Feed the Future of Agriculture with Vertical Farming

By Mark Esposito, Terence Tse, Khaled Soufani and Lisa Xiong

One big misconception is that produce grown from nontraditional methods is of lesser quality, and it’s time to put it to rest. In this article, the authors elaborate on the much needed innovative future of agriculture and how it plays as a “new tech” that revolutionises farming.

 

Restaurants, food trucks, take-out counters, and the like: classic destinations you go to meet friends or just to ensure you get enough calories for the day. Despite the importance of this quotidian activity, food prices are rising at an alarming pace. This has been the recent trend whether you are in Dubai, New York, London, Paris, or Shanghai. Cambridge, UK, is no exception. Mat, a local restaurant owner, revealed: “We are always trying to get the best quality food with appealing prices, but the price just keeps on hiking up.” There is, of course, cheaper meat and produce, but the quality is lower as a result. These lower quality food sources are often laden with heavy pesticides and chemicals for ease of storage and transport. For the consumer, restaurateur, and food retailer, there is no clear picture of how and when food costs might begin to stabilise.

Mat’s situation can be seen as a miniature narrative of the global issue at hand: food pricing pressure triggered by a wearing down of traditional agriculture. On average, food prices have gone up by 2.6% annually in the past two decades on a global scale.1 In the UK, grocery prices have risen 0.2% annually since 2014. In America, the same situation occurs. In 2011 alone, US food prices increased by 5%.2 In the east, China experienced 2.7% food inflation in 2016.3 These ongoing rises in food costs persist around the world and threaten a baseline quality of life as more and more of our disposable income goes into buying food.

 

Trends Analysis: Why is Traditional Farming Frustrating Us?

Traditional farming refers to field farming, which requires labour, amenable weather conditions, adequate sunshine for photosynthesis, irrigation, and pesticides and herbicides to protect crops. These crops then require travelling long distances from farmlands in other continents to get to local tables.

These activities in and of themselves do not reveal the reasons why food prices have been rising steadily, but using the DRIVE framework to investigate the megatrends influencing agriculture,4 we can detect reasons why traditional farming is no longer working as well as it used to.

According to the FAO, food production must increase by 70% before the year 2050 in order to meet global food needs.

 

• Demographic and Social Changes

When compared to the rise in global population, it becomes clear that the global food supply cannot keep up with demand. According to the FAO,5 food production must increase by 70% before the year 2050 in order to meet global food needs. What’s more, this growth must happen against a headwind – urbanisation trends are pushing people away from farming as a profession while taking over arable land at the same time.6

Meanwhile, cultural changes related to diet preferences among younger generations have taken a leap. More people are converting to vegetarianism and “superfoods”; foods like antioxidant-rich kale and protein-packed quinoa are favoured over conventional empty-calorie, carb-heavy foods like potatoes and processed dry pastas. In addition, local food initiatives have become more than a passing phenomenon. Demand for meat and produce from local farms continues to rise in response to environmental concerns and the conviction that fresh, not frozen, is the higher quality, better-tasting food.

Resource Scarcity
Agriculture takes up more than 70% of global water consumption. This tension over water usage adds to the total cost of agriculture. Food loss in the supply chain is another issue as perishable crops blemish and spoil during harvesting, packaging, processing, and distribution. According a report on food from field to fork, some activities could waste up to 50%.7 Moreover, the distance that some foods must travel shortens the number of days on the market, again cutting down on the amount of food available to consumers.

Inequality
In addition to longstanding problems with malnutrition and widespread poverty in developing countries, inequalities related to food prices have also arisen in industrialised countries. In places like the US, the cost of fresh foods have led vulnerable populations to opt instead for budget-priced, high-fat processed fast food. The consequence of these food “choices” is a nationwide obesity epidemic as well as an increase in the number of people developing diabetes. As demand for food and the costs of agriculture continue to rise, the prospects of improving these health and hunger conditions for low-income families will not be great.

