Guidebook to Vertical Farming by Mel Isidor

GUIDEBOOK TO VERTICAL FARMING

CONTENTS 3

Indoor Agriculture Industry

Global Challenges

How to differentiate between vertical farms?

Advantages

Disadvantages

Building

Components and Operation

Factors

Ideas for Social Benefit

The Investment Landscape

Learn More

A vertical farm is a controlled environment that grows plants in vertically stacked units.

INDOOR AGRICULTURE INDUSTRY Controlled environment systems are a part of the indoor agriculture industry. This industry is broken into four categories: (1) hydroponics greenhouses, (2) vertical farms, (3) container farms, and (4) in home systems. This industry is dominated by the Asian market. US follows very far behind.

USA

250+

45+ commercial

5 commercial

20 offerings

Asia

500

500+

3 commercial

7-8 offerings

Hydroponic greenhouses are “smart greenhouses” that use controlled environment technology to grow plants. They are transparent buildings that may use LED lights to supplement sunlight. Over 250 exist in the US, including Gotham Greens and Bright Farms. Over 500 exist in Asia. Vertical farms on a commercial scale are typically retrofitted warehouses of 20,000 to 70,000 square feet. About 45 commercial scale vertical farms exist in the US, including AeroFarms, Vertical Harvest. Over 500 exist in Asia, primarily in Japan, China, and Taiwan (Fig 2.), including SkyFarms in Singapore. In Asia vertical farms are called “plant factories.” Container farms include all the components of a larger vertical farm just on a smaller scale. 5 commercial container farm companies exist in the US, including Freight Farms and Urban Roots. Just 3 exist in Asia. In home systems include controlled environment kits and setups which can be purchased at Target, Walmart, IKEA (coming soon), and specialty stores. There are 20 US offerings including Tower Garden by Future Growing LLC. About 8 offerings exist in Asia.

Breakdown of Plant Factories in the Asia market

Major US and Canada Commercial Scale Vertical Farms (2015)

Indoor Ag companies exist across the US, primarily clustered in the Chicago area. This map shows a few of the largest vertical farms and greenhouses around the US. Not shown is AeroFarms in Newark, NJ which opened in 2016.

GLOBAL CHALLENGES The vertical farming industry seeks to address three major challenges the world is facing today and into the future:

1. Population growth The global population is growing at a staggering pace, particularly in developing countries. Within the past half a century, the global population has more than doubled from 3 billion in 1960 to 7 billion in 2011. By 2050, the global population is expected to reach 9.6 billion. Currently the amount of land used to grow food and raise livestock for our current global population is equivalent to the size of South America. By 2050, if the global population continues to grow as predicted, additional cropland the size of brazil will be required to feed the future population. In addition to population growth, people across the globe are increasingly residing in urban areas. As of 2014, the global urbanization rate was 50% as compared to 30% in 1950. By 2050, the global urbanization rate is expected to rise to 70%. With more people residing in urban areas, food distribution also plays a primary role in how food technology develops to be accessible to all populations.

2. Climate Change The earth is facing increasing challenges due to climate change. Over the past century, the average global temperature has risen over one degree Fahrenheit, which has a significant impact on climate patterns. Increasing greenhouse gas emissions are further speeding up temperature rise. Changes in climate have major impacts on agricultural production. Unpredictable or extreme changes like drought or torrential rainfall can devastate crop yields. Furthermore, changing climate patterns may also cause more plant and animal diseases with an increased prevalence of pests and other pathogens. This is a serious risk for food safety.

3. Poverty Poverty is a major issue that leads to issues in fresh food access. In the United States, the poverty rate has dropped since the 1960s, yet the total number of people living in poverty has risen along with total population growth. As of 2015, 44.1 million in the US people (13.5%) lived in poverty. For minorities, the chances of living in poverty are much higher. In 2015, 24% Blacks and 21% Latinx lived in poverty, significantly above the national average. In the United States and abroad, concentrated poverty is increasing. In poorer neighborhoods, many households face food insecurity, which is a lack of reliable access to

a sufficient quantity of affordable, nutritious food. Food insecurity is highly correlated with poverty, as shown in the [map below]. In 2015, 13% of households in the United States were food insecure, almost identical to the 13.5% poverty rate. Food insecure households are often concentrated in impoverished areas, classified as food deserts, which are areas in which it is difficult to buy affordable or goodquality fresh food. VF can combat these issue by producing fresh food in the very neighborhoods that are lacking access to these food resources, while also providing employment opportunities.

