High-tech farm startups are laid low by financing drought, pests | Hacker News Reader

High-tech farm startups are laid low by financing drought, pests

wsj.com

50 pointslxm80 comments

We wrote up an analysis of this sort of thing from an energy perspective -- bottom line: there's no energy-efficient way for hydroponic setups to produce anything other than leafy green food crops. The energy balance is just all wrong. And it's going to be pretty difficult for vertical farms to compete with the Salinas Valley.

https://raghavan.usc.edu/papers/smartfarm-limits21.pdf

In US? Or in general? Because I am pretty sure I've read there is a lot of very profitable indoor farms in Netherlands and other EU countries.

Also, even if they are currently not profitable in US, they can easily become profitable in the next 5-10 years if climate changes more, fusion energy becomes cheap etc.

The technology itself vastly outperforms traditional farms.

Fusion energy becoming cheap in 5-10 years? You’re the most optimistic person on HN if you think that’s possible! It takes decades to build a fission plant and that’s with tech that already exists!

I’d say the real path to viability is cheaper renewables and food and water becoming far more expensive. The western part of the US uses an unsustainable amount of water for agriculture. That situation is going to implode in the near future. So this scenario might happen.

Most plant life and farming is already powered by fusion energy.

Might want to stress it's space-based fusion energy just to troll the overly-optimistic folks around here

> next 5-10 years if climate changes more, fusion energy becomes cheap etc.

Fusion energy isn’t even expensive at the moment, it just doesn’t exist.

This is a “read the article” situation:

“Many analysts are confident the high-tech greenhouses can be operated profitably in the U.S. because they have been run successfully in Europe and Canada. Vertical farms are another story. No company has made money operating one on a large scale.”

Greenhouses still use soil and the sun

The Netherlands certainly does have profitable indoor farms, but the sort that the new startups are pushing are largely the uneconomic type.

The two key factors: soil and sun. If you have to replace either, you're increasing your costs. Especially sun: if you use LEDs instead of solar illumination, it's hard to do it cheaply enough in the long run, nor produce calorie crops (as opposed to greens) -- there's simply an energy-in-energy-out balance that's hard to achieve.

Well managed traditional greenhouses can do quite a lot.

> they can easily become profitable in the next 5-10 years if [...] fusion energy becomes cheap

Boy you're leaning rilly far out of one of those windows that vertical farms typically do not have

That paper was incredibly good. I bet many readers of it made substantial money shorting these companies.

In it, it shows that for food staple crops, the selling price of the crops only makes up .1% of the cost to produce them, while for vegetables they sell for 9% of the cost to produce. Pretty damming.

Is there a future though where renewables continue to get cheaper and LED tech improves that would address this or will it be forever foolhardy to replace the sun?

This Exa Cognition video has some good insights on the state of Vertical Farming (2021) https://www.youtube.com/watch?v=dnCQuwCtqJg&list=PLU8luVji9K...

There is almost no data in that paper? No new research is presented. It's more like a meta-analysis but not really, is this an opinion piece?

It's a paper we wrote for a CS workshop -- that means it's necessarily a short paper, one that pulls together various threads to make a new argument.

Can someone explain how the business model for indoor farming is supposed to work? Is it just for high-priced specialty crops? Having spent some time in central CA watching the massive scale of farming operations there I just don't see the logic of indoor.

If you could get a farm 50% as efficient at growth in an extremely dense area (think Manhattan) my guess is the transport cost reduction might be worth it for high cost growth.

Obviously if you factor in land prices where this would make sense it stops making sense

Last mile is where all the costs are though. Shipping produce in bulk is cheap AF

Hook up drones to the farms. Allow anyone to obtain as much fresh produce as they need via drone delivery summoned from smartphone or computer.

Drone delivery does not work. It sounds cool but in practice it is terrible.

It always puzzpes me that people with zero idea how dirt cheap shipping is per unit believe drones, or moving production closer to consumers, woupd ever work from a price/cost point of view... And since the last mile is the most difficult one, supermarkets are pretty good in outspurcing that to customers.

