20 votes

The vertical farming bubble is finally popping

26 comments

  1. [5]
    papasquat
    Link
    I never understood the economics of how this stuff was supposed to work in the first place. There's a common problem with techbro futurist types where they fail to understand that the reason we...

    I never understood the economics of how this stuff was supposed to work in the first place. There's a common problem with techbro futurist types where they fail to understand that the reason we currently do things the way we do them isn't because people aren't creative enough to apply technology to problems, or because we haven't developed the technology to do them differently, but because the hard economic facts of a situation mandates it.

    Vertical farming requires land (usually in an extremely expensive metropolitan area), a purpose-built building, a ton of niche technology to plant, water, monitor, and temperature control crops, very expensive specialized workers, an enormous power bill, and a lot of other extremely expensive things that traditional farming doesn't. The only advances is that it uses less land and gets crops closer to people who use them. But both land and transportation are cheap, so there's no real economic advantage to doing it.

    I always treated this stuff in a similar vein to hyperloops: something that would never actually reach real production levels, and somehow managed to con a bunch of very rich nerds out of a lot of money just by virtue of being sci-fi-ish and cool sounding.

    10 votes
    1. Omnicrola
      Link Parent
      I agree with what you're saying. I do wonder however if the economics of vertical farming start to make more sense when it's treated more like traditional farming in the sense that farmers just...

      I agree with what you're saying. I do wonder however if the economics of vertical farming start to make more sense when it's treated more like traditional farming in the sense that farmers just buy equipment and use it. Traditional farmers don't all individually hire a bunch of engineers and specialists to hyper optimize their crops and incorporate all the new tech they can. There are established methods and required equipment, which they can buy off the shelf and use.

      The article touches on this briefly

      “In reality, these companies overspend on R&D by crazy amounts, and then say, ‘Oh, shit, that didn’t work.'” Startups often later incorporate more outside tech, he says, but keep the narrative that they’ve designed a full system from scratch.

      Which makes me wonder if it could eventually work were to start a vertical farm you just buy the equipment and go, rather than trying to court VC firms and boast about proprietary tech.

      11 votes
    2. [2]
      skybrian
      Link Parent
      According to the article, they also use less water and avoid some diseases. Yes, they were overly hyped, but there may still be some niche uses.

      According to the article, they also use less water and avoid some diseases. Yes, they were overly hyped, but there may still be some niche uses.

      4 votes
      1. EgoEimi
        Link Parent
        Vertically grown produce can have superior and more consistent flavor than regular produce, making them suitable to sell to wealthier consumers and high-end restaurants. But that is a small niche.

        Vertically grown produce can have superior and more consistent flavor than regular produce, making them suitable to sell to wealthier consumers and high-end restaurants.

        But that is a small niche.

        5 votes
    3. rosco
      Link Parent
      Preach! Our company has been dipping its toe into the carbon credit market because what we make could potentially be a good fit for sequestration verification, but booooooy howdy is that space...

      I never understood the economics of how this stuff was supposed to work in the first place. There's a common problem with techbro futurist types where they fail to understand that the reason we currently do things the way we do them isn't because people aren't creative enough to apply technology to problems, or because we haven't developed the technology to do them differently, but because the hard economic facts of a situation mandates it.

      Preach! Our company has been dipping its toe into the carbon credit market because what we make could potentially be a good fit for sequestration verification, but booooooy howdy is that space filled with the exact same kind of problems. I attended a round table about tying currency to nature, and while there was an excess of finance and crypto bros, there wasn't a biologist, ecologist, or even naturalist in that room. It was ridiculous how they were talking about returns as if nature functions like a financial market. And these folks are the "movers and shakers" of the industry. Excuse me, but fuck that.

      3 votes
  2. [3]
    scissortail
    Link
    Farmer here. To me, the glaring downside of this sort of farming is that it's pretty much totally impossible to close any resource loops on it; that is, just about all of the inputs have to come...