Food Desert Map

Vertical Harvest, Jackson, WY

HOW TO DIFFERENTIATE BETWEEN VERTICAL FARMS? Vertical farms may vary between different sizes and operational systems. Below are selected examples of different VF models:

Growing Spaces

Warehouse vs. Shipping Containers AeroFarms (left) Freight Farms (right)

Growing Systems

Aeroponics vs. Hydroponics Chicago Oâ&#x20AC;&#x2122;Hare (left) Green Spirit Farms (right)

Lighting Methods LED vs Sunlight AeroFarms (left) Skygreens (right)

ADVANTAGES Vertical farming offers several benefits over traditional farming practices. Nine major advantages are outlined below: 1. Year Round Crop Production VF provides the opportunity to produce maximum yields for multiple growing cycles a year. Green Sense Farms based in Chicago is able to produce harvests 20-25 times a year using optimized LED lighting technology. These innovations can help meet the food demands of the worldâ&#x20AC;&#x2122;s growing population. 2. No Weather Related Crop Failures VF allows for consistent growing cycles in controlled environments. Therefore, there is no threat of inconsistent weather patterns and severe conditions such as drought and floods that commonly reduce crop yields using traditional farming methods. Improved crop yields will help reduce crop waste which is currently 50% of all agriculture in the United States and 70% worldwide. 3. No Agricultural Runoff VF eliminates the threat of agrochemical runoff which is common in current farming practices. Runoff causes serious environmental challenges like eutrophication that destroys entire ecosystems. Reducing our dependence on chemicalheavy farming will allow for restored life, particularly in aquatic environments. 4. No Use of Pesticides, Herbicides, or Fertilizers VF allows for indoor growing in controlled environments. This eliminates the need to use chemicals to fight natural threats in outdoor growing like bugs and pests. 9

5. Allowance for Ecosystem Restoration VF offers the potential to reduce the global agriculture ecological footprint. Farmland that is left untouched will naturally return back to its natural landscape. 6. Reduce Freshwater Consumption VF through hydroponics and aeroponics uses 70-95 percent less water that traditional farming methods. Furthermore, VF practices that eliminates the use of agrochemicals also reduces freshwater pollution.

7. Greatly Reduce Food Miles In the United States, on average food travels between 1,500 and 2,500 miles from farm to table. VF allows for for locally sourced growing which will greatly reduce carbon emissions from transportation and refrigeration. 8. More Control of Food Safety and Security VF facilities are tightly secured and monitored environments which reduce the threat of pests and pathogens from affecting food production. Reducing chemical use in our food production will lead to healthier food consumption. 9. New Employment Opportunities VF has the potential to create jobs in industrial areas that are otherwise too degraded for commercial activity. The industry will create jobs across skill levels from simple jobs like harvesting to technical jobs like engineering.

9 10

DISADVANTAGES While vertical farming offers several advantages over traditional farming methods, there are several drawbacks to this new way of growing. These disadvantages are the key hurdles VF facilities must overcome for successful operations. 1. High Cost & Energy Use There are high start up costs as well as operational costs to run a vertical farm. Building a new facility or retrofitting an existing one for commercial scale environmental control rooms is costly, along with initial technological investments in advanced lighting and other machinery. Furthermore, operations costs are high to run LED lights for most of the day. The high energy use involved in operating VF facilities subsequently raises the operationâ&#x20AC;&#x2122;s carbon footprint. Fortunately, LED technology is rapidly advancing to increase light efficiency and reduce energy requirements.

2. Crop Limitations One of the most major limitations of vertical farming is that there is a limited range of crop species that can be grown indoors. Currently the the industry primarily supports the growin of leafy greens like lettuce and micro greens. Major crops like corn, cotton, and wheat take up too much space and have too long of growing cycles to financially feasible for indoor growing. Therefore the VF industry will only be able to act as a supplement to traditional farming methods and will never be able to wholistically replace existing practices. Limited range of crop species that can be grown indoors.

3. Elite Market In many cases the high operational costs for VF result in higher product sale costs that are required to make VF facilities financially operational. Through selling produce that only an elite market can afford, VF fails to solve issues of fresh food scarcity in low income and developing areas.

BUILDING Indoor Agriculture is tech driven at it’s core. The indoor ag industry is driven by rapid iterations in tech. The technology aims to a) increase yield, b) increase grow efficiencies, and c) lower cost. Currently, vertical farmers are in need of cheaper more efficient lighting systems (LED light around 68% efficiency) to reduce high upfront costs and electricity bills (30% of cost). The Technology Behind VF Vertical farming is simple at its core: grow plants with water, nutrients, and light. No soil needed. It uses a closed loop system meaning the input materials are recycled and used again (i.e water, nutrients). Traditional farming is a open loop system where the input materials are used once only (i.e. can’t recycle water nor nutrients). There are multiple ways to build vertical farms. Here are the major components explained: Growing systems are what bring nutrients and water to the plants. All systems exist as a closed loop, including a pump (nutrient water brought up to the plants) and a nutrient tank (where the nutrients and water are mixed, nutrient water drains down into this tank). There are three well known types of growing systems: hydroponics, aeroponics, and aquaponics (which are both types of hydroponics). In hydroponics the roots of the plants sit in a puddle of nutrient water. In aquaponics fish live in the nutrient tank and their feces are used as a natural fertilizer. Both plants and fish can be harvested. In aeroponics the roots hang suspended in the air while nutrient solution is delivered to them in the form of a fine mist. Hydroponics has been around the longest (invented in 1930’s) and is the most commonly used grow system. Aeroponics is the newest system (invented in 19080’s by NASA), and by far the most efficient for water use.

