Growing crops under controlled conditions independent of weather and pests have dramatic implications for agriculture amid rising global populations and arable land shortages.
Vertical farming (VF) is an agricultural method used to grow crops in stacked layers and is largely performed indoors. It is not a new idea, the concept was first conjured by Dickson Doppenheimer in 1999 who designed a skyscraper indoor farm that utilised the sun's light and heat to grow crops on multiple floors. Since then, technology has advanced through monochromatic LED lighting, more precise equipment to monitor nutrients and robotics. Academic research activity and trials have also increased on the topic but there is contested debate as to whether sunk and operating costs make ventures viable.
Method to the madness
Unlike conventional farming using nutritious soil, after the first week of their seeding phase, indoor vertical farms grow plants on membranes, their roots hang in a liquid in a hydroponic system. The surrounding environment is sterile and the temperature, light, humidity and carbon dioxide levels are controlled. The liquid solution is refined with nutrients (nitrogen, phosphorus, potassium and calcium) and additional traces (iron, manganese, copper and zinc) that plants absorb to grow. As the liquid solution is portable and does not have to be stored beneath the ground, space is exploited vertically and horizontally; think of it as a greenhouse on multiple levels.
The variety of products growing in indoor farms is currently limited to leafy greens such as lettuces, cabbages and kale, but there is substantial evidence that more fruit and vegetables such as tomatoes, aubergines and cucumbers are scalable and a broader closed ecosystem can be established. Fish (tilapia or koi carp due to their ability to withstand higher temperatures) in tanks produce faeces, when the toxic ammonia from the fish waste is filtered, nitrates are conserved which is used to energise plants in an artificially-induced cycle. Aztecs used this system, called aquaponics, as far back as 1000AD. Chickens could also feed on green waste and both animals could be farmed to allow cross-subsidisation possibilities. In a multi-layer environment, plants operate on upper floors as livestock is more easily maintained on lower floors and waste is processed underground.
The global population is expected to rise 30% by 2060 to approximately 10billion. Agriculture conditions are constantly deteriorating through water and arable land scarcity; 25% of all water is used for agricultural purposes and unsustainable deforestation is occurring to pursue farming and livestock breeding. Climate change leads to more volatile weather conditions and more frequent droughts and flooding, decreasing crop yields.
Using hydroponics requires 10x less water and increases crop yield by a similar order. Lighting is controlled to emulate the sun and in one case study, a Bowery (VF startup) development unit can grow leafy vegetables within 17days, twice as fast as traditional farming methods. There are several non-efficiency related vertical farming benefits. Firstly, is the ability to grow crops in ideal conditions independent of weather, pests and disease. VFs can reuse old spaces such as abandoned buildings, shipping containers and mine shafts (deep farms) especially if infrastructure such as lift mechanisms are already fitted. The lack of pesticides and a smaller percentage of outdoor farm production can increase biodiversity and the freshness of food; usually, seeds are modified to detract pests. In response to urbanisation, farming can be performed in cities slashing the amount of food wasted when transported; 14% of food produced is wasted when shipped. In the long run, plants have the potential to be cultivated where resources wane thin in space with mist aided by no gravitational forces (aeroponics).
Alleviating economic pressures
Skilled jobs in research, management, processing and science are created through the opening of new VF facilities and are likely to be accessible to less skilled but experienced agricultural workers if they are willing to relocate and retrain. Having new opportunities for farmers is essential, especially for the youth who understand that their family-taught methods may soon be unusable given the condition of farmland. In 2019, 62% of UK farmers had second income streams (e.g., B&Bs, farm shops) to diversify due to competition abroad and to account for changing demands such as the increased uptake of plant-based food. Additionally, VF targets underemployment in both developed and undeveloped countries; farm labour and equipment is unutilised on days with heavy rain or high temperatures.
However, when VFs become more automated (some already have automated packaging and processing units) labour is unnecessary, hampering the longevity of the jobs created intially. It is also worth accounting for decreasing job satisfaction as farmers are more likely to enjoy the outdoors, working indoors may reduce vitamin D/serotonin levels gained from sunlight as well as sparking tensions with new colleagues and living away from family in cities.
Positive economic effects may too arise from increased capital and foreign direct investment flows and exports, all increasing GDP growth. Because traditional farms have no corporate backing as inherited businesses and VF ventures are run by limited firms that could float on stock exchanges, it provides greater scope for exposure to international investors. Secondly, state of the art technology in indoor farms will increase capital deepening, often boosting total factor productivity; both metrics are currently slipping in developed economies. For example, supply chain bottlenecks are likely to become more infrequent with the use of cloud computing and blockchain technologies to locate and maintain crops. Finally, reliance on indoor agriculture will diversify developed economies with the countercyclicality of agriculture as inferior goods are demanded during recessions. Although, a lesser proportion of income is spent on these goods when incomes rise (which is more often than not) according to Engel's law. The urbanisation of agricultural workers may also lead to externalities within cities including overcrowding, noise pollution and rising real estate prices, these effects often hit low-income households the most widening wealth inequality and social mobility and forcing these families to move into poorer areas.
Skyrocketing costs
It is crucial not to ignore the cost efficiencies that indoor VF offers. Savings are made through transportation, no use of pesticides, no crop loss and no reoccurring bills such as for tractor fuel. Moreover, the potential for economies of scale is large given the size of VFs. However, the disadvantage to VFs is that sunk and R&D costs are huge, this deters governments and private investors due to longer payback periods, especially to private equity fund managers and venture capitalists that wish to maximise short-term gains and IRR.
In urbanised economies, real estate prices are sky-high due to quantitative easing and zero-bound rates thus an increased appetite for REPM by institutional investors and HWNIs. Existing real estate is more likely to have fittings and fixtures to easily refurbish into a VF. However, cheaper opportunities may still be viable with smaller warehouses or mineshafts but this would come with extra costs or fewer benefits from scale. Products may neither be suitable for scale. VFs are at first R&D intensive for process and product development.
Technology has vastly improved over the last decade, LED lights use 75% less energy and last 50x longer than regular incandescents. A further innovation in some VFs is using blue and red light to enhance photosynthesis as green wavelengths are scattered by chlorophyll, but these specific bulbs can be more expensive; in large indoor VFs white light is used. Given their energy efficiency, LEDs tend not to emit so much heat either. A frequent trade-off arises between acquiring the most efficient technology for environment control and avoiding spiralling costs/keeping creditworthiness.
Recent research articles have come to a variety of conclusions. Lucie Adenaeuer from the University of Bonn explains how a kilogram of food produced by a closed VF system in an urban area of Europe would cost approximately €3.5-4 in the free market. Adding that inhabitable land such as deserts and taiga regions in countries with generous public farming schemes could be used. She concluded that 50 projects should be piloted using a 37-layer vertical farming system in the short run with up to 3,000 viable farms commercially viable in the long run. However, based on the prices of these goods, state funding would still be necessary unless producers moved into niche premium markets. Reallocating subsidies will allow farmers to be retrained to work with new technologies. Governments must realise their own sunk costs subsidising traditional farming before going ahead with funding vertical farming projects- a politically unpopular move but one that could be justified to achieve other climate-related manifesto objectives. However, advances in technology coupled with renewable energy could see brand new ecosystem equilibria in VFs developed without state support.
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