Christopher Tang
We are facing an unprecedented food supply crisis. United Nations released a report in August 2019 warning that the world’s land and water resources are being exploited at “unprecedented rates” for many reasons. First, the world’s population is projected to grow from 7.5 billion in 2018 to over 9 billion by 2050, thanks to improved healthcare and medical services. However, due to population growth, longevity resulting from better health care, and increasing consumption caused by economic development in developing countries, the demand for Earth’s resources is expected to continue to grow and exceed the capacity of natural resources. Second, the development of infrastructure and housing to support population growth has depleted the amount of arable land for cultivation. Based on data obtained from the World Bank, the arable land per person has declined gradually over time (Figure below).
Arable Land (Hectares per person) from 1961 to 2016. (Data source: World Bank)
Third, the United Nations reported that more than one half of world population lives in urban areas. As young people migrate to urban areas, it will be hard press for older farmers to manage their farms. Fourth, climate change is putting dire pressure on the ability of humanity to feed itself. Floods, drought, storms and other types of extreme weather threaten to disrupt the global food supply, and food shortages could lead to an increase in cross-border migration.
Facing with these challenges, we are racing against time to develop sustainable food supply to feed the growing and ageing population with depleting water and land supply in the midst of climate change.
To address these food supply challenges, many Venture Capital firms are investing in “vertical farming” (see figure below). Vertical farming refers to the practice of producing fruits and vegetables vertically, in stacked layers, perhaps on many floors inside a building, using artificial lights (e.g., LED lights) instead of the sun, and a whole range of technologies including sensors, climate control systems, target water dripping systems, and special robotic systems.
A leading vertical farming firm is AeroFarms. Based in New Jersey, AeroFarms has raised US$100 million to grow a variety of produce (rocket, watercress, and baby kale) using its own patented “areoponic” technology -- a process of growing plants in an air or mist environment using 95% less water without the use of soil or pesticides. AreoFarms sells its produce to retailers such as Whole Foods and ShopRite under the Dream Greens brand.
A Vertical Farm. (Source: AreoFarms)
As vertical farming is getting some traction, vertical farms could pose a safety hazard to workers because they have to get on a “scissor lift” to get to the plants to inspect and harvest them. A Cincinnati-based firm called 80 Acres Farms has implemented a robotic system that can reach greater heights and use vision technology to identify ripeness and potential disease on the plants. By reducing human touch from farming, crops are less likely to be contaminated with bacteria such as Listeria, Salmonella, or E. coli. Also, without using pesticides, vertical farming can produce higher quality crops that are safer to consumer. Due to concern about food safety in China, Foxconn’s Wuhan campus has selected Skywell, a leading US water technology company, to build an indoor vertical farm to grow high-quality vegetables and fruits so as to improve the nutrition of employee meals provided at Foxconn’s on-campus cafeterias.
Because vertical farming is relatively new, the investment cost is fairly high and it is not clear if this farming business is financially viable. If it works out, we can grow more vegetables using smaller footprint (using vertical space), less water (using indoor mist environment), higher yield (using artificial light), etc. Also, if these vertical farms are developed in urban areas, we can get fresher produce by reducing carbon footprint because complex supply chain logistics will no longer be needed.
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