This article is first because I firmly believe labor is the biggest challenge we face today, as well as for the next 10 years in controlled environment agriculture (CEA), and in commercial horticulture and general production agriculture.

Victor Loaiza Mejia posted the following on LinkedIn on August 10, 2023: 

“I disagree with your assessment of the lack of ‘grower or production leadership’. Traditionally the greenhouse industry has had a legacy program (like Ivy League College) that benefited growers that come from outside the NAFTA countries. The local younger generation of growers and operators need opportunities to grow into these positions. They need mentoring and support.

“My vision of protected agriculture is more regional (USA, Canada, Mexico) than only thinking about the USA. As you mentioned in the article, the growing surface has decreased in the US but has increased in Mexico for example. The oldest greenhouse companies operating in the US and Canada are now some of the largest tomato marketers in the USA, purchasing greenhouse produce in Mexico at a very large scale, without really having ‘skin in the game.’ I see this as a big entry barrier for new companies based in the USA.

“The opportunity for small greenhouse companies is to resist the push to buy the newest closed greenhouse and buy only the necessary technology and develop their local market. Creating Cooperatives style of relationships with other small growers might be beneficial.”

Well, Victor, yes. That’s really all I have to say. Yes, I agree. I should have and could have selected my words better, while also providing more details behind my statement. If I would have, you would have seen that we are saying almost the same thing.

Now that we officially agree, let’s break this conversation down into the realities that drive the factors you highlight.

Where did the head growers, production managers, and vice presidents of operations come from in the U.S. controlled environment agriculture industry?  

The U.S. greenhouse vegetable industry started in the early to mid 1980s. (The Canadian greenhouse industry started a few years prior, and the Mexican greenhouse industry began about 10 years later.) Initially, the industry was almost 100% focused on growing tomatoes. Much of the industry was built off importing not only Dutch greenhouse technology, but also Dutch growers who were equipped with the training and knowledge needed to operate this new technology.  

As years went on, the U.S. continued to attract growers from the Netherlands, as well as nearby areas such as the United Kingdom and Belgium, which also had well-established glasshouse industries. Many of these early immigrants were well experienced with some education. They were young males eager to make their mark on a new industry in a new world thought of as “the land of opportunity.”

Now these same individuals have been in our small industry for 30-40 years. They are getting close to retirement, but many still work. This is an important part of Victor’s criticism and if you compare it with the graph below, you see why they have aggressively held on to positions of power.  

The industry does not have enough companies that can pay them the money they want or to promote others into key positions, while protecting their own careers and those of their friends. (Nothing new here. This occurs in all industries. Normally, industries have more companies and the impact is not so drastic.)

What about the other skilled labor needed to profitably operate a greenhouse vegetable facility?

Greenhouses require lots of skilled labor to operate successfully, especially when the operations are anywhere from 10-200 acres. You need IPM managers, labor managers, assistant growers, junior growers, packhouse managers, logistics managers and more. The list goes on and on. 

So where did these people come from? In many or most cases, Mexico. In the 1990s, the largest vegetable greenhouses in the U.S. were in southwestern Texas and southeastern Arizona — a short drive from the U.S.-Mexico border. This attracted young, educated Mexican (again mainly) men to jobs that paid well, provided year-round employment (not always the case in agriculture) and opportunities to work in a highly technical field that showed promise for advancement.

Now fast forward 30 years. These guys are ready and prepared to take over, but there are not enough opportunities for everyone to be in charge. This also means that as new companies open, we have a lack of ongoing opportunities to attract talent and give individuals chances to grow and develop the skills needed to run smaller or more niche organizations.

A change in politics. A change in opportunities. H-2A.

Simultaneously, we have seen a shift in our ability to bring labor into the United States. U.S.-based agriculture businesses rely heavily on worker visa programs to bring in groups of individuals to work jobs not often desired by locally available workers. The H-2A program allows U.S. employers or U.S. agents who meet specific regulatory requirements to bring foreign nationals to the United States to fill temporary agricultural jobs. (The word “temporary” is key!)  But, this program and our attitude toward migrant workers has shifted significantly over the past 30 years.  