    Farmer here. To me, the glaring downside of this sort of farming is that it's pretty much totally impossible to close any resource loops on it; that is, just about all of the inputs have to come from off-site, and are often produced and transported with processes that involve lots of oil (via electricity, transportation, or direct material inputs). It's extremely vulnerable to supply chain shocks (not to mention power outages) in ways that diversified, organic, soil-based farms are not.

    I think we'd be better served putting the resources going into this into supporting more sustainable farming practices that promote soil health and topsoil development/retention.

    As an aside: I haven't done a ton of homework on this, but my understanding is that most of these operations focus on salad greens and succulent vegetables like tomatoes. Do they grow anything of real consequence in terms of calories or protein? Wheat, beans, squash, corn, potatoes? I have doubts about their suitability for the same, and therefore their suitability for making a serious contribution towards feeding people.

    7 votes
    1. vektor
      Link Parent
      I don't think that's the point, frankly. Most of the crops you mention are completely shelf stable and have economies of scale that are hard to beat: They're basically solar power to food...

      As an aside: I haven't done a ton of homework on this, but my understanding is that most of these operations focus on salad greens and succulent vegetables like tomatoes. Do they grow anything of real consequence in terms of calories or protein? Wheat, beans, squash, corn, potatoes? I have doubts about their suitability for the same, and therefore their suitability for making a serious contribution towards feeding people.

      I don't think that's the point, frankly. Most of the crops you mention are completely shelf stable and have economies of scale that are hard to beat: They're basically solar power to food converters that are extremely efficient, and the logistics of getting these to consumers are also a lot simpler. They're easy to handle, durable and relatively shelf-stable, which makes the logistics trivial. In the case of grains, there's industrial processing necessary that's hard to decentralize.

      The reason they're targetting veggies and greens is because their supply chains are fussy. They spoil trivially easy and aren't as durable, so you have to transport them quickly, carefully, and in relatively small scale. If you could shorten that trip, by having the farm stacked vertically on top of a super market, that'd make things a lot easier on that front. No more of that silliness of harvesting underripe tomatoes, just so they're shelf stable enough to arrive "fresh", only to taste like water with a suggestion of tomato. Off the vine, into the market, onto your plate, within a day. It's the promise of "like-homegrown" veggies with the convenience of a supermarket.

      And I also don't think you'd want to compete with staples, just on a energy cost matter. Vertical farming is always going to be power hungry, and if you're competing on crops where energy/calories is the main quality, then you're always going to lose. A bunch of plants is a very cost-effective solar panel, basically, and the math just doesn't work out (yet). Maybe in the far future. When we either have developed this earth into Coruscant or give enough of a shit about the natural environment to turn agricultural land back into natural landscapes. Which is far away. Maybe once we have fusion tech.

      9 votes
    2. skybrian
      Link Parent
      They often grow lettuce because it grows quickly and year-round, it's highly perishable, and urban customers will pay more when it's fresh. (Or so ChatGPT tells me, and I remember reading similar...

      They often grow lettuce because it grows quickly and year-round, it's highly perishable, and urban customers will pay more when it's fresh. (Or so ChatGPT tells me, and I remember reading similar things before.)

      Looks like it's similar for hydroponics in general:

      Although almost any crop can be grown hydroponically, the most common are leaf lettuce, tomatoes, peppers, cucumbers, strawberries, watercress, celery and some herbs. One key factor in system design for a particular crop is how it is supported in the nutrient solution.

      I'd guess there are similar considerations for growing things in greenhouses, too.

      And then there are the crops that aren't grown as food and can be sold for even more, like flowers and drugs.

      Grain would be the opposite; there's a worldwide market and no price premium for being fresh, so growing it cheap and at vast scale and then shipping it makes more sense.

      4 votes
  3. [3]
    Eric_the_Cerise
    Link
    I haven't studied it much, but the Netherlands is the 2nd largest exporter of agricultural goods, 2nd only to the US ... tiny little Netherlands, 20M people, on the North Sea. How? They do a lot...

