by Luke Hutson, Chief Analyst/Editor-in-Chief

Vertical farming was gaining traction when spikes in energy prices gained some high-profile casualties.

At a gathering this week of industry specialists in controlled environment agriculture (CEA), the business model pursued by companies in the vertical farming space was put under the spotlight.

When referring to high profile closures, Professor Derek Stewart, director of the Advanced Plant Growth Centre, The James Hutton Institute, UK, gave some perspective by saying companies going out of business was common when developing a new technology. “But,” he continued, “a lot are predicated on poor business models.”

Stewart was speaking at the 2nd International Conference for Controlled Environment Agriculture (CEA), organised by the University of Plymouth, UK.

Energy spikes
Energy prices have had serious impacts on many vertical farms.

“Our electricity price went up from 12 p/kwh to 88 p/kwh in six months during 2022,” said Oliver Kaberry, chief operating officer, from Jones Food Company, which operates two vertical farms in the UK.

He described how the company engineered a solution to reduce electricity consumption by injecting outside air to cool the farm. The company managed a reduction in energy consumption of 40 percent.

The intermittency of renewables poses another problem for a vertical farm aiming to run solely on that source. Flex Farming has proposed a solution that absorbs excess electricity from renewables by using it on a vertical farm growing strawberries.

Ahmad Mohseni, CEO and co-founder, described the business as ‘selling energy in the form of a strawberry’. “When there is a deficit [in the grid], we slow down, and when there is a surplus, we grow.”

Established in 2021, the company received £2.5 million in funding from Innovate UK and has built a 500 sq m 10-tonne strawberry indoor farm to demonstrate proof-of-concept.

Beyond leafy greens
Having started off with leafy greens, vertical farms are looking to diversify in crops, and not just edibles. This could include nutraceuticals such as plant-based collagen.

Kaberry said the company is growing trees and house plants. The tree saplings are intended for reforestation programmes. The company now focuses on tree production at its Scunthorpe facility.

For house plants, the controlled environment enables shorter growing periods for starter plants. Kaberry said they had reduced growing periods from six to nine months down to five months.

Strawberries are seen as another option, although there is the competition from conventional growers, particularly in countries such as the UK where there is sizeable domestic production. The key question for a vertical farm producer is how they will compete during peak production months when conventional growers will be selling strawberries at much lower prices.

Location, location
Vertical farms are pivoting towards producing plantlets, according to Stewart.

This could even lead to developments in configuration, such as vertical farms being located to greenhouses. Crops could be started off in the vertical farm and then moved out into the greenhouses or even fields. Onions have been trialled as a possible option.

Another way to improve the business economics is to locate the vertical farm near to the energy source. The problem with urban vertical farms is that they are not near the energy source and that can pose problems when trying to scale up.

Stewart talked about how disused coal mines could be a source of thermal energy for vertical farms; these could turn into growing hubs in future. Other options are locating near anaerobic digesters (AD). One possibility comes with the increased use of artificial intelligence – converting the heat from data centres to power vertical farms.

Location can also influence labour availability. The use of biological products could help in managing labour costs, according to Dr. Russell Sharp of Eutrema. He spoke about his company’s product to combat mildew. Since the product is based on chitosan, it can be used right up to harvest and workers do not need to be taken out of the facility during application.

Adding value
A route to adding value in the business model is biofortification. Charlie Guy, CEO and co-founder of LettUs Grow, the aeroponics specialist, talked through how his company fortified pea shoots with vitamin B12 using aeroponics.

GrowUp Farms has a production site in Kent, UK, that draws energy from a nearby biomass plant. As a result, GrowUp Farms has managed to navigate the volatility in energy prices. The company provides leafy greens in bags to some of the largest supermarkets in the UK.

In terms of product development, Dr. Rixta Sievers, research manager for GrowUp Farms described how the company recently added a new leaf – sorrel – into the bag mix. Sievers spoke of the various stages when creating a new component, including the lighting for growing the sorrel in the trays: “We modified the lighting recipe to improve the morphology,” said Sievers.

Seeing the light
Advances in lighting using LEDs can help reduce energy consumption and improve plant morphology. As a result, unit production costs can be improved by speeding up the growing time.

Kaberry said: “From an operations perspective, [we welcome] anything that speeds up growing. We know our cost per day.” Production costs tend to be linear with time, a straight line sloping upwards. Whereas a conventional grower tends to have costs either end of the growing cycle – namely, at the beginning when sowing, and then at the end when harvesting and packaging.

Jake Shaw-Sutton, a lecturer in applied robotics at the University of Plymouth and founder of Robotriks Ltd., said that tuning just the light can help a plant grow two to three times faster.

The university looked at the impact of LED light spectra on the growth, yield, physiology and sweetness of Stevia rebaudiana. Commenting on the work, Shaw-Sutton said: “If you put white light on the plant, you can see that the plant doesn’t use the whole spectrum, so it is a waste of energy.” For this reason, a combination of blue and red light is used, and this explains why the light in most vertical farms has a reddish hue.

Dr. Hail Rihan, lecturer in agricultural technology at the University of Plymouth, and producer of the conference, gave an example from the work his team had done growing basil. He said that tweaking the blue light for the crop – moving from 450 nm to 435 nm – had improved the plant morphology.

Tweaking the light can also affect quality as well as speed of growth, according to Adam Greenwood, founder of Modular Growth, which makes lighting systems for vertical farms. Greenwood said red pak choi can be made redder by tuning the lighting recipe.

Focus on strengths
Another way to tune the business model is for a company to focus on what it is good at.

Sievers said: “We see ourselves as growers, not tech providers. So sometimes the tech is not ready for when we need it.” It was pointed out in one discussion that in the greenhouse industry the manufacturers tend not to be growers themselves.

Guy said: “We’ve taken a partnership approach rather than trying to do everything ourselves.”

Leading research
Among potential academic partners, the University of Plymouth is fast becoming a leading CEA research centre in the UK. The university has a long connection with agriculture. The agricultural college Seale Hayne was absorbed into the university in 1989. Seale Hayne opened its doors to agricultural students in 1919.

The university has now established the Centre for Research Excellence in Intelligent Sustainable Productive Systems (CRISPS), which has involved an investment of £5.7 million on staff and equipment, with a further £4.1 million on infrastructure.

Aquaculture forms part of CRISPS. Plymouth, referred to as Britain’s Ocean City, has a historical link with the ocean, most famously with the voyage of the Mayflower in 1620. The Marine Biological Association (MBA) is home to the world’s longest running marine science survey: the Continuous Plankton Recorder Survey, which began in 1931.

Five-year forecast
When speaking about the expectations for the next five years, Rihan expects to see the propagation of a wide range of plant species, adding that “the efficacy and efficiency of lighting systems is going up.”

He still sees wheat as a possible crop for vertical farms. He acknowledges the doubts over this but cites the possibility for wheat grown in CEA systems in the MENA region, which is struggling with water scarcity.

Greenwood said the next way for vertical farming to go is with intra-lighting (from the side) and uplighting.

Dr. Mark Else, head of crop science and production systems, National Institute of Agricultural Botany (NIAB) in the UK, said a conventional grower might be hesitant to convert 100 hectares into one hectare of CEA. “I think they are starting to see aspects that might be beneficial in terms of propagation.”

He could see an increased number of crops that could be grown in CEA but added caution: “Just because we can grow them doesn’t mean we should grow them. There must be a good economic business model to do that.”

Stewart brought the consumer back into the picture and the willingness to pay for products grown in vertical farms against conventional methods. For Stewart, the objective on pricing is simple: “Parity has to be your target.”

It all comes back to the business model.