According to the USDA, “Hired farmworkers make up less than 1 percent of all U.S. wage and salary workers, but they play an essential role in U.S. agriculture. According to data from the 2017 Census of Agriculture, wages and salaries plus contract labor costs represented just 12 percent of production expenses for all farms, but 43 percent for greenhouse and nursery operations and 39 percent for fruit and tree nut operations.”

The tightening of our southern border means that we rely on the H-2A program more than ever.  According to a July 2023 article in NPR, “The number of guest worker visas issued each year has more than quadrupled over the past decade. But the program is rife with labor rights violations, and farmers who have come to depend on it don’t love it, either.”

As I stated before, U.S.-based greenhouse producers are competing directly with Canadian greenhouse growers, as well as Mexican greenhouse producers, for consumers’ wallets in produce aisles across the United States. This means, as the American portion of the greenhouse-grown industry, we need to be conscious of all costs (of which labor is a significant portion). It is safe to say that we have learned and can confirm that locally available labor is not as efficient as the labor we get through worker visa programs. 

Why is local labor not as efficient as our immigrant workforce?

I will not even attempt to answer this question. But, what I can report is that through interviews with major greenhouse tomato growing operations, it is estimated that you need 3-4 times the amount of local labor as you do immigrant, migrant or visa workers. (This number seems true regardless of pay and benefits, based on information we received from the recently announced bankrupt company AppHarvest.) 

Conversations with on-site labor managers makes me believe that one main reason this perception exists is because this talent pool is seen as an unskilled labor force. Labor managers all agree that is far from the truth. The truth is, many of these individuals are skilled based on experience gained at other farms. These skills make them eager to be employed based on “production output,” as they recognize that their production compensation will far out pace any hourly rate that they might be paid.

According to USDA statistics from October 2022, the H2A program has expanded since 2005. But has it expanded enough to keep up with the demand? Especially the demand of the controlled environment agriculture sector?  

Even if we could keep up with demand in the greenhouse (or vertical farm), these programs do not allow us to address the issue of finding talented operational managers with experience to run the facility based on the current glass ceilings that appear to be in place.

So questions around labor, management and leadership remain for the U.S.-based controlled environment agriculture industry. From finding the experienced staff needed to operate an efficient greenhouse to providing the most talented in that group the opportunity to advance and excel. 

And Victor, my response to your comment remains “yes.” Now my question back to you is, how will you and your contemporaries lead our industry in change?

Urban Ag News would love to hear from you.  Please let us know your thoughts and comments.

OptimIA project members are sharing their indoor farm research findings with the controlled environment agriculture industry and the public through a variety of educational and informational outlets.

The indoor farm industry is very fluid right now with changes occurring on a weekly basis. New companies are starting, some are leaving the industry, while others continue to receive millions of investor dollars to expand their operations. While financial stability is a key factor in the sustainability of some of these businesses, the need for production- and economic-related information is crucial to profitably producing quality leafy greens crops. Those with the financial backing have been able to develop and implement their own technology to produce indoor crops. New indoor farm growers, existing operations with limited financial resources, and even large-scale farms already in operation continue to look for sound production- and economic-related information that they can apply to their businesses.

Improving the indoor farm industry

In 2015 when members of the OptimIA project team initially submitted a USDA Specialty Crop Research Initiative grant proposal for funding, the primary focus of their research was on the production of leafy greens in indoor farms, but the focal points were moderately diverse.

“We went through the proposal submission process for several years before USDA approved the grant for the OptimIA project,” said Erik Runkle, who is project director and a horticulture professor at Michigan State University. “The proposal that was finally approved was to study the aerial environment as well as economics for leafy greens grown indoors. The aerial environment refers to air circulation, humidity, carbon dioxide concentration, light and temperature.”

One of the major objectives of the OptimIA project was to focus on industry outreach.

“The outreach program objective was to engage with stakeholders in the indoor vertical farming community,” Runkle said. “Prior to submitting the proposal to USDA, the project team members worked with an industry advisory committee and stakeholders from the indoor farm community.”

