Three lessons from negative trends in vertical farming
verticalfarmdaily.com
verticalfarmdaily.com
It's easy to call out the similarities now, but I doubt it's easy to avoid the mistakes in the situation.
Drilling into vertical farming specifically, all one has to do to surmise the entire industry is a crock of shit is note the following:
- agriculture has some of the narrowest margins of any industry
- vertical ag claims they'll be printing money by adding additional layers of complexity and overhead to the process
In my opinion the reason shit like this keeps happening is it's become standard practice in the financial industry to bet on dumb money instead of betting on actual value.
- market gardening is labour-intensive - water shortages look like getting worse, not better, in many regions - food miles, fertiliser and pest controls are significant costs - time to market is critical for some produce
Just today I read an article on HN about the labour costs of asparagus. A capital outlay that can reduce that labour is still appealing. And may I point out the complexity of conventional agricultural machinery?
A bubble bursting doesn't invalidate the field. Maybe the first generation of startups will go tits-up, but the growth opportunity is still there. You had inside perspective on the mortgage bubble, but I think that without that perspective in this case, you're only right by accident. I am not sure this is even a vertical farming bubble, it might be better described as a credit crunch affecting startups in multiple industries, and VF might be hit hard simply because it's all startups at the moment.
However I think the actual value proposition is different. Agriculture does have very thin margins. The current approach is only viable by achieving scale through enormous monocultures. Unfortunately this is very bad for the soil and the surrounding eco-system. We try to mitigate this by using fertilizer, but this is a stopgap solution and it won't work forever.
One example of this is that there now exists a thriving industry for rentable beehives, because all the bees living in the areas where we grow food that needs to be pollinated are dying. So instead we truck dozens of hives across the country, let them pollinate the fields and then pack them back up for the next one.
We are currently forced into ever more complicated counter measures, just to keep the output we have. This will get more expensive until it ultimately just won't work anymore and output shrinks.
Meanwhile, vertical farmings biggest expense is electricity, which will get cheaper over time. It uses way less water, does not have to rely on huge amounts of fertilizer, can grow anything year round and can be set up in dense urban spaces so that the output does not have to be shipped all over the place.
This isn't better than traditional farming right now (and for some food it probably won't be for a loooong time), but the balance will steadily shift in favor of smaller, more localized agriculture. Eventually, with ever growing citys/urban areas, vertical farming will be more economical.
However that day is not this day and the startups that burned through their stacks of vc cash while drinking their own kool-aid deserve to crash and burn.
All of the problems you highlight with standard monoculture ag absolutely exist, and can only be solved by reducing the global population by some terrifyingly large number to get field utilization down to the point where rotation and fallow schedules start to make sense on a global scale. Attempting to resolve these issues with vertical farming would have you trying to capitalize a 10 story structure almost exactly the size of Vermont just to cover the US domestic wheat crop.
We've all heard the marketing song and dance around the industry and none if it scans in the face of even the most cursory examination of actual field acreage utilization figures either domestically or worldwide. You want to solve the global over-farming crisis (and it definitely is one) start engineering a pathogen.
Let's say you just started gardening by yourself and no one has stepped on a rake yet. You're going to be in some pain.
Also, if everyone instantly learned from elders of every bad incident, we'd get nothing done because all the new people would be too scared to try anything.
We're social. We like to mimic one another. Boom - learning!
If I were Elon Musk's last living colonist on Mars and I lost contact with Earth, I'd likely have reference materials to watch or read - learning!
Some theorethical or sci-fi, I guess you'll be at least entertained to death.
If anything, vertical farming is an example of the opposite - investors who are used to a low or no marginal cost businesses having to learn unit economics for the first time.
I think it's telling that everyone interested in vertical farming is from the tech industry, not agriculture.
The plants themselves are compact and mostly green bags of water. The big costs are cleaning, processing, transport, and refrigeratoration. There is almost no manual labor involved.The life cycle is extremely short. The demand is extremely high.
Lettuce might be the only vegetable that vertical farming makes sense for, but it would need to be able to cover the cost of expensive light-industrial space very close to market.
Ultimately plants are solar panels and even in vertical farming it's space you are paying for. Even if you can plant 10 layers deep, youre dealing with maybe having to pay >10x per SQ ft for space in a location close enough to be relevant.
Hydroponics is a well-understood technique - retail kits are available for home ganja growers. Soil is not an input. You would be nuts to grow in soil.
Greenhouses are great, think of vertical farming as gen2 of greenhouses.
Don't mistake VF as a solution for land-extensive staple crops. It won't grow significant quantity of cereal any time soon. What it does promise is high-value crops like salad, herbs, tomatoes, strawberries. These crops benefit from short food miles and are labour-intensive to harvest. You can cut costs by growing them closer to cities, in beds that you can bring to a comfortable height for picking (or pick by robot).
