Let's not make this another depressing story about the hardship the vertical farming market has faced since the beginning of 2022. It's time to dive into 2023 trends and share some success stories on the way.
Second-generation farmers
It seems that second-generation farmers have learned from the mistakes of larger corporations, effectively minimizing the risks encountered by their predecessors. The only viable solution is to either pivot business models or strengthen them by diversifying sales channels, entering either B2B or B2C markets to spread risk. However, this is easier said than done, as B2C ventures may require more investment in marketing, logistics, product diversification, etc., which comes at a price.
In terms of crops, the primary focus continues to be on lettuce, herbs, and microgreens. Could this be because these crops are 'easier' to cultivate successfully compared to fruiting crops? Additionally, producing them at scale makes it easier to secure long-term deals with retailers.
Judy and John Cari, founders of AllWell Greens
CEA and retail
When dealing with retailers in rigid regions like Scandinavia and North America, numerous new deals have been closed with vertical farms. This is in response to the growing challenges that open-field growers are facing due to climate change. Consequently, many retailers found themselves with empty shelves throughout the year. Yet, in other parts of Europe, we've seen numerous partnerships playing out for mixed salads, herbs, and microgreens, meaning that there is a demand for these products.
Indoor growers, including greenhouses and vertical farms, have emerged as a solution to address these issues in the future. However, this comes at a price. The question arises: are consumers willing to pay more for a head of lettuce or a bunch of tomatoes when these products are available year-round? This is a dilemma that retailers will have to navigate.
Growup FARM's products ready for B2B customers
Crop trends
When it comes to crop variety, changes have been observed in the market, particularly in the use of vertical farming in the Benelux region. Vertical farming is still widely adopted for cultivating young plants, but it seems to be a growing focal point for European and North American growers. The reason for this shift is that it is sometimes deemed too expensive for the cultivation of an entire product.
A term fitting for the Canadian and American vertical farming markets is 'risk-taking' as they continually push the growing envelope. Berries remain the center of attention for retailers, partnerships, and research projects introduced in the past year. The question arises: why are North Americans so inclined towards this so-called 'cash crop'? Perhaps indoor prices can outperform import prices through consistency, quality, and extended shelf life.
Mushrooms are still going strong as chefs and consumers seem to have quite the appetite for 'regular' and rare varieties of this product. We've seen investments coming in for new facilities, meat replacements and processed products. From smaller to larger facilities, mushroom producers have definitely seen a steady upward trend for their products.
Vaxa's vertical farm in Iceland
Global new projects
Southeast Asia has significantly led the way in new projects set to be realized in 2024 or the following year. Some of these projects are integrated with shopping malls, residential buildings, or expansion schemes from existing companies. Following closely, the Middle East has been making significant strides in constructing large facilities to enhance national food security.
In North America and Europe, various research-based fundings have been secured to explore the viability of staple crops, fruiting crops such as berries, synergies in vertical farming and renewables, and the overall potential of Controlled Environment Agriculture (CEA).
Lithuania's latest vertical farm by Leafood and YesHealth Group
Upgrade or downgrade?
A notable trend that has surfaced frequently is the reassessment of technologies or techniques employed within vertical farms. Growers have come to realize that not every innovation is an added benefit; some may prove to be a burden, particularly in terms of operational expenses (OpEx). Depending on their size, some growers have optimized their farms by eliminating excess technology, such as robots and 'AI' sensors, and reverting to more traditional practices overseen by head growers.
However, the level of automation in a farm remains a topic of ongoing discussion, given the multitude of factors to consider. Some believe that optimization can be achieved through partial automation, such as packaging and harvesting machines. On the other hand, others argue that quality is best ensured through human intervention, as manual labor can provide that final check before products reach the plates of consumers.
Let's see what 2024 has to offer…