OptimIA team member Chieri Kubota, who is a professor and director of Ohio Controlled Environment Agriculture Center (OHCEAC) at Ohio State University, said proposals submitted for USDA Specialty Crop Research Initiative (SCRI) grants usually require both a strong research and outreach focus.

“USDA SCRI-funded projects focus on problem solving to move a specific industry forward,” Kubota said. “Not only is the research important, but also implementation of research findings in the industry sector. This is basically outreach extension. The proposals cannot just focus on research alone. It is important to have strong outreach activities.”

Multiple outreach activities, educational materials

Even before the grant proposal was submitted to USDA, OptimIA team members had already begun interacting with members of the indoor farm industry.

“We had been engaging stakeholders as a sort of proposal activities,” Kubota said. “We started doing the Indoor Ag Science Café almost a year in advance of submitting the grant funding proposal. That way we were engaging our stakeholders trying to develop a community educational platform that was a main activity. Indoor farm growers and equipment manufacturers are the general target audience of the project’s research. Team members are also constantly answering questions from growers and venture capital companies regarding indoor vertical farms.”

The OptimIA website includes a variety of educational materials including Research Highlights articles , scientific research journal publications and trade magazine articles, including Urban Ag News.

The OptimIA team members have also shared information from their research at various scientific- and grower-focused industry conferences. In July several members shared their research findings at Cultivate’23 during an educational workshop on the Essentials of Hydroponics Production: A tHRIve Symposium.

Team members have also been developing online educational materials under OptimIA University, which include YouTube videos.

“We have posted several lectures with topics based on discussions among the project members,” Kubota said. “The concept of OptimIA University is free access to whoever wants to use the online materials. The grower sector is the targeted audience.

“Rather than offering courses for a fee, we decided to make the information available to everyone, including growers and other companies that want to use it to train their employees. It consists of YouTube video lectures with pdf slides and additional reading materials. The OptimIA University website is about half completed and there are other course lectures still pending.”

The OptimIA researchers also hold an annual invitation-only stakeholder meeting.

“The annual meetings are specifically for our advisory committee which gives team members an opportunity to share information about the research in progress and that has been recently completed,” Runkle said. “It’s also an opportunity for the committee members to provide feedback and guide future project activity.

“We also invite growers and company representatives who we have worked with in some capacity on research projects. This includes growers with whom we may have conducted research trials or representatives from companies that have provided us with equipment or supplies used in our research.”

Educating the public

Even though the primary focus of the OptimIA project outreach program is members of the indoor farm industry, the team members also extend their educational activities to the general public.

“OptimIA researchers at Ohio State participated in the COSI Science Festival organized by the Columbus Museum of Science and Industry,” Kubota said. “This is a community STEM educational event in which companies and scientists participate and showcase their technologies and science. It is held in May over multiple days. We participated as an OptimIA group. We showed how leafy greens can be produced using different hydroponic systems with LED lights. OptimIA team members at Michigan State University and at University of Arizona have also done similar STEM programs related to hydroponic crop production for the public.”

For more: Erik Runkle, Michigan State University, Department of Horticulture; runkleer@msu.edu; https://www.canr.msu.edu/people/dr_erik_runkle; https://www.canr.msu.edu/profiles/dr_erik_runkle/cell. Chieri Kubota, Ohio State University, Department of Horticulture and Crop Science; kubota.10@osu.edu; https://hcs.osu.edu/our-people/dr-chieri-kubota; https://ohceac.osu.edu/. OptimIA, https://www.scri-optimia.org/.

This article is property of Urban Ag News and was written by David Kuack, a freelance technical writer in Fort Worth, Texas.

Cannabis water use efficiency (WUE) refers to the amount of water a cannabis plant uses to produce a certain amount of biomass or yield. Supplemental light, such as artificial lighting in indoor cultivation, can have significant effects on a plant’s water use efficiency. 

Here’s how:

1. **Increased Photosynthesis:** Supplemental light, especially in indoor growing environments, can enhance photosynthesis in cannabis plants. When plants can capture more light energy, they can convert more carbon dioxide and water into sugars and other organic compounds. This increased photosynthetic activity can potentially lead to improved water use efficiency, as more water is used for productive processes.

