US: Indoor farming gains interest from retailers

As a testament to the sunny future of the agtech niche, the U.S. Department of Agriculture started a new Office of Urban Agriculture and Innovative Production last year. More than $3 million in initial grants were made available through that department in 2020.

Several grocers are already buying into this type of produce supply. Earlier this year, The Kroger Co., based in Cincinnati, began sourcing fresh produce from Hamilton, Ohio-based indoor grower 80 Acres Farms for the retailer’s stores in Ohio, Indiana, and Kentucky.  Consumers have expressed their opinions about produce grown indoors. According to the 2021 “Power of Produce” report published by Arlington, Va.-based FMI, 43% of shoppers don’t have a preference for produce coming from indoor versus outdoor farms.

One of the biggest drivers of the move to produce more food in indoor-farming facilities is sustainability. From an environmental standpoint, indoor-grown produce may be part choice, part necessity, depending on the area and the circumstances. On the business side, sustainability is a central part of many CPGs’ and grocers’ corporate- responsibility platforms as they pledge to reduce their use of resources like water and energy. Many manufacturers and retailers have also revealed goals to cut down on or eliminate the use of pesticides in their products.  

In addition to the pursuit of sustainable growing practices, other factors are contributing to interest in this method of agriculture. The need to shore up food security in the face of a booming global population and the problem of urban food deserts are notable catalysts. So is consumers’ penchant for eating more fresh plant-based foods, and foods grown in a more sustainable way.

There are additional practical reasons for sourcing produce from indoor growers. “Right now, retailers want consistency in price, quality, and delivery. At its core, we are delivering consistency,” notes Rosenberg, citing other profit-driven benefits such as reduced shrink and spoilage.

Grocers can merchandise indoor-farmed produce in a creative way to distinguish their offerings and connect with shoppers. “We’ve worked in a process of co-creating with retailers,” observes AeroFarms’ Rosenberg. “It is an opportunity to deliver innovation and excitement for an exciting category.”

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