Vertical Farming

The Goal:

• Vertical Farming – To introduce and accelerate the emergence of vertical farming, which is the production of crops in a controlled indoor environment (CEA – Controlled Environment Agriculture) generally by stacking crops on top of one another for high density and high output. And of course, make a profit off the new technology.
• Vertical Markets – To show the potential commanding the highly responsive, near instantaneous control over resources for the production of other goods and services. The goal is to show that Vertical Farming is a supply chain solution. One can also diversify and maximize profits through selling a wider range of products beyond just food.
• Vertical Integration – To create a variety of products in house from raw materials to finished products in farm-to-table fashion. Related to “vertical markets” but different with a focus on creating high quality products without outsourcing or contracting out.

Each of the above has their own set of problems and untreaded paths which will be explored in the following pages.

Vertical Farming: What?

Vertical farming has existed conceptually for a while now. There were historical antecedents in rice paddies in Southeast Asia and in the Hanging Gardens of Babylon among other, more academic conceptualizations. Vertical Farming in the modern sense is attributed to Dickson Despommier, who imagined a “farmscraper” or glass tower with the capabilities to grow a variety of fruits and vegetables indoors for distribution in dense urban centers. The idea originally was to shorten “food miles” which is the distance food products have to travel from farm to point of consumption.

This idealization was an interesting starting point but has evolved since Dickson Despommier initially proposed the idea. “Food Miles” are not recognized as having as large an impact on groceries and restaurants as Despommier presumed. Despommier was very concerned with world hunger and how to feed our growing populations. Most modern academics acknowledge that it isn’t really food production that is the issue (we could feed everyone today if we were so inclined), but the underlying issues of food waste, push supply chains, and poverty that are the root cause of world hunger.

In spite of the failings of Despommier’s model, the idea took hold and has been pursued by entrepreneurs to a radical evolution that differs from Despommiers vision but still maintains his goals and motivations, i.e. to end world hunger. Modern systems (as of 2016) generally consist of hydroponics with specialty LEDs above the crops. Each of these systems is stacked on top of  another. So what exactly does that mean? Let’s discuss modern systems step by step with respect to their subsystems.

Hydroponics is a method of growing plants indoors by providing water, oxygen, and basic nutrients through a piping network. Generally, in hydroponics, the pots that hold the plants are connected to pipes that distribute a solution that is made of water and nutrients. There are other systems like aeroponics, which distribute the solution via spray, or aquaponics, which included living aquatic organisms to help recycle the nutrients. Each has advantages and disadvantages but all can provide enough for plant life to grow indoors.

Notice that hydroponics does not provide lighting. This must be provided separately and in modern vertical farms is done via LEDs. In the pictures above, the purple/pink lights are a special grow light design to provide wavelengths for optimal plant growth.

Modern Vertical Farms provide a number of advantages and benefits that make them an attractive investment. The Vertical farms use 90-97% less water than traditional farms because the hydroponics recycle water. The hydroponics also means that less fertilizer is used and none of the fertilizer is lost to runoff. Vertical farms also have higher output than traditional farms in less space. One vertical farm in Japan can produce 10,000 heads of lettuce in a month. Another  produces the same amount of kale it would take a tradition farm in 30 acres in 1 and a half acres. This high output is because the plants get optimized lighting 24/7 whereas traditional farms have to wait for at least twice as long for their plants to be ready for harvesting. There is also higher output because the crops are grown indoors, which mean that 1) there is year round production and 2) no crop loss due to flooding, drought, etc.

So why has vertical farming not established itself and is so slow to market? There are disadvantages to vertical farming. First and foremost is that vertical farms are energy hogs. Despommier initially conceived of the idea to try to create a sustainable solution to our agricultural problems but vertical farming currently is probably the most wasteful way to farm. A large portion of the energy use comes from keeping the lights on at all times. There is also significant energy use for climate control. Certain plants need high temperatures to grow and this can be exceptionally taxing on utility bills especially in the winter. Another issue is high startup costs. The cost for intercity space is high, so why build a farm in the city when land in the countryside is so much cheaper? V.F. is also unproven so there is no guaranteed ROI. Third, there are also limits on what can be grown. Growing fruit trees indoors is not as easy as growing a leafy green like kale or lettuce. There still is no way to grow staple grains like rice or corn indoors.

I have some ideas as to how to combat these disadvantages. For the high cost, there is no way around that. But if we can spend millions on bombing children or bailing out “too big to fail” industries, we can fund a capital intensive project that could potentially benefit all of mankind. Having said that, Vertical Farming is useful because it actually produces a product and depending on how refined that product is, one might be able to recuperate that spent capital at a higher rate than initially expected. This is where “Vertical Integration” comes in, but that will be discussed later. Also, certain Rust Belt cities, like Detroit or Cleveland, have spare land so there is no worry about high cost intercity space.

The energy problem has an obvious solution. If one were to build a house under a waterfall, how would one design their sewage system? Simply create a reservoir for the water to pipe throughout the house. Similarly if we need light, we simply “pipe” the sunlight through fiber optics when it is available. This could reduce our lighting bill by half. Such systems exist and are very expensive. They are called “active daylighting” systems and rely on a solar collector, solar sensor, and fiber optic network to distribute the light.

There are issues with this systems too however. Unfortunately these systems are expensive. But proper design from the beginning may be able to mitigate the costs. Certain locations (California) are better suited for active daylighting than others (Michigan). Fiber optics only carry light about 60 ft before losing efficiency. There is also the issue of filtering away the heat from the sunlight.