    I haven't studied it much, but the Netherlands is the 2nd largest exporter of agricultural goods, 2nd only to the US ... tiny little Netherlands, 20M people, on the North Sea.

    How? They do a lot of it with greenhouses. I don't know how well that compares to vertical farms, but it's gotta be at least roughly similar in terms of extra expenses and required resources.

    They grow a lotta flowers in them, a lot of tomatoes, strawberries, a lot of stuff that only grow during a specific season, but that people want to buy year-round.

    Why are greenhouses so commercially viable, while vertical farming isn't?

    5 votes
    1. JCPhoenix
      Link Parent
      I guess when I hear greenhouses, I'm thinking of like all glass or all plastic structure (or at least the roof). And I've seen some video clips or pictures of greenhouses in the Netherlands...

      I guess when I hear greenhouses, I'm thinking of like all glass or all plastic structure (or at least the roof). And I've seen some video clips or pictures of greenhouses in the Netherlands before, and I remember seeing natural light. So that right there is a big expense for vertical farms: electricity—artificial lighting vs natural sunlight. Idk if all vertical farms use artificial light, but the pics of vertical farms in the article are all in completely enclosed, no windows, warehouses, using artificial lighting.

      But then take a look at this photo from a reddit post. There are clearly artificial lights in those greenhouses, at least once the sun has gone down. Which I suppose is still a savings. If you don't have to run lights on sunny days, that's electricity you're not paying for.

      There are certainly more factors than that. That's just the most obvious one I saw.

      4 votes
    2. FlippantGod
      Link Parent
      I would assume up front cost. Edit: and perhaps flexibility? A greenhouse has a lot of uses and is easy to repurpose. A vertical farm sounds less so.

      I would assume up front cost.
      Edit: and perhaps flexibility? A greenhouse has a lot of uses and is easy to repurpose. A vertical farm sounds less so.

      2 votes
  4. [2]
    skybrian
    Link
    From the article: [...] [...] [...] Sounds like there are still opportunities for people who know what they're doing and don't overpay to step in after the bankruptcies. Reminds me of the end of...

    From the article:

    Fifth Season’s failure is only the most dramatic signal of a reckoning taking place in what’s known as the vertical farming sector. AppHarvest, which runs high-tech greenhouses in Appalachia growing tomatoes and greens, said in a recent quarterly report that it had “substantial doubt about our ability to continue as a going concern” unless it could raise more money; the company is currently being sued by investors who argue that it misled them about its viability. AeroFarms, an early pioneer in the space, pulled out of a proposed SPAC deal last year. In the company’s May 2021 investor presentation, AeroFarms, which was founded in 2004, estimated just $4 million in 2021 EBITDA-adjusted revenue—and $39 million in losses.

    [...]

    “There are many reasons why they’re doing it, but one of the reasons is because they know that Silicon Valley investors won’t invest in a farm, but they’ll invest in a tech company,” says Henry Gordon-Smith, founder of Agritecture, a firm that consults on urban farming projects. “In reality, these companies overspend on R&D by crazy amounts, and then say, ‘Oh, shit, that didn’t work.'” Startups often later incorporate more outside tech, he says, but keep the narrative that they’ve designed a full system from scratch.

    [...]

    Bigger farms could help, he says, so companies could sell more product. Some farms in the U.S. might also move toward a model often used in Dutch greenhouses, with a much smaller staff. “The overhead to run the farm is a lot lower because there’s no corporate offices,” he says. “There’s an outsourced technical support staff team and outsourced IT team. The manager of the entire facility is also the head grower, who is also the person who pays payroll.”

    Some American startups also have a suite of well-paid executives even before they’re making a profit. “A lot of these companies are still floating on venture capital,” says Stein. “What’s the first thing that they do? They hire all their friends. And they blow out the administrative salaries on the operating side.” The high-tech greenhouse company AppHarvest, which has raised more than $640 million, reported net losses of $83 million through the first nine months of 2022, including a summer quarter that yielded a paltry $524,000 in net sales when AppHarvest had to compete with outdoor farmers’ growing season. The company’s total revenue for the first three quarters of last year was $10 million, but most of that was used on up to $7 million in severance payments when it fired two executives.

