Vertical agriculture: the boom of the millionaire business of futuristic fruits and vegetables growing in cities


Tobias Peggs

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Square roots

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Tobias Peggs says that this nascent industry is still trying to find the best business model.

A parking lot right in front of the urbanization where rapper Jay-Z grew up seems an unusual place for an agricultural revolution.

In that corner of Brooklyn (New York) there are ten containers full of technological devices to control the climatic conditions in which plants that are distributed by bicycle to businesses in the area grow.

It is an urban farm.

The containers are owned by Square Roots, a company that is part of the growing industry of vertical agriculture, a sector dominated by technological entrepreneurs convinced that food production is ready to make a disruptive leap.

The best basil The world supposedly comes from Genoa, Italy. Square Roots grows Genoese seeds in a container that recreates the city's daylight hours, humidity, CO2 levels, and uses nutrient-rich water that allows hydroponic product growth.

"Instead of sending food worldwide, we send the weather data and incorporate it into our operating system," says co-founder Tobias Peggs.

A rapidly expanding business

Being an expert in artificial intelligence, Peggs founded Square Roots with the investor Kimball Musk (brother of Elon Musk) two years ago. They have signed an agreement with one of the largest distribution companies in the United States, Gordon Food Service, to put containers for plant cultivation in some 200 wineries.

The entrepreneur says that the agreement represents the gigantic potential of vertical agriculture: locally grown fresh produceQuickly commercialized, which can be harvested throughout the year, are free of pesticides and are not affected by bad weather.

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Bowery Farming

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Bowery will open its third industrial-sized vertical farm.

"Indoor farming can answer many of today's questions asked by consumers about the provenance, sustainability and health of the food they eat," says Peggs.

Jeffrey Landau, director of business development at Agritecture Consulting, estimates that the global market value Vertical agriculture will increase to approximately US $ 6.4 billion by 2023, from US $ 403 million in 2013, with almost half of that growth in the US.

Despite the high costs of the sector and the limited range of food, the growth potential is enormous.

Recently AeroFarms, a producer of lettuce and other green leafy vegetables, made $ 100 million in investments, including funds from Ingka Group, the parent company of Ikea.

Bowery Farming made more than $ 100 million in a 2018 round of financing backed by Google Ventures and Uber's boss, Dara Khosrowshahi.

Plenty, another important actor, received funds from the CEO of Softbank, Masayoshi Son, and Google’s former head Eric Schmidt. The company has the ambition to build hundreds of vertical farms in China.

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In the United Kingdom, the food delivery and robotics company Ocado is also investing in the sector.

But there have also been failures. "Vertical farms have a very intensive capital expenditure"says Landau.

"Its Lighting system it's one of its biggest capital costs. "And to that we have to add ventilation, air conditioning, irrigation and harvest.

Peggs chose a modular container-based system because it says it is quickly scalable according to demand.

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"We can put a farm in a new city for less than US $ 500,000 and be operational in two months. We simply press the basil, mint or tarragon button, and the box is set to generate optimal weather conditions."

However, in New Jersey, Bowery Farming takes a different approach.

The company have industrial farms. The warm exterior of a huge gray and windowless cellar contrasts with the cold interior where an aroma of fresh agricultural products hits you immediately.

The impact of LED lights

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Michael Baca

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Irving Fain hopes to sell radishes and turnips soon.

The products are grown in trays stacked up to the roof to maximize the cultivated area. Everything from the automatic sowing machine to the harvest is in charge of Bowery's patented operating system, which controls the light, adjusts the nutrients in the water and takes pictures of each plant to measure its health.

"The OS It is our central nervous system. There are millions of data, "says founder Irving Fain.

"Artificial intelligence is constantly learning and predicting how to produce the best quality product." Managing the farm manually would be difficult, he says. The staff does the work from computer screens and iPads.

Vertical food cultivation has existed for decades, but the industry had a boost with the advances of the LED lighting, for its lower cost. If that is combined with robotics, innovations and artificial intelligence, an industry is created that, according to Fain, is viable and scalable (with potential for expansion).

"The big question was, how can we grow in large volumes with a constant high quality? But suddenly, the economy changed," he says.

"We can grow 365 days a year, a big difference compared to thousands of years of agriculture. Unlike the outdoor agriculture, our performance is almost 100% guaranteed".

Vertical farmers speak with the enthusiasm that entrepreneurs with experience in the technological world have. With population growth and climate change pushing food production, they believe they may have answers.

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Square roots

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Square Roots products are distributed on bicycles.

But the industry has a great limitation. You can't feed the world with green leaves.

That said, for Fain, that Bowery has ever grown lettuce or kale, "it is still a victory." But his ambitions are greater. Bowery is growing radishes and turnips that he expects to be released in the coming years.

Square Roots, meanwhile, hopes to start commercial production of beets and strawberries, and is experimenting with rare and long forgotten seeds.

The controversy over the carbon footprint

Peggs says it makes sense to grow perishable products in the same consumer neighborhood.

"Many products, such as tomatoes or strawberries, are grown for travel, not for pleasure. It makes sense to grow food vertically with a long shelf life."

But different products present different challenges, says Landau. When it comes to plants, not all light is created equal. And different crops, like tomatoes, strawberries and peppers, They have different needs.

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Square roots

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QR codes tell consumers what the product's history is.

"The lights for these types of crops are generally more expensive, require more electricity and produce more heat, which means additional cooling," says Landau.

"Harvesting these crops may have a significant operating cost".

But it is being done. In the United States, the Oishii company grows vertically the highly prized Japanese strawberry Omakase throughout the year.

And Farm One produces more than 200 products, including 34 edible flowers.

Plenty is experimenting with watermelons. As technology costs fall and research and development intensify, the variety of crops will expand.

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That can also relieve criticism of the carbon footprint of the industry. In the debate of artificial light versus the sunlight, the latter often has the advantage. But, then, indoor farmers point to transportation costs and waste in traditional agriculture.

For the moment, says Landau, concerns about the carbon footprint are valid, although he hopes that indoor farms will take more and more advantage of renewable energy.

"And when we look at the markets located in extreme weather environments or in island nations where most food matters, indoor farming could be a viable option, "he says.

Peggs emphasizes that the industry is still young and is trying to find the right models and business direction.

Among entrepreneurs there is no consensus on everything, although they certainly agree on this: vertical agriculture has the potential to transform world food production as we know it.

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