Hydroponics

Aquaponics

Aeroponics

LED lights are used in place of the sun. They provide 400 and 700 nanometer wavelength necessary for the plants to complete photosynthesis. Phillips has created a red & blue diode light at 68% efficiency, which attempts to provide only the wavelengths needed and minimize temperature impact. Currently, however, most vertical farms use white lights because of cost. Control System Hardware monitor the entire system for optimal growing conditions. This includes monitoring lighting, CO2 levels, nutrient levels, etc. This system is cost prohibitive to small farmers. Nutrient solutions are made of macronutrients and micronutrients used to help plants grow. This usually includes a combination of potassium nitrate, calcium nitrate, and other nutrients. Typically nutrients are stored separately as Nutrient A and Nutrient B and mixed together in the nutrient tank with water as needed, since they can solidify if mixed together without water. Many available options to large and small farmers for purchase. Large commercial players often create their own nutrient mixes. Seeds that are currently used are bred for the outdoor. Large companies have seed development programs. Ideally as the vertical farm industry advances seeds for indoor crops will be bred.

COMPONENTS AND OPERATION Below are two examples of the components needed for a controlled environment vertical farm on a multiple scales:

Small Scale

A: control system B: artificial light (fluorescent and white LED) sources C: recirculating ebb & flow hydroponic system D: solution tank E: pump F: heating and cooling system G: CO 2 supplier H: light

Commercial Scale

Operation Goals

Operation goals of a commercial vertical farm are four fold: 1) maximize the amount of salable parts of plants using minimum amount of resource, 2) maintain the highest resource use efficiency (RUE), 3) minimize pollutants released into the environment, and 4) minimize costs while achieving the previous three goals. • Maximize amount of salable parts of plants using minimum amount of resource • Maintain the highest resource use efficiency (RUE) • Minimize pollutants released into the environment • Minimize costs while achieving the previous three goals

Product Flow

Product flow runs on a 12-step system (see below). Seedlings are germinated and set under grow lights in special conditions specific to seedling growth. First and second transplant happen has the plants increase in size and require different controlled conditions. Plants are then harvested, roots and damaged leaves are removed. Produce is weighed, packaged, and bags/boxes are labeled. Then produce is packaged, labeled, cooled, and shipped.

Seeding for germination

Trimming damaged leaves

Weighing and packaging

Shipping

Growing germinated seedlings in light

Harvesting, removing roots

Labeling bags

Cooling

1st transplanting

2nd transplanting

Packaging

Labeling boxes

Handling Operations

One of the largest costs to a vertical farm is employment (around 30%, Plant Factory). An attractive option to reduce cost may be to invest in automation. Currently, • Manual labor is used if daily harvesting if 5000 heads/day or less • Semiautomated or automated is used if harvesting is over 10,000 heads/day In the Future, • Likely to be automated is transplanting and transporting of boxes, because these are simple things that robots can do. • Less likely to be automated is trimming damaged leaves and packing plastic bags into boxes, since this requires advanced skills to be able to identify defective leaves and cut them as needed.

FACTORS DRIVING INDUSTRY GROWTH The primary factor driving indoor agriculture is the increase in local food demand. The local food market has expanded from $1bn to over $7bn. Currently there is an unmet need for local food in most states. 39 states grow fewer fruits & vegetables than they consume.

Farmers Market Growth

Vertical farming has a good position to help satisfy the unmet need of the local food market. Since vertical farms can be built anywhere in any climate and produce food through all seasons, vertical farming makes year round local produce possible in most parts of the world.

Local is expected to surpass ‘organic’ and ‘natural’ due to its symbolism of transparency and trust. There has been a growth in consumer channels including a doubling of farmers markets in over the past decade and the rise in popularity of community supported agriculture (CSA).

