Abstract:
Indoor farming is at a pivotal moment, learning from early pioneers’ successes and setbacks to shape a more sustainable future. This article summarizes key challenges, mentioned by industry experts at the moment—such as scaling too quickly, high costs, and market pressures—while highlighting promising shifts like hybrid farming, incremental growth, and integrating vertical farms with traditional agriculture. We respect the remarkable strides made by the vertical farming pioneers in advancing technology and consumer acceptance, laying a foundation for progress for the whole industry. At greenhub, we are eager to learn and acknowledge that we don’t have all the answers. By fostering collaboration, innovation, and practicality, we believe that the industry can unlock its potential for a resilient, sustainable future. Collaboration is at the core of what we do.
Part one: Overview of the Current State of the Industry
This week, we’re beginning our journey towards building a more viable indoor farm. At greenhub, we don’t claim to have all the answers, but we’re committed to understanding the challenges and opportunities shaping this field. In this post, we’ll explore some of the core issues currently sparking conversation—from industry and academic debates to supplier insights. We’ll take an honest look at where things stand, why some of the early pioneers faced setbacks, and how these lessons might help us move forward.
Next week, we’ll dive into potential solutions and practical steps, sharing what we’re learning from EuroTier to understand how vertical farming fits into the larger agricultural landscape.
1. Building on the Lessons of Indoor Farm Pioneers
At greenhub, we have a lot of respect for the vision and determination shown by vertical farming pioneers like Bowery Farming. Bowery had $700 million in funding and partnerships with major retailers like Whole Foods and Amazon Fresh, aiming to redefine how we grow and distribute food by creating high-tech, indoor farms to bring fresh produce to urban areas. But despite these bold efforts, the financial reality of scaling up—high costs for infrastructure, energy, and labor—ultimately forced them to close when they couldn’t secure further funding or a buyer.
Bowery’s story isn’t unique. Other well-known vertical farming companies, like Infarm, Jungle, and Future Crops, have faced similar challenges and had to either scale back or shut down. Stephan Dolezalek, managing partner at Grosvenor Food & AgTech and a former AeroFarms board member, sees these setbacks as part of the natural cycle for new industries. There’s often a lot of enthusiasm at the start, leading to big investments, sometimes before the market is mature enough to support them. As Dolezalek suggests, this phase of adjustment could help the industry stabilize, setting the stage for a new era of resilient, profitable vertical farming businesses (source: AgTechNavigator.com).
Academia acknowledges these events and is reflecting on the developments regarding the pioneers too. Vertical farming received substantial venture capital investment up until 2021, totaling $1.2 billion. Major investments included:
Plenty: $500 million from SoftBank and Amazon
AeroFarms: $240 million from IKEA and Dubai-based investors
Bowery Farming: $170 million from Google Ventures
80 Acres Farms: $200 million
Infarm: €400 million
PlantLab: €20 million
Nordic Harvest: €10 million
By 2022, the “hype” began to fade as companies like AeroFarms and Kalera faced bankruptcy, marking what Marcelis calls a natural industry “shakeout.” He notes that vertical farming isn’t dead, as new projects like Growy in Amsterdam and 80 Acres are still seeing high demand. Academia is acknowledging this valley of despair stage of the industry but also recognizes that we are at a pivotal point of change.
2. Common Challenges in an Indoor Farm: Are We Ready to Move Forward?
With each big-name closure, we’re getting a clearer picture of the recurring challenges that vertical farming faces. Here are the key issues that keep coming up and I am sure you must have read before:
- Growing Too Big Too Fast: Many vertical farms scaled up quickly to satisfy investor expectations, which often led to them losing focus on stability and core farming practices.
- Identity Crisis: Vertical farms sometimes position themselves as tech companies rather than farms, which might help with fundraising but can detract from what’s most important: producing and selling quality food.
- Misunderstanding Retail Market Dynamics: Some farms underestimated factors like pricing pressure, retailer demands, and competition for shelf space. No matter how innovative a farm is, it still has to compete on price.
- Profit vs. Revenue: Emphasizing gross revenue over net profit is a common mistake. Without a clear grasp of actual costs, high revenue alone isn’t enough to sustain a business long-term.
While it’s good that the industry is calling out these issues, we’re still mostly at the “problem identification” stage rather than moving toward solutions. Posts that simply list these challenges get a lot of attention, with responses like “spot on” and “well said,” but actionable solutions are still rare. And while there’s often a call to “share data,” we know it’s more complicated than that. If it were as easy as copying someone else’s “growing recipe,” vertical farming would already be thriving without these setbacks.
It is interesting that academia is defining the problems slightly differently but also similarly across research papers. Again, Marcelis is a good example and summary of the academic point of view:
- Energy Costs and Consumption: The cost and sustainability of energy use are critical concerns. Vertical farms typically require significant energy, especially for lighting.
- High Labor Costs: Smaller-scale operations often struggle to automate tasks, making labour-intensive processes a burden. Many positions, from office staff to technicians, are required even for small farms.
- Lack of Knowledge and Knowledge Sharing: Vertical farming suffers from limited knowledge-sharing on effective practices, which hinders industry-wide improvement.
- Product Price and Market Viability: Pricing remains a challenge, as high operational costs make it difficult for vertical farms to compete with other forms of agriculture on price.
Prof. Dr. Leo Marcelis highlights that while vertical farming faces significant challenges, the industry is in a pivotal phase of learning and growth. Through targeted strategies in labor, energy use, crop selection, and technology, vertical farming has the potential to overcome its current obstacles and move toward a more sustainable, economically viable future.
3. A Shift Toward Openness and Incremental Growth
One positive shift is the openness with which industry leaders are now addressing challenges. For the first time, we’re seeing people acknowledge both the struggles and the potential, which signals a real turning point. This honesty shows that we’re moving into a more grounded phase where we can start having practical conversations about what actually works.
Another trend we’re seeing is a move away from rapid, large-scale expansions toward smaller, adaptable farms. This steady, incremental approach prioritizes sustainable growth, energy efficiency, and resource management. At greenhub, we believe this is the best path forward, as it allows operations to adapt without taking on the high financial risks associated with scaling up too fast.
4. Integrating Indoor Farms into a Broader Agricultural Ecosystem
In addition to this trend toward smaller, resilient farms, vertical farming is finding a role within traditional agricultural systems, like greenhouses and Controlled Environment Agriculture (CEA) setups. Universities, research institutions, and suppliers are conducting trials within these environments, focusing on crop optimization, resilience, and innovative growing practices. This blended approach reduces financial risk and boosts productivity, making vertical farming a valuable partner to conventional methods.
Marcelis suggests that vertical farms and greenhouses could benefit from a hybrid approach. For instance, young plants could be cultivated in vertical farms where they’re protected from external stressors, while larger plants could be transferred to greenhouses where cost-efficiency is better established.
Presence of the inhouse pavilion in Hannover at EUROTIER also shows that indoor farming is already a part of the broader agricultural ecosystem. Vertical farming in indoor farming will be represented by Alexander Jaworski during the theme day of Aquaculture and Algae at the inhouse farming pavilion during the roundtable ‘ Fish, Algae, Shrimp, Insects, and Vegetables from Indoor Farms – Out of the Marketing Desert!?’, moderated by Fraunhofer and DLG e. V.
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