Vertical farming: the difficult second act | FT Rethink
Vertical Farming The Second Act | Financial Times |
Vertical farming has been a boom industry, but it’s also seen a high number of business failures. Recently, investment funding has dropped significantly. Despite that, there are broader economic and structural reasons that could potentially boost demand for vertical farms. So, where does the industry stand now?
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So, Freya, what have we got on the agenda?
Vertical farming. It’s been a boom industry, but it’s also had its fair share of difficulties. So where does it stand now?
In the past decade investors have poured more than $6bn into vertical farming start-ups. Advocates said with vertical farming we could reduce carbon emissions, pesticide use, water usage, pollution, and food miles. But in the last few years funding has dropped off significantly. For example, over $2bn in funding in 2021 fell to around $280mn last year.
We’ve also seen the collapse of major players, like, Bowery Farming and AppHarvest. Costs have been a major problem. The farms need a lot of energy to power things like LED lighting systems and ventilation. Higher interest rates have made financing more expensive.
Another factor has been a shortage of skilled labour. And one last problem, many vertical farms have been very protective of their technology. This secrecy has made it harder for the industry to learn from its mistakes. It all sounds a bit grim, but the industry isn’t dead yet.
The global market is expected to more than treble from around $8bn last year to about $25bn in 2030, according to Grand View Research. There are still broader environmental, economic, and structural reasons that could fuel the demand for vertical farms. The world’s population continues to grow and needs to be fed. At the same time, more arable land than ever before is being used to produce things like biofuels, and soil degradation continues to be a problem. Crops are also under pressure from climate change, and water scarcity is an ever-present issue.
In a turbulent world, concerns about food security may be a driver to bring food sources closer to home. Meanwhile, the rapid advances we’re seeing in AI could significantly improve the efficiency of vertical farms. Advocates say vertical farming is not a failed concept, but rather a good idea that initially, at least, has been approached inefficiently. Also, its potential is almost certainly far greater in some areas above others, places such as Singapore, which only grow 6 per cent of its own produce.
Let’s not forget the sector is still very young. New technology industries like this can have huge initial expectations that are rarely met. But after, there can be consolidation with new players entering the market and mainstream adoption. Having said that, there’s no denying that plenty of mistakes have been made, and there’s no guarantee that that won’t continue. So it will be fascinating to see if the industry can eventually grow into something more than just a niche market.
Original Article: https://www.ft.com/video/92fb3b2c-7dfa-4282-9146-2c281cba6c34