For now. Who is going to be the first company to pull it off though? I'd definitely subscribe to that - would love fresh produce parcels dropped off on my front steps or backyard by drone delivery. This has already been done with medical supplies before which is super cool.

I really don't think it's feasible without some kind of AGI (or human) on the controls. There are so many environmental, technical, societal and regulatory issues to tackle. They make a lot of noise (although some are much quieter now), people could very easily jam their communication signals (or just shoot at them), birds, hardware failures, ... I worked on last-mile delivery project at a drone startup, we could do cool demos that impressed shareholders, but I could never see that working in the wild, people would get hurt.

Also, once you solve the last-mile problem, a new one arises: the last-foot problem...

It's not rocket science, that's for sure.

Imagine if "last mile" was an elevator down to the first floor which was a fresh produce store. Someone could build these kind of structures on top of subway stops. There could then have elevators / stairs down into the subway so commuters could easily buy food on their way home.

Also, it's not possible to ship some produce and maintain quality. Think sweet corn which (also avocados), yes, is still sweet when you get it in a grocery story but is far from as sweet when picked. There are also studies about loss of some nutrition just days after being harvested: https://fruitandvegetable.ucdavis.edu/files/197179.pdf

And, you can make the case from other sides too. There's some initial interest in looking at how climate change, and rising CO2 levels, are affecting plant growth. Due to higher CO2 it seems like some plants are growing larger but less nutrient dense: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9003137/

There are other factors which could make something like this make sense (if you solved some major tech challenges, got the land and materials for free, and only focus on social / ecological impact). For example, some fun reading can be found around the CO2 impact of fertilizer farming and tilling practices which could be removed by growing nitrogen fixing crops like beans/beats or growing in aquaponics systems so you can also sell fish and make algea.

Pretty sure almost anything else is more profitable on a sqft basis - retail, housing, dining, entertainment, etc.

Urban utility rates also tend to be much higher than a bit further ou - likewise with labor costs owing to cost of living, esp housing.

> Pretty sure almost anything else is more profitable on a sqft basis - retail, housing, dining, entertainment, etc.

Yes, I fully agree. From my comment: "something like this make sense if [...] got the land and materials for free"

> Urban utility rates also tend to be much higher than a bit further ou

If you could centrally plan this kind of project and had complete freedom to do anything you wanted you could:

1. Use light tubes to funnel sunlight into the building for the plants. You could also pretty cheaply collect more light than the sqft-age of the roof by putting reflectors on multiple roofs to reflect light towards a central point on your farm building: https://en.wikipedia.org/wiki/Crescent_Dunes_Solar_Energy_Pr....

2. You can make the entire building a greenhouse. NYC loves steel, glass, and concrete so you could probably make the entire envelope of the structure glass. Many buildings already do this: https://www.youtube.com/watch?v=kdy-bOTYlDs. This would let even more light in.

3. You could use this building as part of your waste treatment process. Human waste has a lot of nutrients needed for plant growth (nitrogen, phosphorus, etc). Rather than ship fertilizer, mined and processed across the globe, we could just extract most plant nutrients from waste. We're (the USA) currently not entirely managing this side responsibly: https://newsroom.ucla.edu/releases/treated-sewage-algae-bloo...

4. We could use far less water which, in climates which do most of our growing, would be pretty important. Since the building would essentially be a greenhouse you would retain a lot more moisture.

There are a lot of synergies where if we had control over the growing environment we could improve things. For example: we could collect light in light tubes, use crystals to split out only the light segments which the plants need, and use the remaining light segments for solar energy (panels, desalination, dehydration of products, etc). There are endless mini optimizations that we can't do right now.

Obviously, though, this is entirely hypothetical because the construction costs are not currently yet outweighed by the existing farming industry production pipeline. Once more externalities are accounted for that may change things (ex: we lose the ability to mine fertalizer due to war or supply). Then moving food production closer to consumers might make sense.