    [...]

    It’s also hard to make money selling baby greens rather than a high price-point item like cannabis—or even just more expensive produce, like berries. “Is it worth spending $20 million on a cutting-edge system when you’re producing objects that might get $1 or $2 in the marketplace? That’s the problem,” says Stein, the Penn State business professor. (As a growing number of indoor farms have started selling branded greens, the competition is also making it harder to get placement in grocery stores.) If companies look to make more money by charging a large premium for a box of greens, there’s a relatively limited group of consumers willing to pay more for salad.

    Fully indoor farms, which can be carefully controlled, could also be used to grow plants for pharmaceuticals, fragrances, or cosmetics, says Josh Lessing, who founded a robotic harvesting startup, Root AI, and was previously also the chief technology officer at the greenhouse startup AppHarvest. (Despite its revenue issues, AppHarvest spent a reported $60 million in April 2021 to acquire Root AI.) Scaling up those farms could help bring down technology costs to make growing lower-value food more viable.

    Sounds like there are still opportunities for people who know what they're doing and don't overpay to step in after the bankruptcies. Reminds me of the end of the dot-com boom.

    4 votes
    1. [2]
      Comment deleted by author
      Link Parent
      1. Omnicrola
        Link Parent
        Just a quick comment do endorse NK Jemison, and specifically the Broken Earth trilogy, of which this book is the first in the set. Didn't discover her until a year or two ago, and it's a really...

        Just a quick comment do endorse NK Jemison, and specifically the Broken Earth trilogy, of which this book is the first in the set. Didn't discover her until a year or two ago, and it's a really excellent series. It's supposedly being developed into a series, though I haven't seen any updates since the original news : https://www.syfy.com/syfy-wire/nk-jemisin-broken-earth-trilogy-adaptation

        1 vote
  5. [13]
    TheRtRevKaiser
    Link
    While the technology is interesting, it's hard for me to understand what problem these companies are supposed to be solving. At least in the US, we certainly don't have a shortage of land.

    While the technology is interesting, it's hard for me to understand what problem these companies are supposed to be solving. At least in the US, we certainly don't have a shortage of land.

    4 votes
    1. [7]
      mycketforvirrad
      Link Parent
      More Than 50 Billion Tons of Topsoil Have Eroded in the Midwest Smithsonian – Elizabeth Gamillo – 19th April 2022 Only 60 Years of Farming Left If Soil Degradation Continues Scientific American –...

      More Than 50 Billion Tons of Topsoil Have Eroded in the Midwest

      Since farmers began tilling the land in the Midwest 160 years ago, 57.6 billion metric tons of topsoil have eroded, according to a study published recently in Earth's Future. The loss has occurred despite conservation efforts implemented in the 1930s after the Dust Bowl, and the erosion rate is estimated to be double what the U.S. Department of Agriculture (USDA) says is sustainable. Future crop production could be severely limited if it continues, reports Rachel Crowell for Science News.

      Smithsonian – Elizabeth Gamillo – 19th April 2022


      Only 60 Years of Farming Left If Soil Degradation Continues

      Generating three centimeters of top soil takes 1,000 years, and if current rates of degradation continue all of the world's top soil could be gone within 60 years, a senior UN official said.

      Scientific American – Chris Arsenault – 5th December 2014

      15 votes
      1. [6]
        TheRtRevKaiser
        Link Parent
        Thanks, that's quite alarming. From the Smithsonian article it does sound like there are more sustainable farming practices that would mitigate topsoil loss, but I had no idea that we were losing...

        Thanks, that's quite alarming. From the Smithsonian article it does sound like there are more sustainable farming practices that would mitigate topsoil loss, but I had no idea that we were losing that much topsoil to erosion.

