Apr 22, 2020 - Economy

Vertical farms see surge in demand for greens grown indoors

Greens are grown at Bowery Farming, a vertical farm in Kearny, New Jersey.

Greens are grown at Bowery Farming, a vertical farm in Kearny, New Jersey. Photo: Don Emmert/AFP via Getty Images.

Indoor, urban vertical farms — which grow produce in warehouses with tightly controlled climate and light conditions — are seeing a surge in demand that could signal a lasting change in how we get our fruits and vegetables.

Why it matters: "People are more concerned about who is handling their food, where it's coming from, how many stops did it have before hitting the shelves," said Irving Fain, CEO of Bowery Farming.

  • "Those were always things people cared about, but this situation has amplified them and increased attention and focus on those variables."

The big picture: While the majority of people now live in cities, very little of our food is produced there.

  • COVID-19 has thrown a wrench in supply-chain logistics. Food packaging plants and farms have shut down due to sick workers, and trucking routes have been disrupted by lockdowns. Harvests are being left to rot in the fields.

How it works: Indoor farming generally consists of columns of vertically stacked growing trays in large warehouses.

  • Using artificial light, algorithm-controlled water and climate settings, and automated soil and nutrient monitoring, plants can be grown much faster than in outdoor farms and without pesticides.
  • The produce is harvested with fewer workers than a typical farm needs, and the growing season never ends.
  • Produce is then shipped to local stores, usually within a 200-mile radius of the farm.

Bowery has two farms in Kearny, New Jersey, near New York City. The company sells its leafy greens and herbs in stores in the tristate area.

  • It has opened a third farm outside Baltimore that serves the Washington, D.C., metro area as well as Pennsylvania and Delaware.
  • Business has more than doubled with some online distributors, and is up between 25% and 50% in stores.

The other coast: Plenty grows leafy greens mixes, arugula and kale in an indoor vertical farm just outside San Francisco. CEO Matt Barnard said the company has more than doubled its shipments since the coronavirus outbreak began.

  • "When this crisis started, the demand immediately jumped," he said. "We've sustained a high rate of production relative to before the crisis, and we've been increasing it week over week."
  • Barnard said the surge in demand has accelerated the company's plans to open additional farms, but he declined to say when and where.
  • The company plans to start growing berries next.

Both companies say they are delivering food directly to local food pantries.

Reality check: Without a significant infusion of capital, vertical farms won't be cropping up in every city anytime soon. They're expensive both to get up and running and to operate, with high energy costs in order to power thousands of LED lights and sophisticated ventilation systems.

  • They also have to keep prices competitive, particularly after the coronavirus crisis ends and consumers are not quite so willing to fork over extra cash for quality produce.
  • The other problem: Many vertical farms have started with leafy greens, but they'll need to expand to a much wider variety of fruits and vegetables to be a viable, large-scale source of food.
  • “It’s hard to feed the world with lettuce, kale and arugula," Erik Kobayashi-Solomon, founder of IOI Capital, told the FT last year.

Between the lines: Vertical farms aren't the only way locally grown fruits and vegetables are getting a boost in the wake of COVID-19.

  • On Yelp, community-supported agriculture operations in the U.S. have seen daily consumer actions — meaning any action taken to connect with a business, from viewing its profile to posting a photo or review — rise 579% since March 1, according to Yelp's most recent economic impact report. That's a bigger increase than any other type of business has seen over the same period.
  • Under quarantine, people have rushed to build their own backyard gardens, per HuffPost.
  • Some urban gardeners in Washington, D.C., are donating their entire harvests to a local nonprofit that helps underserved families.
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