Vertical farming: Bursting with promise — but unknown costs

The production of food crops such as fresh greens (like lettuce and arugula) and herbs (such as basil) in vertical production facilities is part of a larger field of agriculture often referred to as controlled environment agriculture (CEA). In addition to production of these types of crops in vertical facilities, production also occurs in such facilities as greenhouses and plant factories inside of converted warehouses and shipping containers. The types of crops most commonly grown in CEA production include tomatoes, peppers, cucumbers, strawberries and fresh greens and herbs.

Depending on the crops being grown, different types of production systems might be used in CEA, but the most common systems are nutrient film technique, floating beads, Dutch bucket systems and various types of gutter systems. These systems might be true hydroponic systems — in which the plant roots are suspended in a static or recirculating fertilizer solution — or a system that uses an artificial soil or substrate in which the plant roots grow.

Across all of the types of controlled environment structures, systems and crops, the production of food crops in CEA has been experiencing rapid growth in the U.S. In fact, Rabobank, a Dutch multinational banking and financial services company, reported that the value of U.S. greenhouse-grown food crops exceeded $3 billion in 2013 and is expected to exceed $4 billion by 2020.

The U.S. Department of Agriculture’s statistics also support the conclusion that greenhouse-grown produce production has been rapidly increasing. Many factors have been reported to be responsible for the growth in greenhouse food crop production including reducing water and fertilizer inputs needed to grow crops, an ability to better program and have predictability of crops in CEA versus open fields, the ability to grow crops year-round and thus better serve the local markets, the ability to potentially better use biorational disease and pest control, the ability to grow food crops on nonarable land, the ability to produce higher volumes of produce on limited land (especially with vertical farms), and the potential for reducing food safety issues as compared to open field production.

In addition to these factors, the growth of CEA was reported as being fueled by market and human factors. Karen Halliburton Barber of Rabobank noted in a report that, “There is a growing preference among U.S. retail and food service buyers for greenhouse produce.” She also noted that, “The buyers are seeking the quality and reliability of supply that greenhouse products provide.”

As a type of CEA, vertical farming affords the opportunity to produce larger volumes of these crops per area than traditional field production. This is achieved by both the potential for year-round production and the multiple levels of production systems employed. Vertical systems also allow for the production of produce crops in areas where land is very limited or very expensive as is often the case with highly urbanized areas. However, compared to both field production and even traditional greenhouse (single level production) hydroponic production, the fixed costs and variable costs of production will be different for vertical farming. Some costs are likely to be significantly higher while others might be lower. Costs are likely to be spread over higher levels of crop production.

It is important to understand these costs. It is important also to understand the market. What is the target market? What crops does the market want? How large is that market and what are the prices for a given product that the market will tolerate are all important questions before deciding to move forward with any type of CEA operation — including vertical farms. Having a strong understanding of the crops to be grown, the level of production achievable, the costs of production and the market will increase the chances for a successful CEA business venture.

• Michael Evans, Ph.D., is director of the School for Plant and Environmental Sciences in the College of Agriculture and Life Sciences at Virginia Tech (@VTCals).