        That topsoil has to be going somewhere, though, right? I'm assuming it's running off into waterways and then ending up at silt of winding up in the ocean, right?

        I just struggle with the idea that the solution to sustainability issues in farming is to move the farming indoors. You're replacing sunlight and soil with something there. But maybe it's a good thing that we're working out the kinks now on how to grow indoors if we are going to destroy arable land at the rate that those articles seem to indicate.

        4 votes
        1. [2]
          papasquat
          Link Parent
          Yeah, the scales we're talking about here are not even in the same universe. The US has almost a BILLION acres of farmland. Replacing that with vertical farming would still require hundreds of...

          Yeah, the scales we're talking about here are not even in the same universe. The US has almost a BILLION acres of farmland. Replacing that with vertical farming would still require hundreds of millions of acres of vertical farming real estate. That is, hundreds of millions of acres of buildings.
          That's (rough estimate), 30 times more building space than every single unit of housing in the US; hundreds of millions of detached homes, condos, apartment buildings. Building this stuff would be at the cost of literal hundreds of trillions of dollars and require completely reshaping every metropolitan area in the country. The economics are just so far off so as to be not even worth considering past some back of the napkin math.
          It's the same thing with carbon capture, or large scale desalination, or any other of hundreds of pie in the sky technology solutions that are supposed to save us from disasters we created without requiring any sort of actual change in how our society works.
          The real solution here is regulation and stricter enforcement of land management practices, just like the solution to water shortages is banning wasteful uses of water and growing crops that are suited for the environment, and the solution to climate change is emphasizing mass transit and ending oil and coal subsidies.
          People want so hard to believe that we can be saved without changing our behavior even slightly, if only we're creative enough and trust in the tech bros.
          It sucks because we have solutions to all this stuff, but instead, we'd rather pretend we don't and make a bunch of people rich by hoping they have the silver bullet.

          The only real niche I could think of for vertical farming is fancy bougee places serving food for 4x the normal price to rich people so they can say "this was grown in an expensive high-tech greenhouse by robots 15 minutes away". It's not an efficient way to feed people though.

          5 votes
          1. skybrian
            Link Parent
            I agree that expecting indoor farming to replace the farming of staple crops is nonsense, but that was never the goal and I think you're underestimating niche uses. New techniques don't need to be...

            I agree that expecting indoor farming to replace the farming of staple crops is nonsense, but that was never the goal and I think you're underestimating niche uses. New techniques don't need to be universal to be useful for viable businesses.

            Talk about a "real solution" and how we can be "saved" is unnecessarily abstract and sweeping. Technologies shouldn't be dismissed because they don't solve our most pressing problems. For example, did you know that flu vaccine comes from special chicken farms? That's hardly the usual reason for growing chickens, but it's still important, and it's not just for rich people. Similarly, a lack of imagination about possible crops isn't a good enough reason to dismiss indoor farming as unimportant. As non-experts, we simply don't know all the possibilities.

            Meanwhile:

            Effects of population growth on Israel’s demand for desalinated water

            [...] As of 2020, desalination supplies approximately 50% of Israel’s domestic water needs.

            While increasing reliance on desalination has largely eliminated the public perception that Israel faces an impending water crisis, rising population levels are likely to place unprecedented stress on Israel’s water infrastructure. Israel’s population growth rate over the past 30 years has averaged just over 2.1%, a singularly high rate amongst industrialized countries. Israel’s Central Bureau of Statistics anticipates an increase in population from approximately 9.5 million in 2022 to between 15–25 million by 2065, depending on actual growth rates.

            [...]

            Our work demonstrates that population growth is likely to necessitate an unprecedented increase in the production of desalinated water, while the availability of freshwater from natural sources is likely to decline both in per capita and absolute terms. We show that the total effects of population growth on Israel’s water system can be expected to far outweigh those of climate change. Increased reliance on desalination will require a correspondingly large investment in infrastructure to ensure that Israel’s production capacity keeps pace with water demand. The extent to which Israel is able to ensure adequate water supplies will provide lessons to other countries and regions facing acute water scarcity and high-population growth.

