainability factors, compared to only 16% who said the same in 2007.
Ripma agreed that consumers are looking for more in their food purchases beyond taste and price; ethical purchasing behaviors are a priority. In response, S2G “started to invest across the food system to support entrepreneurs doing the work with this goal in mind,” he said.
In addition, S2G is seeking to add more tracking management to its portfolio in order to communicate to the market what these technologies are doing in terms of sustainable practices, especially as indoor agriculture is likely to be a stronghold of sustainability.
Sustainability is top of mind for AeroFarms as well; it is a certified B Corp. with a scorecard in sustainability as well as societal issues such as fair wages.
“This message [of water and land conservation] has really resonated and connected with the consumer,” said Oshima. “This idea of enabling local production, as well, allows us to bypass a very complex supply chain where there is a lot of food waste along each one of those handoffs.”
Vanzura asserted that “this issue with sustainability is that it is literally an existential crisis… So, all forms of farming, all forms of life need to take this seriously.”
Freight Farms has prioritized taking an active approach to each of its five key pillars of sustainability – land, water and soil conservation as well as reducing energy and transportation use.
“I think as an industry, all of us need to continue to drive and continue to improve the sustainability of our solutions,” Vanzura said.
To watch the SmartSummit in its entirety and hear more insights about the vertical farming industry from Oshima, Vanzura and Ripma, access the SmartSummit on demand.
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