Vertical farming is springing up in Amsterdam but investors remain distant

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One of the gravest problems facing humanity right now is food security. The UN says that between 720 and 811 million people faced hunger in 2020. The State of Food Security and Nutrition in the World (SOFI) report specifically details the challenge with access to fresh produce.

In order to solve this challenge, we have seen people turn to vertical farming, a practice of growing crops in vertically stacked layers. Vertical farming not only rises from the need for fresh produce and climate challenges hindering access to it, but also from the ingenuity of farmers and technologists aiming to bring technology to improve food security.

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What is vertical farming?

vertical farming
Vertical farming is an agricultural practice of growing crops in vertically stacked layers | Image Credit: DepositPhotos

Imagine you walk into an agricultural field and the first thing you will see is crops placed horizontally in multiple rows for growing. Now, if you turn this layout of crops from horizontal to vertical then you will come close to seeing the idea of vertical farming.

In simple terms, vertical farming is an agricultural practice of growing crops in vertically stacked layers. This process takes place in a controlled environment using technology such as aquaponics, hydroponics, and aeroponics, and does not make use of soil.

It is clear that the population around the world is growing but there is not much operational farmland to feed this growing population. If we don’t have land to grow crops, then the obvious thing to do would be to see how to grow fresh produce in structures such as buildings, shipping containers, tunnels, and even abandoned mine shafts.

“With the growing problem of climate change and increasing soil degradation, this challenge is only getting bigger. There is an increasing amount of land that is not suitable for traditional farming anymore, mostly in places where food production is most needed,” says Laura van de Kreeke from Chef’s Farm Team at Amsterdam-based Growy.

Origin of vertical farming

The concept of vertical farming was first pioneered by Dickson Despommier, a professor of Public and Environmental Health at Columbia University, in 1999. He challenged his students on whether food can be grown on the rooftops of New York skyscrapers.

To prove the possibility, Despommier created a concept in which a 30-story vertical farm grown by hydroponics and artificial light could feed about 50,000 people. Even though this concept never saw the daylight, it did inspire many other designs leading to vertical farms becoming a common concept.

In the past few years, we have seen governments as well as developers warm up to the idea of vertical farming. The technology-based indoor farming has been implemented in cities such as Abu Dhabi, New York, Los Angeles, Bangalore, Dubai, Beijing, Amsterdam, and others. According to one estimate, a total of $1.8B was invested into startups working on creating vertical farms between 2014 and 2020.

How does vertical farming work?

Vertical farming is definitely the answer to offering access to fresh produce to a growing population while managing challenges associated with agricultural land. It aims to provide us with more food by using less land and doing it in a sustainable way. Vertical farming achieves this by relying on three popular techniques:

  • Hydroponics: This technique refers to growing plants without soil where the roots of plants are submerged in liquid solutions containing macronutrients, such as nitrogen, phosphorus, sulphur, potassium, calcium, and magnesium, as well as trace elements, including iron, chlorine, manganese, boron, zinc, copper, and molybdenum. The technique also sees use of inert mediums such as gravel, sand, and sawdust act as soil substitutes to support the roots. This technique increases the yield per area and reduces water usage.
  • Aquaponics: By combining aquaculture (fish farming) with hydroponics, we get aquaponics. Aquaponics aims to elevate hydroponics by integrating the production of terrestrial plants with the production of aquatic organisms in a closed-loop system that mimics nature.
  • Aeroponics: The idea of aeroponics took shape from NASA’s initiative to find an efficient way to grow plants in space in the 1990s. This technique does not require any liquid or solid medium to grow plants and instead, it relies on a liquid solution with nutrients misted in air chambers where the plants are suspended. It is arguably the most sustainable soil-less growing technique and uses 90 per cent less water than other conventional techniques.
  • Controlled-environment agriculture: CEA or Controlled-environment agriculture is essentially the modification of the natural environment to increase crop yield or extend the growing season. It is hosted in enclosed environments or structures such as greenhouses or buildings, where control can be imposed on environmental factors including air, temperature, light, water, humidity, carbon dioxide, and plant nutrition.

Advantages and use of advanced technologies like AI and robotics

ECO-1-Emirates vertical farm
At 330,000sqft, Dubai is home to world’s largest vertical farm | Image Credit: Emirates

The biggest advantage of using vertical farming comes in the form of sustainability and efficiency. The arable land requirements for traditional farming are too large and can be invasive. With vertical farming, farmers can increase their yield by over ten times per acre in some cases, compared to traditional methods.

“Vertical farming will not immediately solve all food issues in the world, but it will contribute to a global solution,” says Laura van de Kreeke.

Another advantage with vertical farming comes in the form of resistance to weather. Traditional outdoor farming relies on supportive weather but vertical farming can provide fresh produce year-round at a lower cost. With extreme weather becoming prominent around the world, vertical farming becomes a viable choice.

But Laura van de Kreeke feels vertical farming is still not there in terms of achieving its core benefits like environmental conservation. The industry, however, shows great promise in growing many fresh veggies and fruits in an autonomous, controlled environment that could eventually be used to grow in every country and climate. “We are currently at the stage where we can grow leafy greens, but in the near future, we will be able to grow a bigger variety of crops. We as Growy are already looking into growing plant protein, bigger crops, and also fruits like strawberries in our farm,” she adds.