            There are two things you could say about this. First of all, desalination is important in Israel, and it's likely to become more so. Also, they are still likely to have major problems with their water supply. So, not a "solution" but it's a vital source of water for some.

            4 votes
        2. [2]
          Akir
          Link Parent
          It's going into the food we consume. Topsoil is a living ecosystem that plants feed themselves from.It's my understanding that commercial farming doesn't properly maintain that ecosystem and that...

          It's going into the food we consume. Topsoil is a living ecosystem that plants feed themselves from.It's my understanding that commercial farming doesn't properly maintain that ecosystem and that is why this is problematic. Of course, it doesn't help that we keep developing buildings, streets, and parking lots over a lot of land.

          2 votes
          1. MimicSquid
            Link Parent
            It's also being carried away by wind and water. Conventional farming practices involve fairly deep tilling, which results in powdery, uncompacted soil. With nothing to hold it in place, it's more...

            It's also being carried away by wind and water. Conventional farming practices involve fairly deep tilling, which results in powdery, uncompacted soil. With nothing to hold it in place, it's more vulnerable to erosion.

            4 votes
        3. NoblePath
          Link Parent
          Midwestern soil is mostly going into the gulf of mexico via the Mississippi river.

          Midwestern soil is mostly going into the gulf of mexico via the Mississippi river.

          2 votes
    2. [5]
      Omnicrola
      Link Parent
      I don't pay a lot of attention to this space, but the general impression I get is that they're trying to solve "inefficiencies". Contrasting vertical farms to traditional farms on certain metrics,...

      I don't pay a lot of attention to this space, but the general impression I get is that they're trying to solve "inefficiencies". Contrasting vertical farms to traditional farms on certain metrics, vertical farms are vastly more efficient in how they use resources (water, fertilizer, etc). So using less resources to grow our food seems like a good idea. OTOH, as mentioned in the article the vertical farm uses a lot more electricity. Whereas a traditional farm uses .... practically nothing.

      Another part of the pitch is that because they're "vertical", you can put farms all over the urban landscape, and have the food closer to where it ultimately needs to go. Which means less expenditure on transportation and (in theory) less cost.

      8 votes
      1. [4]
        MimicSquid
        Link Parent
        I would argue that a traditional farm isn't using nothing, they're using the useful nutrients that have built up in the soil over millennia. Vertical farms have all their inputs accounted for....

        I would argue that a traditional farm isn't using nothing, they're using the useful nutrients that have built up in the soil over millennia. Vertical farms have all their inputs accounted for. Traditional farms have inputs that aren't often accounted for.

        2 votes
        1. [2]
          FlippantGod
          Link Parent
          "Traditional" farms - intensive ag - depend heavily on fertilizers and pesticides.

          "Traditional" farms - intensive ag - depend heavily on fertilizers and pesticides.

          3 votes
          1. MimicSquid
            Link Parent
            Yes, but in this case the real unappreciated input is the very soil itself.

            Yes, but in this case the real unappreciated input is the very soil itself.

            2 votes
        2. Omnicrola
          Link Parent
          Apologies for being unclear, the "nothing" was specifically in regards to electricity. A traditional crop doesn't need lights, climate control, etc that a vertical farm does. To your specific...

          Apologies for being unclear, the "nothing" was specifically in regards to electricity. A traditional crop doesn't need lights, climate control, etc that a vertical farm does.

          To your specific point however:

          they're using the useful nutrients that have built up in the soil over millennia

          Yes and no. The soil that's good for farming does have nutrients have been deposited by nature over millennia, but a properly managed farm does not exhaust them. Proper crop rotation, planting complimentary crops, allowing natural decomposition instead of re-tilling, these are just some of the methods that allow for sustainable farming without the need to constantly boost the soil's fertility with fertilizer and other additives.

          3 votes