The Growth of Vertical Farming Brings New Questions

Vertical farming seems poised to become the next big trend in food production. Its ability to produce food without needing to rely on geography and weather, as well as a reduced requirement for skilled laborers both contribute toward the sector's rapid growth, but it is not without its risks - and it remains to be seen whether or not the entire venture will ultimately be profitable.

Vertical farming describes a modern form of agriculture in which crops are grown indoors, under artificial light and temperature conditions. In a recent analysis by Allied market research, vertical farming was projected to reach a valuation of over $12.6 billion by 2026 - a rate of growth that is frankly stunning. This is, of course, only a projection - a fancy word for a guess with a little more data backing it up. The market may be poised for such growth, but there are still significant concerns when it comes to actually turning a profit through vertical farming, and that's without going into the amount of capital involved in getting a vertical farming operation off the ground in the first place.

The nature of vertical farming is such that it requires a considerable amount of real estate, albeit that it is less about acreage and more about height. There are regions where such real estate can be obtained relatively cheaply of course, but depending on location, a facility to house the operation might be the largest up-front expense. Land purchasing aside, the other obvious upfront expense is getting the equipment necessary for a vertical farming operation. This includes everything from soil to plumbing to, perhaps most importantly, lighting.

Why is lighting so important? Well, different crops grow better under different lighting conditions, and any vertical farming operation will grow multiple kinds of crops. Planning the layout of the facility includes planning which crops and lighting solutions go in which areas. Energy costs also come into play here: the cost of keeping the literal lights on can account for up to 30% of operational costs, meaning that it is in your best interest to find the most energy-efficient lighting solution.

Selecting the crops to grow in a vertical farming operation is also one of the larger challenges involved. In order to make a decent profit, vertical farming operations need fast-growing, high-yield crops which have a higher market value. Otherwise, the costs of running the farm will outpace the return. In particular, selling popular organic crops (leafy greens and herbs in particular) is a good bet for having a profitable facility. All these factors - location, crop selection and equipment - go into whether or not a farm will fulfil the promise that so many investors see in the concept. There is a lot of interest in the sector from investors, and there is plenty of money to be made, assuming things are done correctly.

Ultimately, the next several years will determine whether or not the vertical farming sector lives up to the expectations of the various investors who are currently trumpeting its praises. As the climate shifts and reliable outdoor growing becomes less reliable as a result, it seems likely those projections will prove accurate.

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