Volatility
Agriculture is no stranger to volatility, which remains one of the industries most vulnerable to natural disasters. Climate change has caused more frequent extreme weather events in recent decades, which damages an entire season’s worth of harvest and worsens the rise in food prices. Higher temperatures also make crop pests more rampant. In addition, mutable government rules on crops can also drive up food prices. In the US, current ethanol mandates account for 10-15% of food price hikes. On top of that, regulations on herbicide, pesticide and fertiliser use are also positively related to lower crop yields.8 These forces, which determine the direction of price volatility, are here to stay.

Given these observations and changes seen through the lens of the DRIVE framework,9 the likelihood that traditional farming can continue to be a reliable and affordable source of food production is not that likely at all.

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Vertical Farming is Born Out of Challenges.

One answer to food supply problems is coming from research labs to our dining tables. Vertical farming, a term coined by Dickson Despommier in his book The Vertical Farm: Feeding the World in the 21st Century in 2010,10 is the agricultural practice of producing food vertically in stacked-up layers. These farms make use of enclosed structures, like warehouses or ship containers, and can also be integrated into skyscrapers. Called “grow houses”, they provide a controlled environment to grow crops using soil pots in a hydroponic or aeroponic system. In this environment, crops receive the right amount of light, nutrients, and heat, regulated by an algorithms monitor. Here are some pioneers in the field:

• AeroFarms: A Local Farm

AeroFarms, harboured in a renovated steel plant in New Jersey, US, uses vertical farming to grow fresh and affordable produce. The annual yield is 130 times greater than that of a traditional field farm with the same surface area, and water consumption is 95% less than field farming, with zero pesticide use.11 One of the main virtues of vertical farming is independence from the land, or, to be more specific, the soil. The company employs aeroponics on a reusable fabric. Rather than exposing crops to sunshine horizontally, AeroFarms uses LED lights and manipulates the light spectrum to best fit their crops’ growth requirements. The products are then sold locally in grocery stores and supermarkets.

• Fujitsu: Vertical Farming for Medical Needs

Fujitsu, who made their name as an electronics maker, has experimented with vertical farming in empty semiconductor plants in Japan. They launched to market a low-potassium lettuce for patients suffering from kidney disease.12 The lettuce has only 100 mg of potassium per 100g of lettuce, which is less than one-fifth of what traditional lettuce contains. Due to the controlled environment, nutrients level can be manipulated to produce this distinctive lettuce. The demand has proven itself, with the market estimated to expand from ¥23.4 billion in 2013 to ¥150 billion in 2025.

• Sky Greens: Growing Produce When There is No Arable Land

Sky Greens is the first vertical farm to feed Singaporean dwellers in the densely populated and farmland-deprived region.13 The imbalance between 250 acres of farmland available to feed a population of five million has pushed growers in the direction of vertical farming. Sky Greens grows vegetables in A-shaped towers with an efficient rotating system for crops to absorb sunlight, which emulates the tropical climate of Singapore. Each tower can produce up to 10 times more than a field farm with the same surface area.

• Growtainer: Ready to Scale

Growtainer operates mobile and high-density vertical farms in modified 20’ or 40’ shipping containers.14 The modular units are simple and user-friendly. With all the necessary utilities set up inside, these small and insulated hydroponics farms can be monitored and operated remotely through the Internet, and even over smartphones with an app. The Growtainer system can be used in schools, restaurants, and military bases for leafy vegetables. Growtainer offers three major advantages: food security, year-round growing capacities, and simple operation. The company is scaling, with an increasing number of clients coming from the northeastern US, Thailand, and Vietnam.

Due to various factors related to geographical location, cultural difference, political support, investor dynamics, and local agricultural market conditions, what works for the above companies might not work for others entering vertical farming. Government policies on funding vary in different countries and even regions within local regulations. Dietary habits can also influence market popularity of certain crops. To identify such trends, partnerships with players in local food supply chains would provide practical insights on local barriers. Other challenges persist. In some regions, people are sceptical of this innovation and misunderstand vertical farming as “artificial vegetables”, which do not come off as particularly appetising. Though there may be no single model for vertical farming, its advantages over traditional field farming cannot be overlooked.