Eliminating the supply chain costs for fresh produce that spoils very quickly.

I wonder if it actually doesn't work or if it just doesn't work for VC because it won't produce a multi-billion dollar rent machine with a high moat and low operating costs.

It certainly won’t replace central CA, which is one of the most fertile regions in the world. However, if you live far from that region, as most of the country doe, the freshness and available variety of foods decreases. If indoor farming becomes viable, it would allow those regions to have fresh foods they don’t normally have access to.

I’d pay twice as much if I could get in Portland, ME the same kind of guac I get in LA.

Air freight is probably cheaper.

Avocados and other ingredients used keep for long enough to drive them from Mexico to Portland. So not sure that’s a produce issue.

In Portland, you only get specific types of avocados that can be harvested while still hard and survive the journey. This applies to all types of produce: being transportable is more important than tastiness.

For certain crops some of those vast fields are basically setup with temporary greenhouse enclosures. It makes me think that there is some accessible state in between that is an improvement to current practice.

Especially if one thinks water may be more limited as we move forward. Water conserving techniques might be what makes or breaks some farming areas.

A combination of fruit walls and traditional passive greenhouses can zone push far better than vertical farms:

https://www.lowtechmagazine.com/2015/12/fruit-walls-urban-fa...

https://www.lowtechmagazine.com/2015/12/reinventing-the-gree...

There are plant's that are basically impossible to transport, so they aren't farmed for practical purposes. Remove the need for long distance transport, you have a unique proposition.

Eg. I bet you've never had a Thimbleberry.

You're not growing a thimgleberry hydroponically.

Ok? Indoor growing doesn't by law have to be hydroponics.

Speaking as somebody who eats literally dozens of thimbleberries a year, you're not selling them more than 5 feet from the bush. Forget "transport" unless you're renting fruiting bushes to restaurants that charge $20/berry. But the berries fall off at a touch when they're ripe, so forget "transport" altogether.

What climate/zone do they grow? Where can I get me some seeds?

USDA 3b is what I've generally seen sited. Mostly online, including Etsy, but it's much easier to grow by cuttings.

I've wondered about this for wasabi. I believe it is the most expensive vegetable on the market at several hundred dollars per kilo - almost all of what is sold as wasabi is actually horseradish. Apparently it is picky about conditions (as the price would suggest), and so I'd think it would be an interesting opportunity.

Imagine creating the ideal climate (indoor) to farm Kashmiri Saffron[1] that cannot be grown in most climates except for a very few select regions. Kashmiri Saffron goes for about $1,500 a pound.

The other is to add much needed nutrients that deficient people need. Here is an anecdote from our adventure. We were able to artifically add enough Vitamin B12 to Spinach that non-vegetarians can benefit from. Vitamin B12 is not available in vegetarian diet.

The other audacious goal we tried. What if that same Spinash is loaded with enough nutrients for pregnant women that the malnourished women in rural India can get their fair share of nutrients during their terms for a healthy mother and a healthy baby!

These specialized way of farming can only be managed by a well managed indoor farm. For instance, in a country like India with enough sunlight, besides leveraging solar energy, we can also make the plants have enough sunlight while still inside the farms. So, combine a mix of hydro + the likes of Dutch Bucket Method can make way for lot cheaper way of indoor farming.

1. https://en.wikipedia.org/wiki/Saffron

Edit: Sorry for feeding the wrong nutrient. Vitamin B12 and not K12.

> Imagine creating the ideal climate (indoor) to farm Kashmiri Saffron[1] that cannot be grown in most climates except for a very few select regions. Kashmiri Saffron goes for about $1,500 a pound.

I can grow saffron in my garden in London. The problem isn't growing it, but harvesting the filaments...

I believe that is where India's population of 1.4 Billion comes in. There are too many unemployed people willing to work and benefit from some form of income. A decent pay (not an exploitative one) for most housewives would kill to get that job of harvesting Saffron in their spare time. That might supplement their household income and even send their kids to school.

