It's always Site Specific: Yield per square foot OR energy input per square foot OR COGS per unit of yield?
I’m going to argue that COGS per unit of yield is the most important success metric from the grower’s perspective, quickly followed by energy input per square foot with yield per square foot coming in a distant third - and actually that last metric should be tossed out all together unless space is at a premium. As well, I am going to keep this very simple - relying on basic, logical arguments. Namely, that all is site specific.
We can discuss the merits of vertical growing until the cows come home, but let’s leave that argument to the plethora of others doing a great job at parsing through the sorted history and potential future of the methodology. It is here to stay in one form or another, we all got super excited about it three or four years ago and the luster has worn off, much like the promised return on investment. So, unless the cost of real estate is at a premium or you can somehow, negate your OpEx by 50%, going vertical indoors is a steep hill to climb. I’m not saying it doesn’t have a place - it does - but not most of the time. Site specific as always!
So, this question, much like most questions in agriculture, has a site specific answer. Everything boils down to:
First and highest priority: local market for your output (can you sell at a profit?)
A close second to First: build for the grower (happy grower = happy food)
Climate - (ask an indoor grower what the most complex part of growing is)
COGS (or OpEx)
CapEX (cost of real estate will make or break the rest of the project)
Everything else is more or less a constant - not that there is much left after CapEx and OpEx. But, as we know, people get excited about technology and many projects are green lit because investors push to implement. Site specific be damned!
There are a lot of resources for those interested in indoor farming. Namely, Agrictecture’s build-a-farm software. Consultant’s abound. Finding, non-biased opinions will be the tough part. I’m biased - I promote Indoor Sungrown Indoor via HyPAR.farm, but I know that our technology shines in:
Exceptionally arid or hot climates where there is a lot of sun
Where energy pricing is high or unpredictable
Where real estate is not at a premium
But, back to the question at hand. Without modeling a specific farm, in a specific location, we should all agree that the COGS per yield argument simply makes economic sense. Why else would a farm project get greenlit? We did the Silicon Valley VC adventure - it is time to get back to reality. There really isn’t too much else to say about this. The complex part is modeling the project without a bias. If you can’t sell at a profit, you won’t last very long. And as we know, all is site specific.
And what are the two primary COGS?: labor and energy. The cost of labor is what it is. It will change and we should model for that - you get what you pay for and that is a somewhat predictable cost. However, energy is a different beast altogether. Unless your farm has a 100% dedicated renewable energy source you need to plan for unpredictability - meaning, not tied to the grid because the minute energy can be redirected towards a more profitable user, you lose.
Energy is the key to all of these discussions, and if the sun is shining, it is pretty difficult to argue that not using the sun is a good idea. If your market is in that Greenhouse Goldilocks zone, the answer is clear and one can just keep traveling until the real estate cost justifies the farm. Building a vertical farm in downtown San Francisco will probably never make sense. Again, site specific.
On the other hand, if you are not in an ideal location for a greenhouse, going inside could make sense. The question is, horizontal or vertical? And the answer is… site specific.