Indoor farming continues to be newsworthy as new projects are announced around the country, and reporters detail some of the novel technologies being used to support vertical agriculture. Beyond the hype, here are some quick points to consider about controlled environment agriculture.
"An indoor farm is any farm with an element of control to the environment, protecting crops from the outdoors," writes Allison Kopf of Agrilyst, an intelligence platform provider for indoor farms. "Greenhouses, hoophouses, vertical farms, container farms, and even some home growing systems are all part of the indoor farming ecosystem." Just a small proportion of indoor farming or controlled environment agriculture projects hits the headlines, and those typically relate to vertical farming operations in converted warehouses or cargo containers.
According to Kopf, there are 40,000 farms growing indoors in the U.S., encompassing a billion acres of growing area. They generated over $14.8 billion in sales in 2012, which accounts for only about 0.2% of the $300 billion worldwide greenhouse vegetable market. Vertical farming is a very small segment of the market, but it is growing rapidly. It is expected to reach $5.8 billion by 2022, with the greatest gains in Asia Pacific. Japan already boasts 200 large scale "farming as manufacturing" plant factories, and China has another 80.
While vertical farming is just a sliver of the indoor farming market, technological innovations developed for that niche can be transferable to other indoor applications. And one major tech opportunity is the Internet of Things (IoT). "Given the controlled environment in which they operate, indoor farms are well suited to the application of ‘big data’ techniques and a range of startups are joining established industry players in introducing these," writes Nicola Kerslake, founder of Newbean Capital. Agrilyst believes that better data could help U.S. indoor farmers reduce operating costs by $1.3 billion. It says that better data can also help push revenues higher to the tune of $4.3 billion for both greenhouse horticultural crops and cannabis as it helps optimize variables such as space optimization, plant varietal choice, growth speed, and others.
"As alternative proteins – plant-based meat, insects – become commercially available, we anticipate that indoor agriculture will be a part of figuring out the supply chain for these approaches," observes Kerslake. While experts maintain it may take decades to establish a mainstream edible insect market in North America, it already has established a niche presence in the United States and Canada. Proponents hope that insects will become an important source of food for animals and humans. In Europe, Protix, an indoor farming company which breeds insects for animal food, has just received around $50 million in funding.
The rapidly growing indoor farming industry has been impeded to date by access to capital, according to Contain Inc. The company, an alternate finance arm of Newbean Capital, launched at United Fresh. It is working with three leading indoor agriculture technology providers to offer lease financing to their customers. The participating companies and product relationships include AmHydro, provider of Get Growing!™ greenhouse bundle packages, Bright Agrotech’s ZipFarmTM equipment, and CropKing, a manufacturer and distributor of commercial greenhouse structures, hydroponic growing equipment, and supplies.
Several online resources are available to help prospective indoor farmers. Leading sites include: Upstart University, AgTech Innovation Center, the Vertical Farming Summit, and several others. For a more complete list, check out this article by Chris Powers, 10 Online Platforms Helping Future Indoor Farmers.
While the future of vertical farming remains to be seen, news around its development has helped emphasize fresh produce, and particularly, consumer interest in locally grown produce. The development of vertical farming technology that can help the overall indoor farming sector is an additional benefit to the industry.