Sitting atop Philadelphia’s City Hall is a statue of William Penn. For years, an ordinance prohibited buildings in the city from being taller than the brim of Mr. Penn’s hat. In the 1980s, the city was running out of real estate, which decreased expansion and growth. The city realized that something had to change to preserve the future. City officials soon realized that if they “grew up,” they could take advantage of a great deal of available open space in the sky. The ordinance was rescinded; giant skyscrapers were built, resulting in the growth of new businesses and an influx of people into the city. In addition, the city was able to collect additional tax dollars.
Over the last 25 or so years, society has been worried about the ability of agriculture and food manufacturing to provide enough food to feed humankind. Global warming and other natural events and disruptions have fueled those concerns as available horizontal farming space decreases due to urban sprawl and other issues. So, similar to Philadelphia’s story, but with the added benefit of science and technology, the agriculture and food industries are now looking up rather than out. A new technology for farming still in its early stages, Controlled Environment Agriculture (CEA) or Vertical Farming has the agriculture and food industries buzzing.
This revolutionary technology could be to the Food Industry what the Electric Vehicle (EV) is to the Automotive Industry. This new science is still beginning, so developments are occurring almost weekly as scientists and agriculture experts experiment with technology.
How Does it Work?
The process of Vertical farming is twofold. It begins with growing crops inside buildings that act like greenhouses but are much more technologically advanced. Second, these buildings are multi-story facilities that take advantage of vertical space. With farmland at a premium, “growing up” will allow the agriculture industry to acquire much-needed real estate to grow crops. Vertical farming’s goal is to optimize plant growth and be able to produce more natural food products. The technology uses soilless farming techniques and hydroponics to grow plants vertically in stacked layers in structures with controlled environments. This is in direct contrast to farming outdoors which is limited to regional land where weather and terrain are suited for growing crops. The internal environments are climate controlled and can minimize seasonality. Plants, vegetables, and fruits that generally grow in hot and dry climates can now be produced in cold weather climates in these modern greenhouses. They could be considered plant-growing factories.
The technology is so versatile and flexible that the structures could be a low or high rise. Skyscrapers, old warehouses, shipping containers, old factories, tunnels, and abandoned mine shafts are all examples of places that can be used to house these vertical farms. They could be located in any geographical area as well, urban or rural. The aftereffects of the pandemic have provided additional opportunities. Globally, urban areas are being transformed due to the increase in people working virtually, corporations closing urban offices, and people moving out of cities. Real estate that was always priced ridiculously high is now surprisingly affordable. Buildings previously housing other businesses can now be turned into Vertical Farms. Let’s peek into the future. What about a vertical farm down the street from Philadelphia’s City Hall? How would you like a locally grown salad for lunch, William Penn?
Vertical Farming could be the antidote to many disruptive forces impacting today’s agriculture and food manufacturing industries. Some immediate benefits that the agriculture and food manufacturing industries could reap from this technology.
Reducing the Impact of Seasonality and Climate Restrictions
Seasonality is a common disruption to consumers, retailers and manufacturers, and producers of agricultural and food products. There are only certain times of year when many items can be grown, and there are only certain climates where some products can be produced. What if seasonality could be significantly minimized? Food manufacturers need to constantly manage a major issue of the availability of seasonal agricultural products and ingredients. Vertical farming can mitigate if not eliminate, many seasonal problems. With indoor facility and technology, vertical growers can stagger the growing cycles of products and grow most products year-round regardless of season or geographical location. This will result in more food being grown in less time. Imagine tomatoes, for example, being grown in Minnesota year-round in large quantities. In addition to year-round product growth, what about the impact on the labor market? Labor resources could be more consistently employed than seasonal shifts or sporadic layoffs. In addition to the agricultural benefits, this can also have a huge social impact.
Moving Agricultural Products Closer to Consumers
A significant process constraint to food manufacturers is the location of the sources of their ingredients. Suppose a manufacturer in the United States has to a component that is grown in another part of the world due to climate issues. In that case, their entire operation will be impacted, from the time it takes to grow to the cost of materials. Consumers face the same issue regarding products that can only be grown in other regions of the world. Product availability is limited; the prices are high, and many times due to prolonged and arduous transportation routes, the quality is impacted. Today’s consumer is demanding and wants everything yesterday. That does not always work when it comes to agricultural and food products. The distances and transportation issues mean wasted time and lost sales. Vertical farming takes up far less space than the traditional farm, and with growing products upward in structures. These can be located near the actual processing facility and to a large concentration of consumers. Food manufacturers might be able to source many of their ingredient needs locally. Another possibility is that manufacturers can build facilities right at the manufacturing location and source their products.
Reduction in Lead Times and Transportation Issues
Ingredients sourced closer to or at the manufacturing facility will significantly reduce lead times. Procurement and transportation lead times will be reduced as well as related costs for transportation, special handling, etc. This will allow for better demand, production, and procurement management to help minimize waste, maximize efficiencies, increase customer service, and improve profits. Moving the source of products closer to processing facilities could reduce the number of trucks needed, thus minimizing CO2 emissions.
Better Traceability and Food Integrity
Food safety, quality, and integrity are the first priority in the agriculture and food industries. With less soil and more controlled growing environments, there will be reduced chances of damage from insects or negative effects of pesticides. Growers and manufacturers will have the ability to embrace technology for food tracing to maintain traceability and food safety throughout the supply chain. Given that vertical farming can simplify the supply chain in many cases, compliance with traceability, quality, and food safety regulations should be easier for all players in the industry.
The Next Great Industry Transformation
The EV is transforming the Automotive industry. Vertical Farming could have the same impact on the agriculture and food industries, not to mention changing many aspects of the supply chain that could positively impact other sectors. Almost every part of the food and beverage value chain could be affected by this technology. Where, when, and how products are grown could be revolutionized. The speed at which food products can be delivered to consumers could improve tremendously. The food manufacturing and agricultural marketplace could be reinvented and transformed forever.
As with everything in life, this new technology is not without its share of challenges. Most businesses and participants in the agriculture and food supply chain will need to adapt. And, there will be some costs. Constructing and maintaining these facilities will require additional large financial investments. However, the potential cost savings throughout the supply chain could significantly offset the initial costs. Manufacturers will have to embrace new systems to compete, trust technology, and move many environments to the cloud to be part of the revolution. This could be outside traditional agriculture, and food organizations’ comfort zones. Still, to be a sustainable and adaptive enterprise, the initial risk and change management process should be worth the investments. Vertical farming allows for the sourcing of food products and ingredients to be expedited and greatly improved. The time from field or greenhouse to fork will be decreased, thus streamlining and improving the supply chain and individual manufacturing and farming organizations. The industry players will need to modify and adapt to new processes and systems to access and process information faster than ever. The rewards, however, could be limitless for organizations that provide food products and society as a whole. The benefits could be endless. Over the last half century, there has been a great deal of negativity in the agriculture and food industries. Finally, things are looking up!
Stephen Dombroski is QAD’s Director for the Consumer Products and Food & Beverage vertical markets.