Generally lighting accounts for the majority of utility bills. Heating and cooling are close seconds, but advances in VFD technologies allow for solution that may offer significant savings in heating and cooling. One building reduced its heating/cooling bill by 97% by following biomimetic designs based off of termites. There are definite caveats to this approach however, as this sort of system would need to be heavily engineered from the outset. Again, proper design from the beginning could allow for solutions to be built into the architecture of the farm. For example, heating could be significantly reduced with geothermal pumps, VFDs, and a control system that accounts for the stack effect.

In short, while there are significant outstanding issues facing vertical farming, these issues are primarily technical and can be engineered around. Thornier issues of public acceptance and unproven technologies still exist but all infrastructures was new at one point and the only way around these issues is to meet them head on. What has been described so far is technical and historical aspects of vertical farming, the technical “what” questions. The next section, vertical markets will address the “why” questions and the final section, vertical integration, will address the “how” questions.

Vertical Markets: Why?

A vertical market is a business term used to describe specific industries a business can serve. For example, semiconductors are a vertical market because not every business attempts to provide this specific computer part, nor does every business specifically care about this particular computer part. It is essentially a niche. Horizontal markets attempt to provide goods or services more broadly, for a wide group of people.

What does this have to do with vertical farming? As mentioned previously, vertical farming was initially proposed to mitigate food supply shortages. This, it should be noted again, is not truly the core issue of world hunger. But because this was the original intent of the idea, most real world vertical farms focus on high volume production to feed lots of people. This is not a bad thing by itself, but it ignores the tremendous other opportunities that vertical farming presents and ignores vertical markets.

The focus to this day is non-value added, raw food production. Google X abandoned their vertical farming project because they could not produce staple crops like wheat or corn. Green Spirit Farms, Aerofarms, and Minai all produce leafy greens like lettuce or kale. Again, this is not inherently bad, but it is limiting. But, not all farms produce food products. Some farms provide the raw materials for textiles or pharmaceuticals or biofuels. And this is primarily why vertical farming should be pursued: not to end world hunger, but as an efficient means to control production.

As mentioned in the goals section, vertical farming is primarily a supply chain and logistics solution. By producing raw good close to the point of processing, more or less at will, one can gain a tighter hold on production. For example, if vertical farming allows for rapid growth of certain high density energy crops one can theoretically create drop-in biofuels on command and avoid thorny current day issues like the food vs. fuel debate. On a purely money-driven agenda, farming high value crops like saffron or vanilla with automated processes at low but controlled volumes is a relatively easy way to make money quickly. If one were able to farm cotton in high controlled volumes, textiles/ clothing manufacturing and production can fall under one roof.

The point is, production and manufacture become one and bottlenecks in supply chain like procurement can easily be controlled. This is the capitalist, self-serving reason to endorse vertical farming. The sustainability aspects are still there but efficiency is sustainability and vertical farms, with some outstanding issues, have the potential to be incredibly efficient means of production. Vertical farms allow vertical integration to high degrees with the provided capital. This doesn’t mean that feed the populace and growing leafy greens shouldn’t be pursued, but treating vertical farms as part of a larger process as opposed to ends in and of themselves allow more doors to open.

Part of the reason vertical farms grow leafy greens is to develop and study vertical farming itself because the technology is in its infancy, and this is understandable, but in order to attract funding and positive press the potential of the technology needs to be shown. The potential is best shown by demonstrating exactly how other more established industries can benefit off of vertical farms. The potential is not just salads, the potential is control.

Vertical Integration: How?

The largest issue hinted at so far is that the biggest problems in vertical farming are not technical or design issues, but financial and societal. There are several unresolved issues on this front that neither I nor one person alone can provide solutions for including government subsidies, commercialization, and business structures. I can’t say there are easy answers, so all I can provide are possible solutions that I actually in my heart-of-hearts am not confident at all about. That being said, there are certain strategies I believe in slightly more than others which I try to outline.

First is bootstrapping vertical farming. Ichigo, a Japanese vertical farming company that is attempting to grow beyond leafy greens is using the “Tesla” model. The idea is to sell low volume, high priced to fund cheaper, higher volume product to fund the ability to sell high volume, low priced product.

This is a solid business plan, but Ichigo is (as of 2016) selling 4 strawberries for $150, which is ridiculous. There may be potential along these lines to bootstrap a vertical farm by selling high value pharmaceuticals or spices at low volumes and funneling that capital towards expansion, but if adding vertical farming to the supply chain increases consumer cost 100x then it would be better off just using traditional farming.

Vertical Farming is (or could be) an infrastructure. Infrastructure is introduced slowly, often with significant political and societal backing. An alternative business model is to follow the path of cell phones. Cell phones and smart phones did not immediately enter the market as an iPhone or a Blackberry. In the early 1990s they were primarily status symbols for the wealthy and pragmatic tools for select industries like the military, EMTs, etc. Introducing vertical farming via the industries that most immediately will need and profit off of it, instead of sourcing the products to mom-and-pop restaurants, will increase acceptance rapidly. This in turn will leverage political backing to allow for more expansion.

This business model is why identifying the potential vertical markets is important for the growth of vertical farming. It is essentially a more business to business model than the current iteration of vertical farms. This model ingrains vertical farming directly into the infrastructure of other businesses for maximum efficiency, via vertical integration. If the end goal of a business is monopolization then there is no better way than coupling vertical farming with vertical integration in specific vertical markets.