For managers interested in expanding into vertical farming, there are ways to minimise the expensive learning curve and improve their chances of success:

Change the Perception of Farming and Invest in “New Tech”

Traditional farming has been characterised as labour-intensive, vulnerable to climate change, and remote to a modern and urbanised lifestyle. In some places, farmers are associated with poverty, naivety, lack of education, and isolation. Few people are aware that vertical farming is likely to redefine the farming industry and revive its charms for educated young people. In the vertical farm, farmers are the new techies. Accuracy in operations and knowledge of computer-controlled systems and data analytics are prerequisites for vertical farming. Farmers are now data analysts, bio-scientists, and system supervisors. Understanding this transformation in farming provides managers with leverage in communicating the need to embrace vertical farming with different stakeholders.

Promote Farming Innovations and Educate Consumers

The average consumer has the misconception that produce grown with nontraditional methods is of lesser quality and taste. Promotional campaigns are a tactic that companies can use to interact with consumers explicitly to clarify the value of non–field farming crops and educate them on the nutritional and environmental benefits of vertical farming. Like wine-tastings, food-tasting events provide guests with the opportunity to sample hydroponic and aeroponic produce and judge the taste for themselves. These events also lend well to generating social media buzz. Vertical farming is not Frankenstein food, but might as well be without any efforts to educate the public.

Encourage Local Food Culture Through Governments and Food Associations

Governments and relevant associations are excellent networks to push local food culture. They are invested in the local economy, and local food production has been shown to help create employment.15 The Ontario Ministry of Agriculture, Food, and Rural Affairs of Canada actively pursues a regional local food strategy, and they have funded more than $40 million in projects in the province for the 2015-2016 fiscal year.16 Such government support is a sign that local food movements are a source of economic development with no signs of abating.

Vertical farming offers additional choices and growth potential that traditional farming techniques cannot realise. It is economically sensible, environmentally friendly, tech-savvy, and most importantly, health-sensitive

 

Change of the Perception of Investors

Investors are essential if vertical farming is to scale successfully. AeroFarms, for instance, required six rounds of funding from nine investors, for a total equity funding around $95.8 million, to get to where they are today.17 To attract the attention of investors, the company does not label itself as a nontraditional farm but rather as “an urban agriculture and cleantech company”.18 Talking points to build consensus include the trend toward using technology to grow nutrient-specific crops like Fujitsu’s low-potassium lettuce. Another key point to stress is the profitability potential. Vertical farming’s high productivity rates, reduced water usage, and quality produce yields higher earnings at lower cost.

 

Conclusion

Vertical farming is not a fairytale; it is happening now. Though vertical farms can never be expected to replace traditional farming entirely, it is likely that they will have to complement each other if we are to meet the food demands of tomorrow. Vertical farming offers additional choices and growth potential that traditional farming techniques cannot realise. It is economically sensible, environmentally friendly, tech-savvy, and most importantly, health-sensitive. From grow house to table, vertical farming is revamping the future of agriculture.

Featured Image: Nice leafy vegetables at the Sky Greens vertical farm in Singapore / Reuters

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Dr. Mark Esposito, PhD., is a Socio-Economic Strategist and bestselling author, researching MegaTrends, Business Model Innovations and Competitiveness. He works at the interface between Business, Technology and Government and co-founded Nexus FrontierTech, an Artificial Intelligence Studio. He holds appointments as Professor of Business and Economics at Hult International Business School and Grenoble Ecole de Management and he is equally a faculty member at Harvard University since 2011. Mark is an affiliated faculty of the Microeconomics of Competitiveness (MoC) network at Harvard Business School’s Institute for Strategy and Competitiveness and is currently co-leader of the network’s Institutes Council.

Dr. Terence Tse is an Associate Professor at ESCP Europe London campus and a Research Fellow at the Judge Business School in the UK. He is also head of Competitiveness Studies at i7 Institute for Innovation and Competitiveness. Terence has also worked as a consultant for Ernst & Young, and served as an independent consultant to a number of companies. Hee has published extensively on various topic of interests in academic publications and newspapers around the world. He has been interviewed by television channels including CCTV, Channel 2 of Greece, France 24, and NHK.