IDEAS FOR SOCIAL BENEFIT In the US, 25 million people live in food deserts while 14 million are low income. This means that many people lack nutritious options and/or the ability to pay for quality produce. Vertical Farms could address the last mile issue. Currently commercial farms sell to an elite market, primarily to middle to upper middle class folks who can afford to eat at a fancy restaurant or pay for groceries from higher end supermarkets. Here are some ideas for how VF’s could help advocate for food equality: Robin Hood Model This is a relatively well known model: sell at a premium to the rich in order to sell cheap to the poor. For example, a farmer may sell his produce at farmers market for a premium price at the “wealthy” farmers market and sell the same items at a discounted rate at the low income farmers market. Veggie Trucks Retrofit a bus to act as a produce grocery store. Set up the bus at certain locations at certain hours convenient for lower income neighborhoods. The idea is to fill in the gaps where food deserts exist with local healthy produce. For example, Growing Power is a nonprofit that provides local veggies at affordable prices to underserved communities through their Fresh Moves Mobile Market (Fig 4.). Community Gardens Space to grow and sell food within cities is scarce. Permanent community garden spaces are a way to provide autonomy to people within a city. A vertical farm is often built from an old warehouse with surrounding land. Some of that land could be used for a community garden. The Plant Chicago is a great example of this. They have a mural and garden on the side of their 90,000 square foot building (Fig 5.). This idea, implemented as a community garden, could add real social value to the surrounding community.

THE INVESTMENT LANDSCAPE Investment interest is increasing • Over 12% global agtech investment dollars go to indoor cultivation • In the US, $32 million VC funds were invested in indoor ag in 2014 • Today in the US, $188 million funded has been funded

Solar Industry Growth

Indoor agriculture is expected to follow solar panel industry trajectory • 2005 wave of investment into the sector • Sharp decline in solar panel cost

Business Models in Indoor Agriculture

Rationale for Indoor Farming Investment • Qualitative Argument: few options to feed 10bn by 2050. • Quantitative Argument: There is a 30% annual industry growth, driven by: • Change in consumer behavior. • Market preference for local • 92% of fine dining restaurants claim they plan to add local food to menu • Reconfiguration of US Food Supply Chain. • Big box stores & online grocery services are taking large share of grocery market • Their supply chains need large quantities as predictable times & prices • Moore’s Law of Indoor Ag. • Currently indoor ag is more expensive than outdoor ag, but equation is changing as capex falls and size of indoor farms grows • Cost of LED lights has fallen 85% in last 5 years. Forecasted to fall from 60% of capex to under 15% by 2026.

Risks • Farm Economics • High upfront capital costs • Large farms required to be economic (due to purchase of equipment) • Complex engineering feat that takes time to optimize -- set up takes longer than expected • Startup Risks • 80% of startups fail • Crop Failure • Aphid infestation or failed HVAC system (lose smaller portion of crop than outdoor) • Competition Fierce for Tech • Underdeveloped Industry

ICP increase efficiency to the national food chain • Lower transportation costs • Less spoilage • Better quality product • Cuts the $15bn supermarkets loose to unsold/spoiled produce • This encourages supermarket chains, restaurants, campuses to buy produce from indoor farms Indoor farming will not replace outdoor farming • Will augment the food chain • Add diverse, distributed systems that are more resilient to supply shocks • Better prepared to meet demands of growing population

Technology Development • Data Application • Monitor light, nutrients, etc. in real time • Improve crop economics • Automation • Japan, advanced automated farms • Seed Development • Develop indoor plant seeds • Reintroduce seeds from seed banks • Crop Diversification • Currently greens as food and medicine

LEARN MORE The Vertical Farm: Feeding the World in the 21st Century BY Dickson Despommier Published 2011

Imagine a world where every town has their own local food source, grown in the safest way possible, where no drop of water or particle of light is wasted, and where a simple elevator ride can transport you to nature’s grocery store - imagine the world of the vertical farm. When Columbia professor Dickson Despommier set out to solve America’s food, water, and energy crises, he didn’t just think big - he thought up. Despommier’s stroke of genius, the vertical farm, has excited scientists, architects, and politicians around the globe. Now, in this groundbreaking book, Despommier explains how the vertical farm will have an incredible impact on changing the face of this planet for future generations. Despommier takes readers on an incredible journey inside the vertical farm, buildings filled with fruits and vegetables that will provide local food sources for entire cities.

Plant Factory: An Indoor Vertical Farming System for Efficient Quality Food Production Edited by Toyoki Kozai, Genhua Niu, Michiko Takagaki Published 2015

Plant Factory: An Indoor Vertical Farming System for Efficient Quality Food Production provides information on a field that is helping to offset the threats that unusual weather and shortages of land and natural resources bring to the food supply. As alternative options are needed to ensure adequate and efficient production of food, this book represents the only available resource to take a practical approach to the planning, design, and implementation of plant factory (PF) practices to yield food crops. The PF systems described in this book are based on a plant production system with artificial (electric) lights and include case studies providing lessons learned and best practices from both industrial and crop specific programs. With insights into the economics as well as the science of PF programs, this book is ideal for those in academic as well as industrial settings.

Created 2016 Melissa Isidor + Sierra Clark