Vertical farming has found its fatal flaw
In June, a A vast new vertical farm has opened on the outskirts of the English town of Bedford. At a flashy opening event, members of the UK Parliament listen that the sparkling facility will one day produce 20 million trees per year. This is the latest opening for Infarm, a European vertical farming company that has raised more than $600 million in venture capital, promising a future where vegetables are grown in technological warehouses. tall stacked with LEDs instead of in an empty field or a greenhouse.
But now, the future of Bedford Farm does not look very bright. On November 29, of the farm co-founder email your workforce announced that it was laying off “about 500 employees”—more than half of its workforce. The email details the company’s plans to downsize its operations in the UK, France and the Netherlands, while focusing on countries where the company has closer links with retailers and the ultimate opportunity to bring higher profits. In September, Infarm laid off 50 employees, citing the need to reduce operating costs and focus on profit.
Just six months ago the vibe from Europe’s largest vertical farming company was relentlessly upbeat, so what’s changed? According to Cindy van Rijswick, strategist at Dutch research firm RaboResearch, some of the pressures that have always existed for vertical farms have really set in in 2022. First, the industry is very vulnerable. when electricity prices increase. Powering all those LED grow lights uses a lot of electricity, and from December 2020 to July 2022, consumer energy prices in the European Union went up. nearly 58 percent. Eighteen months ago, vertical farms in Europe may have spent around 25% of their operating costs on electricity, but that figure could have risen to around 40%, van Rijswick estimates.
At the same time, investors are starting to tighten their belts and look for faster paths to profitability. Vertical farms are expensive to build compared to conventional outdoor farms. AppHarvest — a US-based high-tech greenhouse builder — has been struggling to find enough cash to fund its ongoing operations despite going public in 2021. In its latest quarterly report, the company said there was “significant doubt” about ability to continue Future.
The poor global financial outlook is also weighing on consumers. Most vertical farms grow herbs, shoots, and other leafy vegetables. Leafy vegetables are the industry’s go-to product as they grow fast under LEDs and have a short shelf life and high price tag. But with inflation high, consumers may want to forego expensive vertical-grown herbs for something a little more budget-friendly. That is especially true for vertical farms in Europe. “The European market is a difficult place for vertical farming because there is so much competition from crops grown in fields or in greenhouses,” said Van Rijswick.
Vertical farms may have a better chance of survival if they look further, to countries where energy is cheap and growing outside is difficult. One place is clearly the Middle East. Gulf Cooperation Council countries—a group that includes Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates—import about 85% of their total food and 56% of vegetables. surname. “As we choose new markets to expand and establish our farms, we will look to places where there is a growing need for food production and food security,” said Infarm founder Erez Galonska. at the Vertical Farming Congress in Abu Dhabi on December 14. One of the largest vertical farms in the world opened earlier. year in Dubai. The facility is nearly three times the size of Infarm’s Bedford growing hub and supplies green leafy vegetables to Emirates airline and local stores.