Brief - The Hustle

Cities are turning to vertical farms to keep their supply chains upright

Written by Michael Waters | Apr 23, 2020 9:25:33 AM

If the last few weeks are any indication, an algorithm may soon be growing your green beans.

As urban grocery stores struggle to stock enough produce for their customers, they’re finding a seedling of hope in vertical farms — big, indoor facilities that cultivate plants using precision-controlled temperatures, lighting, and water supplies.

According to Axios, demand is blossoming for vertical farm startups. Companies like Bowery Farming have seen 2x the business, and they’re racing to open up new facilities near big cities.

The problem isn’t a cabbage shortage

There’s a disconnect here: Vertical farms are spreading their roots right as old-school farmers, facing lowered demand, are letting billions of dollars of produce rot on their land.

The produce is there — urban groceries just aren’t getting it. So what’s going on?

It’s a tale of rotten supply chains. The trucking industry is overwhelmed. Farmers typically split their crops between restaurants and grocery stores. With the restaurant side of the supply chain shut down, it’s difficult — and expensive — to pivot all the way into the other.

Vertical farms promise an answer: Crops grown in big cities, right near the stores that need them most.

But maybe you should hold your seed funding a little longer

Many believe that vertical farming is the future — especially in a health crisis. The few employees needed to maintain vertical farms mean fewer concerns about spreading disease.

But the industry needs stronger financial roots if it’s ever going to be ready for harvest. The upfront costs of vertical farms are immense.

You need to pay for LED lights, ventilation, temperature controls, and the 24/7 power costs are immense. Many vertical farms are opening, but very few are actually profitable.