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CEA: Leaders See a Bright Future
Controversy aside, Controlled Environment Agriculture (CEA) is a production method that has attracted a ton of investment and seemingly has a bright future.
At least that was the consensus of a panel discussing indoor farming during the recently held Organic Grower Summit. Tom Stenzel, executive director of the CEA Food Safety Coalition, moderated the panel, which included Robinson Fresh Director of Supply Molly Tabron, CEO Arama Kukutai of Plenty, and Matt Ryan, CEO of Soli Organic. The trio expects tremendous growth in the sector but did agree it has its limits, and it will not replace outdoor farming.
Stenzel began the discussion explaining the concept and characterizing it as a way to control more variables involved in the growing of agricultural products. “Every grower tries to control the variables,” he said, explaining that CEA, in its most basic form, is a way to mitigate a greater number of those variables. Indoor growers, he said, have greater control over the environment and pest pressures and can even handpick their growing medium.
The three speakers discussed their interest in the indoor growing environment and how the value proposition fits into their strategy.
Ryan reported that Soli Organic, which was once called Shenandoah Growers, still grows organically both indoors and outdoors, but is planning to convert much of its open-field production to vertical farming. The company is heavily involved in producing herbs, and Ryan believes that they can grow herbs more efficiently indoors, with a great leap of efficiency expected as they increase their vertical farming footprint.
Some herbs, Ryan said, such as rosemary, bay leaves, and lemongrass, actually do better outside. But for so many other crops, indoor farming offers the opportunity to deliver better organic herbs at a lower price point. To drive future sales of organics, Ryan said the company believes the price point must be close to that of conventional herbs.
Soli got involved with indoor growing of organics to control some of the more challenging aspects of growing outdoors, including weather issues and labor. The company’s business model includes growing close to market in order to deliver fresher organic herbs at a reasonable price.
One of the more celebrated companies in the vertical farming space, Plenty, has attracted venture capital money and signed partnership agreements with both Walmart and Driscoll’s. The company is currently concentrating on conventional farming with CEO Kukutai indicating that Plenty offers the value-added attributes of indoor farming without the added burden of producing a certified organic crop.
Kukutai said Plenty is spending millions of research dollars trying to master the genetics of indoor growing and produce a growing system that can accommodate many crops. The advantage of CEA, he said, is the ability to get much more production from each square foot of space than can be achieved outdoors. This, in turn, will allow the company to deliver high-quality produce at a fair price.
As such, Plenty sees itself as a technological solution to the food security issue.
As for the products Plenty grows, baby greens have proven to be easy to produce indoors, but Kukutai said there is lots of work to do in the plant sciences to bring the technology to vining crops, tomatoes, raspberries, and even kiwifruit. Any high-value crop, he believes, is a candidate for vertical farming. Research and development will take years, but he is convinced having an assortment of products is important.
Robinson Fresh is interested in the indoor farming concept as an expert in the distribution and transportation of products. Tabron said there is much investment in the space, which indicates vertical farms will be built and products sold. What is lacking in the vertical space is the expertise involved in moving produce through the supply chain, which is what Robinson Fresh excels at.
“Just because you can grow it, doesn’t mean you can sell it,” she said.
Potential vertical farm operators have approached her firm touting their ability to be a one-crop farm, but Tabron said that concept does not match how the industry operates, which is where Robinson Fresh can lend its expertise. CEA can work if the new farming companies can unlock what consumers want and do it in an economically feasible way. Tabron said there are “lots of people entering the space—more than will survive.”
The winner, she said, will be those who focus on the consumer and can produce at the lowest cost. “It always comes down to cost,” she said. “We will continue to see consolidation and innovation.”
Kukutai said the CEA space will look much different in five years than it does today, and it will include a plethora of products, including fresh produce as well as plant-based foods and meat alternatives.
Though vertical farms often tout their decreased dependency on such natural resources as water and land, Ryan fears that the outsized use of electricity could be a challenge moving forward. The cost and volume of electricity consumed by an indoor vertical farm is quite significant, he said, and he expects there to be public backlash if these farms cannot become more sustainable in their energy use.
Ultimately, vertical farming will prosper if the growers can get their costs down to a level that is lower than field-grown crops, according to Soli’s Ryan. He did opine that it certainly is possible as he calculated a vertical farm utilizes only one-tenth the labor of even a greenhouse operation. Labor, of course, is a huge cost component of outdoor farming.
Soli Organic is a certified organic producer that believes the USDA organic label brings much value to the consumer. Ryan called the organic label a “strong claim” that resonates with the buying public.
Kukutai, on the other hand, isn’t convinced, arguing that the consumer has a limited knowledge of organics and believes that the buying public will react well to a product grown indoors that is pesticide free.