Are you just going to ignore that the parent invalidated the whole first paragraph in your previous comment?

“that cannot be grown in most climates except for a very few select regions”

I've no idea beyond this. I can dig up and try to act smart but that would be lying to myself. But hey, best of luck to London. :-)

India is one of those climates. A lot of saffron is grown there.

Sort of surprised no one has tried this for the coca plant to produce cocaine closer to demand. Maybe they have but we don't know about it?

Cocaine would have a similar issue as saffron. although to a much lesser extent. While it can be grown rather easily, one would need quite a few plants to make enough for a single recreational user.

The plant is a fantastic thing to have on its own, cocaine be damned. When we visited Peru it was a godsend on long hikes, like a good cup of coffee without any preparation.

What is the advantage over dietary supplements? Seems like a complicated and expensive way to package and ship vitamins.

Spinach is an extremely common and cheap food in India. Again, we are not sure if better alternatives. That was a pitch and idea that we wanted to try. We felt the cost to benefit ratio is massive.

Is it still cheap when you grow it a special way and add vitamins? Why would it be cheaper than normal spinach + separate vitamin pills?

Right. If would be one thing if you were genetically modifying spinach to produce the vitamin. But if you're starting with the finished product and doing stuff with it, why not just sell it as is? Additional steps are just adding to cost.

Don't you mean Vitamin K2?

Sorry. Edited to mean Vitamin B12.

Why can’t that farming happen outdoors?

I see that you did there. ;-)

Anyways, it is not a competition. Indoor farming is a supplement where the output is supposedly multiplied with every floor-rise of plantation. The same surface area but go up -- single homes vs high-rise flats/apartments.

I thought some of its benefits were more harvests per year, denser growing, and control of water use and fertilizer.

"Can someone explain how the business model for indoor farming is supposed to work?"

This depends entirely upon a bunch of various factors, but the major draws are that you can control the environment, and with specialized hydroponics techniques you can drastically reduce the usage of fertilizers and water to obtain an equal-quality crop. You can also drastically reduce the footprint required - in certain hydroponics systems, what would normally take 1 full acre of land (say, alfalfa) could be done in 1/8 of an acre. Depending on the crop, you can even get away without using light at all (most grass crops work with this) reaping even more savings on energy usage.

Many of these farms are failing because they've got a bad mix of factors that they did not thoroughly think through before implementing. All of the farms I've set up in Australia, UK, and the Middle East are still working just fine, a decade later.

> you can even get away without using light at all

Sorry, do you mean that just sunlight that comes in through whatever windows there are is sufficient? Surely you don't mean that grasses are viable in pitch black?

Zero light, period. Totally-enclosed buildings with no windows. Seed to feed in 7 days.

1. Luxury-good pricing and marketing

2. Riding a trend with keywords like eco-friendly, sustainable, high-tech, etc.

Don't ask me how yuppie's came to associate eco-friendly and sustainable with indoor-farming, but that's what the target prospect associates it with anyway. Think about the economics of it for just ten seconds and you'll come to the conclusion that it's anything but sustainable, efficient, etc.

Ultimately, it's selling status and fashion. Trendy urban restaurants can cite "local indoor-farmed mache" on their menus and yuppie's will salivate.

The plants need light. But.. we're indoors. However.. we can install grow lamps. Now.. we need a way to power them. I know.. put solar panels on the roof.

This is literally what many of these "operations" have done.

That was the moment they could have realized that none of this is actually going to work in any way that could be described as "an improvement."

Weed farming is technically indoor farming.

Yes.. and you produce a product that sells at $20 per gram. That's why they do it. There are pretty much zero food products that sell at that price per weight.

In states where it is legalized, the prices are nowhere near $20/gram.

The price is close to $100/ounce, which would put it somewhere between 3$ and 4$ per gram, with adjustments for quality.

At this price, energy and fertilizer inputs become substantial enough to eat into margins.