Laura van de Kreeke says, “Vertical farms already use a lot of automation technology, but we definitely see an increase in automation and AI use. We use AI and robotics to ensure steady production without human intervention. Because our farm is completely automated, from seeding to packaging, we can collect a lot of useful data and cut costs on personnel doing simple production tasks. Making the simple, time-consuming tasks of collecting data and watering, moving and checking the plants automated, leaves more time for the research.”

Challenges associated with vertical farming

The biggest challenge, according to Laura van de Kreeke, is the misconception that vertical farming is more sustainable and cheaper than greenhouses or traditional farms. The biggest issue faced by the industry is high energy use and cost, personnel costs and high investment costs.

“Although we are working very hard on green energy solutions such as solar energy and digesters, we are not there yet. Everyone is working on their own solution for the energy issue, but no one can say that they have completely tackled it. We believe we almost have a solution that makes us able to run on our energy source, but everything is still being researched and tested extensively,” she explains.

Founded in 2010 and headquartered in Amsterdam, Dutch startup Skytree is developing a decentralised direct air capture (D-DAC) technology for vertical farming to solve the challenge associated with carbon footprint.

“Vertical farms are all about minimising carbon footprint, but today they still rely heavily on CO2 in cylinders or tanks which is produced mainly as a byproduct of fossil fuels. Skytree’s decentralised direct air capture units can help close the loop,” says Max Beaumont, founder of Skytree.

“Our direct air capture technology makes it easier for vertical farms to make the switch to a cleaner and more reliable way to supply their plants with CO2. A truly circular method meeting our needs for a sustainable economy in the long term,” he adds.

Impact of vertical farming on Amsterdam’s startup ecosystem

vertical farming
Growy has joined forces with Space&Matter to build Urban Food Hub | Image Credit: Space&Matter

The Netherlands is widely considered to be the most sustainable country in the world. The Dutch government has supported initiatives by offering incentives to stimulate energy innovation and promoting use of renewable energy sources. It also works with the industry and knowledge institutions to achieve a sustainable economy.

Proliferation of vertical farming is widely seen as a feather in the cap of a sustainable economy. Ard van de Kreeke, the founder of Growy, says, “Vertical farming has gained a lot of interest over the last few years because of its promise of sustainable food production.”

However, he also cautions about the fact that vertical farms are currently not as sustainable as we think. At Growy, he says they are working hard on creating a completely circular and sustainable farm.

“Local and sustainable food production have gained a lot of interest and is also something that aligns well with Amsterdam’s policies on food production and sustainability,” says Ard.

While the interest in sustainability and vertical farming continues to grow, it is not necessarily helping with funding. Ard says raising funds is “still very difficult” and the sustainability part has not driven investors to invest. The investment climate has especially turned cold for startups and scaleups in the last few months.

Even though a lot of investors speak about sustainability, it is not necessarily showing in their actions or investment. Ard says investors want to see a ready-made system with proven technology which startups like Growy cannot provide yet. He wonders how the venture capital world has changed when one could raise money with just an idea a few years ago.

According to Dealroom, Amsterdam has the second most valued tech ecosystem in Europe but not everyone is enjoying the benefits. Ard says it has been difficult to raise any big investments especially in the Netherlands and especially as a vertical farm. “Raising either Series A or even Series B is very hard at the moment, even if you have more than an idea,” he says with worry.

In simple terms, the introduction of vertical farming and the progress made in the field has not accelerated investment in the space. Ard says they pitch potential investors with Climate Performance Potential (CPP) and even present the Sustainable Development Goals that Growy aims to achieve.

While the future of the European startup ecosystem is portrayed as green and sustainable, Ard doesn’t feel that to be real. “No real impact investors are also investing as bankers. It’s supposed to be green but there’s only money going to already proven, existing systems and companies,” he says.

Ard says, “We definitely see a green future ahead, but that is mostly because it will be out of necessity in a few years. The number of green companies will grow exponentially but VCs are not helping (yet). Even impact investors are still greenwashing, so it will be a while before most companies are actually sustainable.”

As an entrepreneur, Ard sees a need for greener and impact investments to really help accelerate adoption of vertical farming as a venture idea. He says lack of funding is a deterrent for entrepreneurs from even starting. “By bringing more attention and helping start-ups with funding, we think that vertical farming will gain more interest by people outside of the urban farming industry,” he says.

What is the future of vertical farming?

Vertical farming, like Laura van de Kreeke explained, is not the direct solution that people conceive it to be. However, the end goal of this technique is to grow a fresh, delicious, and pesticide-free assortment of fresh fruits and veggies, and therefore take some pressure off the traditional farms and help restore the soil and surrounding nature’s health.

“Vertical farms will not replace traditional farms, but instead, help lighten their heavy load of producing enough food in an increasingly difficult climate. Even though we’re not there yet, we see a bright future ahead for the vertical farming industry,” adds Laura van de Kreeke.

Vertical farms are also acting as a beacon to the growth of sustainable startups in Amsterdam. “I think they are important in helping Amsterdam become more sustainable and make its inhabitants aware of the food chain. They can also be inspiring to other entrepreneurs to start their own sustainable startups,” says Laura van de Kreeke.

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