Some of the big costs are: labour, fertiliser, and transport to market. The latter two are tied to energy costs, and the former is expensive in high-CoL places where you want to sell the goods. Hydroponics makes much more efficient use of fertiliser and water, and may reduce labour costs. Vertical farming enables you to operate close to cities where land coats are high.
Are you qualified to say who is and who isn't interested in vertical farming? Have you been reading Farmer's Weekly or just HN? But for the sake of argument: existing ag interests are the incumbent and tech is a sector known for disruptors. VF is tech-heavy. It wasn't farmers who invented tractors, it was engineers and entrepreneurs.
But this is an interesting point, and the whole thing may turn out to be delusional techbro vainglory. I think that's a stretch in a world where energy cost has tripled in a decade and desertification is an observable reality. I wouldn't look for farmers in the startup, I'd look for biologists and grocers. Farmers are the customers, and the ones losing their livelihoods are good sales prospects.
edit: I looked up some very high level and recent bloggy stuff. apparently a traditional greenhouse uses 5kw/kg of output (idk if that's just plant material or food) - and an indoor vertical farm is closer to 40.
With this in mind, I can see a large former factory building being converted into vertical farming and then selling fresh produce, year round, to select clients at a premium.
Being able to farm and produce year round is also quite a nice bonus. You can largely ignore the weather, except where it impacts your supply chain.
All that said I think it's a fine idea and a great use for previously used industrial spaces.
This isn't actually that true though.
Even in places like San Francisco or Seattle you can find farms and greenhouses within 10 miles of downtown. Moving them, like, 5 miles closer at the cost of millions and millions of dollars doesn't make much sense.
The long supply chains are for things like avocados or apples or prepackaged salads. All things that vertical farms don't really do.
> In my experience, people that live in cities have never really had fresh vegetables before unless they've personally grown them.
This is a hilarious argument to me because most grocery stores in our area already offer hydroponic lettuce and tomatoes, but they are sold as an inferior product to the stuff grown in soil.
It doesn't make sense everywhere but nothing makes sense everywhere.
There isn’t always space or proper conditions to do either of these, and that will only become more true in the next few decades.
Because the solar panels needed to power the vertical farms will cover up all the land?
Vertical farms seem like one of those "take a solution, and split it up to create two problems" kinds of things.
If it’s too expensive, then explain why the Netherlands has had such huge success with CEA.
* in the current business environment, where it competes with farmers who have lots of nice land and free sunshine. Maybe in some future hellscape, food towers will be our most economic option. Or indeed in a future paradise where the externality provided by wilderness is priced appropriately, such that people have an incentive not to waste precious land and biodiversity for the sake of corn and beef.
They'll figure it out eventually. Local, space efficient, variable controlled agriculture has so many upsides for dense, urban areas that I doubt the idea will fail.
I know they say this, but what are the upsides really? I’m far from an expert but afaik neither land nor transportation are the bottleneck when it comes to food.
- More water efficiency which is becoming more of a concern with changing climes.
- Less need for fertilizer and pesticides, resulting in less potential toxicity for consumers.
- Precise control over growth conditions allows for perfection of individual crops when it comes to taste and nutrient density.
- Less biodiversity impact of traditional land based farming, more forest area available land.
- Transport is still a huge environmental impact, especially when it has to be transported internationally.
Edit: Also less concern of agriculture contamination, e.g. cattle farm upriver causing bacterial infection like salmonella.
For pretty much everything else though...
So what does verticality add other than complication, and why is it so valuable for “dense urban areas”? Do any of the gains you propose make up for the enormous loss of free energy from the Sun? So far, in real life, the answer is a resounding no.
Counterpoint: even if you have the most amazing set of patents, no one is going to give you venture capital if your margins are "slightly better than a farm". Even if you have positive unit economics. You'd be insane to pick that investment over, like, a McDonalds franchise.
If you actually look at the profit margins of even the successful companies in this space vs the capex investment, it's kind of bananas. They took an industry (agriculture) and targeted investors completely unfamiliar with that industry with the help of a bit of misdirection.
Given the amount of money dumped into these operations and the tiny margins they operate in, the most viable endgame for them is to become too big to fail. Invest as much money into infrastructure and distribution as possible and get to positive margins. Investors would have nothing left to pull and would have no choice to write off their investments and just let the companies do their thing.
Too much time needed for investment return.
Perfectly shaped symmetrical vegetables: Probably not in this conditions, because Auxins.
Shadow can slow your crop, Vertical spaces produce and receive shadow all the time
Agriculture is messy and often smelly. Plants can't grow without lots of s*t.
To harvest tomatoes in the wall of a skyscraper is difficult, expensive and often even dangerous.
Debris still must be removed. Birds still must be deterred. Snails don't have any problem with climbing...
Think: urban hothouse agriculture with more lights.