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Significant growth, ample opportunities for CEA

By
Tim Linden

A trio of operators participating in the controlled environment agriculture space reported a bright future with potential for significant growth, especially in the organic category, at a seminar held during the recent Organic Growers Summit.

The Monterey, CA event was held Nov. 30-Dec. 1 with the session on CEA moderated by Tom Stenzel, who was recently hired as executive director of the CEA Food Safety Coalition. The panel consisted of CEO Arama Kukutai of Plenty, Robinson Fresh Director of Supply Molly Tabron and Matt Ryan, CEO of Soli Organic, which was formerly Shenandoah Growers.

Stenzel led the group through a series of questions that delved into this burgeoning growing option and its potential for growth. He first explained that concept as just another way to control the many variables involved in producing crops. He said every grower must deal with many obstacles, and indoor farming allows growers to reduce that list of negative impacts by regulating the environment, greatly reducing pest pressure and picking their growing medium.

Ryan agreed with this characterization, noting that Soli Organic grows both indoors and outdoors with the goal of converting much of its open-field production to vertical farming because they can do a better job on a plethora of crops. During the session, he revealed that some herbs, which are the specialty of his company, actually do better outside such as rosemary, bay leaves and lemon grass. But for so many other crops, indoor farming offers the opportunity to deliver better products at a better price. He said this is especially true with organics as the company “fundamentally believes we have to deliver organics at a mainstream price” to truly drive increased consumption.

Plenty has made quite the splash financially as it has attracted many investors to the indoor farming space and has also attracted mainstream grower-shippers and retailers, including Driscoll’s and Walmart. The company has entered into an agreement with the large berry supplier to develop vertical farms for that crop category, and it is also working with the nation’s largest retailer to locate indoor farms closer to where the end users live.

Kukutai said much work needs to be done in the vertical farming space for it to reach its potential. He revealed that Plenty is spending millions of dollars and countless research hours trying to master the genetics of indoor growing. He said baby greens, for example, are relatively easy to grow, but there is lots of work to do in the plant sciences to bring the technology to vining crops, tomatoes, raspberries and even kiwifruit. Any high-value crop, he believes, is a candidate for vertical farming. Kukutai said the research and development will take years, but he is convinced having an assortment of products is important.

Tabron said Robinson Fresh is interested in the concept as an expert in the distribution of products. She agreed there is a “ton of money in the space” and that most likely means there will be vertical farms built and products sold. But what is lacking in the vertical space is the expertise involved in moving produce through the supply chain. “Just because you can grow it, doesn’t mean you can sell it,” she said, noting that some vertical farm operators have proposed creating one-crop farms of items that just don’t sell in huge quantities. That won’t work, she opined.

She said CEA can work if the new farming companies can unlock what consumers want and do it in an economically feasible way. Tabron offered there are “lots of people entering the space; more than will survive.” She added the winners will be those who focus on the consumer and can produce at the lowest cost. “It always comes down to cost,” she said. “We will continue to see consolidation and innovation.”

When asked to look down the road five years, Kukutai said that is an eon in terms of time in the vertical farm space. It is currently moving at warp seed and he indicated it will look much different in half a decade. He believes there is great potential for the concept, but it doesn’t all revolve around fresh produce. Also in the space are plant-based foods and meat alternatives.

Ryan brought a new challenge to the discussion and that’s the cost and amount of electricity consumed to run an indoor vertical farm. He expects there to be a backlash among the consuming public if these farms cannot become more sustainable in their energy use.  He further opined that indoor farming will not prosper if the growers can’t get their costs down to a level that is lower than field-grown crops. He said the quality has to be there, but indicated being a low cost producer has to be in the equation. He did opine that it certainly is possible as he claims a vertical farm utilizes only one-tenth the labor of even a greenhouse operation.

While Ryan believes the USDA certified organic label is golden and connotes so much value to the consumer, Kukutai isn’t convinced of that.  Currently, Plenty is focused on production and plant science and is not concentrating on marketing organic crops from Plenty facilities. “Don’t overestimate what consumers know about organics,” he said.

Plenty believes marketing a clean, pesticide free product with its own label will be just as effective. He does admit there will need to be tons of work to educate the public about the value of vertical farming, includes all its value propositions from pesticide use to environmentally friendly attributes, such as limited water and land use.

Tim Linden

Tim Linden

About Tim Linden  |  email

Tim Linden grew up in a produce family as both his father and grandfather spent their business careers on the wholesale terminal markets in San Francisco and Los Angeles.

Tim graduated from San Diego State University in 1974 with a degree in journalism. Shortly thereafter he began his career at The Packer where he stayed for eight years, leaving in 1983 to join Western Growers as editor of its monthly magazine. In 1986, Tim launched Champ Publishing as an agricultural publishing specialty company.

Today he is a contract publisher for several trade associations and writes extensively on all aspects of the produce business. He began writing for The Produce News in 1997, and currently wears the title of Editor at Large.

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