NYC post tax 3.5g is $50-$60 which is almost $20/g

The prices are exactly $20/gram in California if you decide to buy at that quantity. You get slight discounts for volume, but this is the base price for high quality indoor grams, and they are packaged and priced as such on the shelf.

You can certainly get $100/ounce, or even $45/ounce products here as well. These are typically lower quality /outdoor/ grown products.

The point being, you can optionally grow marijuana indoors because this margin exists, probably in a way that it would never for lettuce.

Indoor farming is a solution in search of a problem.

It’s a solution in search of pre-requisites which would be:

1. Unlimited free energy (like the Sun)

2. The earth turns into ice world

3. We build a colony on Mars.

Not everything needs to be a problem in order to push boundaries. Maybe it doesn’t make economic sense now, but hardly anything does until way down the road.

To give some context....

In nature the sunlight a tree uses is somewhat more than the surface volume of the top part of the tree where the leaves are. That happens due to the characteristics of light wavelengths and the fact that the plant cells where the sunlight reactions occur are somewhat transparent.

Similar to organisms in oceans the plant cells have more than one cell part tuned to more than one light wavelength so that the inner leaves are producing energy from a different light wavelength than the outer leaves.

Tech farms need to re-invent their light tech to make it profitable but no one has looked at the biology of it to understand that aspect as current tech lighting usually is one light wavelength instead of the two that are needed.

Okay rant off, my previous stint as a biology student rears its head again.

I did check this recently, light pipes are still only one light frequency.

> but no one has looked at the biology of it to understand that aspect as current tech lighting usually is one light wavelength instead of the two that are needed.

Wat. You can buy lights on HLG right now that will hit blues and reds. (And various wavelengths in between.

https://horticulturelightinggroup.com/collections/lamps/prod...

If you want fancier arize life2 have like 9 profiles?

https://images.salsify.com/images/zji236jwdstg4q9dyc6d/HORT1...

Apogee founder is also doing a ton of research into far red and its impact.

https://www.apogeeinstruments.com/epar-sensors/

What is this “second wavelength” that is being missed in your mind?

Headline's a bit misleading, it's only about indoor farming startups in the United States.

More accurately it is about vertical greenhouses not having a path to profitability.

My first invention was a machine that concentrated solar power, and then distributed to different levels of the vertical farm. Basically piped solar light.

It never went anywhere but my dreams unfortunately. Still have the cad drawings and a prototype.

What were the light losses like?

It depends on how much you want to spend on optics. The optics fit as slots, so you can put a standard mirror(0.8) and depending on the number of reflections(let us assume 6) you will have 0.8^6=25%.

From what I researched at the time, in most latitudes you do not care about raw solar power as plants cannot stand it anyway. I also prioritized price and efficient optics are not cheap.

The idea is that you compensate the small efficiency with the fact that your light is now free. The infrastructure is really simple and uses mirrors from your local hardware shop. The frame can be done in your home with steel profiles and can be done in scale if needed.

An advantage to traditional usage of natural light is that if you want you can put an infra-red filter and have a spectrum that will not heat up your green house to the point you need temperature control.

Another is that you can also put your green house in a space with natural cooling surrounding without concerning yourself with light availability. Given that the system is passive except for the tracking mechanism you also need minimal electricity.

>Funding has all but dried up. The industry raised a record $895 million in last year’s first quarter. So far in the current quarter, the figure is about $10 million, according to data provider AgFunder.

I think a big reason for this significant drop between last quarter of 2022 and first quarter of 2023 is AGI. All the money in the VC world is now flowing towards AI and all other industries are going to take a hit similar to AgTech

>>> He says his company has avoided the sector’s difficulties by making day-to-day farming the priority rather than growth. It expects to hit $100 million in sales this year and says it is profitable.

High tech farms work great, it's mostly about a few companies that tried to be tech instead of agro that failed.

Headline makes me wonder if "financing" also applies to "pests". Like are there loan weevils? Interest grubs? Stock locusts?

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