Dr. Khaled Soufani is Professor of Management Practice (Economics) and Director of the Executive MBA in the Judge Business School at the University of Cambridge, where he also directs the Center for Middle Eastern Studies and the Circular Economy Center. He has published extensively in the area of financial management and economic affairs of small and medium- sized enterprises. His current research interests relate to fast-expanding markets and the economics of innovation.

Lisa Xiong is a candidate to the Executive Doctorate of Business Administration at Ecole des Ponts Business School. She works as Teaching Associate for business schools in Europe, UAE and China. Her research interests cover inequalities, Chinese economic development, entrepreneurship and open innovation. Lisa is a linguist and social science investigator. Her ability to navigate both the east and west cultures allowed her to serve different communities, enterprises and clients in different parts of the world.

References

1. Fao.org (2017). FAO food price index. Food and Agriculture Organization of the United Nations. Retrieved from http : //www.fao.org /worldfoodsituation/foodpricesindex/en/
2. USDA (2017). USDA ERS – Food prices and spending. Retrieved from https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending/
3. Scutt, D. (2017). Inflation in China is heating up fast. Business Insider. Retrieved from http://uk.businessinsider.com/inflation-in-china-is-heating-up-fast-2017-2?r=US&IR=T
4. Esposito, M. and Tse, T. (2017). Thrive in the new normal, DRIVE in uncertainty. The European Financial Review. Retrieved from http://www.europeanfinancialreview.com/?p=5577.
5. Fao.org (2009). Global agriculture towards 2050, How to feed the world. Retrieved from http://www. fao. org/fileadmin/templates/wsfs/docs/Issues_papers/HLEF2050_ Global_Agriculture.pdf
6. See Esposito and Tse, 2017
7. Goldenberg, S. (2016, July 14). From field to fork: the six stages of wasting food. The Guardian. Retrieved from https://www.theguardian.com/environment/2016/jul/14/from-field-to-fork-the-six-stages-of-wasting-food
8. Orland, S. (2012, March 15). Why are food prices so high? Forbes.com. Retrieved from https://www.forbes.com/sites/steveodland/2012/03/15why-are-food-prices-so-high /#25b24bb46962
9. See Esposito and Tse, 2017
10. Despommier, D. 2010. The vertical farm: feeding the world in the 21st century. New York: Thomas Dunne Books
11. AeroFarms (2017). AeroFarms is on a mission to transform agriculture. Retrieved from http://aerofarms.com
12. Matsutani, M. (2014, May 13). Fujitsu harvests low-potassium lettuce grown in semiconductor plant. The Japan Times. Retrieved from http://www.japantimes.co.jp/news/2014/05/13/national/science-health/fujitsu-harvests-low-potassium-lettuce-grown-plant-clean-room/
13. Krishnamurthy, R. (2014, July 25). Vertical farming: Singapore’s solution to feed the local urban population. The Permaculture Research Institute. Retrieved from https://permaculturenews.org /2014/07/25/vertical-farming-singapores-solution-feed-local-urban-population/
14. Growtainer (2017). The portable production facility of the future. Growtainer. Retrieved from http://www.growtainers.com
15. Kneafsey, M., Venn, L., Schmutz, U., Balázs, B., Trenchard, L., Eyden-Wood, T., … and Blackett, M. (2013). Short food supply chains and local food systems in the EU. A state of play of their socio-economic characteristics. JRC Scientific and Policy Reports. Joint Research Centre Institute for Prospective Technological Studies, European Commission.
16. Ontario Ministry of Agriculture, Food, and Rural Affairs (2017). Local Food Report 2016. Retrieved from http://www.omafra.gov.on.ca/english/about/local_food_rpt16.htm#2015
17.Crunchbase (n.d.). AeroFarms. Retrieved from https://www.crunchbase.  com/organization/aerofarms
18. See AeroFarms, 2017.
19. Chang, J. (2014). An analysis of Chinese buzzwords in the snake’s year. Journal of Arts and Humanities, 3(2), pp. 78.­

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