Investors Pull Out of Vertical Farms
By: Kaydee Ambas · March 08, 2023 · Reading Time: 3 minutes
A Wilting Industry
Vertical farms presented a unique solution that answered several societal problems. Namely, how do we grow enough food to feed a growing population, while shielding it from the increase in extreme weather patterns?
The vertical farming industry emerged in response, offering high-tech solutions that involved growing produce “vertically” – i.e. grown indoors, using rising structures such as shelves, buildings, shipping containers, and even abandoned mine shafts.
Vertical farming startups raised billions in funding and promised rapid growth. But early numbers are in for many of these companies, and they’ve left investors wanting to be horizontal.
Most vertical farming startups touted high-tech solutions to help improve the farming industry and make it more efficient. A few examples include robot-powered farms to save on labor costs, using AI to monitor indoor plant conditions, or genetically-modified soil.
While these solutions were good in theory, the reality is that the profit margins on produce are simply too slim to support the high costs of high tech.
Many investors are pulling out as a result, causing many of these startups to make layoffs or shut down altogether.
Back to Horizontal Farming?
Vertical farming might still have a use. But it would most likely be in hotter parts of the world, where it’s impractical to grow crops outside. Vertical farming has found significant funding in Middle Eastern countries like Saudi Arabia and the UAE, where around 85% of food is imported.
On the other hand, the US still has one of the most abundant farming economies in the world, making it hard for vertical farms to compete.
The vertical farms that do stay in business in the US will likely have to pivot to higher-end products like berries or even marijuana, with price tags to match the high cost of growing them. For consumers who can afford a $20 tray of 11 strawberries, like high-end startup Oishii offers, vertical farming may still be the future. For the rest, farming remains horizontal.
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