2. **Transpiration and Stomatal Regulation:** Transpiration is the process by which water is released from a plant’s leaves through small openings called stomata. These openings also allow for the exchange of gasses, including carbon dioxide and oxygen. When more light is available, plants often open their stomata wider to take in more carbon dioxide, which can lead to increased water loss through transpiration. This could potentially decrease water use efficiency if not properly managed.

3. **Optimal Lighting Management:** To maximize water use efficiency under supplemental light, it’s important to manage light levels effectively. Providing the right amount of light for the growth stage of the cannabis plant can help maintain a balance between photosynthesis and transpiration. Using light intensity and duration strategies, growers can optimize the plant’s ability to produce energy while minimizing excessive water loss.

4. **Growing Medium and Watering Techniques:** The choice of growing medium (soil, coco coir, hydroponics, etc.) and the watering techniques employed can also influence cannabis water use efficiency. Proper substrate choice and irrigation practices can help regulate water availability to the plant roots, preventing both water stress and waterlogging — both of which can impact WUE.

5. **Genetics and Environmental Factors:** Cannabis cultivars vary in their response to light intensity and other environmental factors. Some strains may exhibit better water use efficiency under supplemental light compared to others. Additionally, environmental conditions such as temperature, humidity, and CO₂ levels can also influence water use efficiency.

To push these limits, Callado and Hernandez regulated and analyzed the quantity and demand of resources and plant growth factors on an ongoing basis. They added light and water-control and measuring capabilities to every plot in the greenhouse, in addition to measuring temperature and evapotranspiration. 

As shown in Figure 1, the cannabis crops were grown under four light levels using two Current dimmable fixtures per plot supplementing sunlight. The L1000 PPB lighting fixtures delivered uniform supplemental light intensities of 150, 300, 500, and 700 μmol m⁻² s⁻¹ for 18 hours, while the Daily Light Integral (DLI) from the sun and LEDs were on average around 18, 30, 40, and 52 mol m⁻² d^-1. However, they present preliminary results for the three highest light levels. 

Moreover, the fertigation system was triggered independently at each plot when the pots’ water container capacities were 80%. This maintained consistent water and nutrient levels in pots regardless of the crop growth rates. Finally, the water use was quantified with load cells (scales) under the plants.

The Results and Conclusions

It’s easy to conclude from known knowledge that the impact of supplemental light on cannabis water use efficiency can be complex and depends on various factors, including light intensity, duration, genetics, and environmental conditions. Proper management of these factors, along with optimized growing practices, can help improve water use efficiency in cannabis cultivation. 

As the cannabis industry continues to evolve, research and experimentation in this area will provide more insights into how to achieve the best water use efficiency outcomes.

The results from Callado and Hernandez suggest that increasing the light amount not only increases the number of branches or cuttings per plant but also could increase the water demand (Figure 2b) and water-use efficiency to produce cuttings (less water per cutting) (Figure 2b). 

In other words, plants grown under an average DLI of 30 mol m^-2 d^-1 for 21 days produced close to 29 cuttings per plant, while plants grown at 52 mol m^-2 d^-1 produced 47 cuttings per plant from new secondary branches. 

Furthermore, plants grown under 30 mol m^-2 d^-1 produced 2.5 cuttings per every liter of water, while plants grown under 52 mol m^-2 d^-1 produced 4.3 cuttings per the same liter of water. This means the crops were more efficient at transforming water into branches under higher light intensities.

So how does this impact commercial growers?

The current research highlights the ability of a cannabis crop to use higher light levels to increase yield and water-use efficiency (higher yield per liter of water). The water-use efficiency for cutting production went from 2.5 to 4.3 cuttings per liter of evapotranspirated water when growing plants under 30 versus 52 moles of light per day, respectively. This would mean that to produce 100 cuttings using 52 moles of light, growers needed 23 liters of water instead of 40 liters under 30 moles of light. 

Figure 1. The top-left picture shows the experimental layout and greenhouse with two L1000 PPB fixtures at each plot or light treatment area (12 plots in total). The top-right picture shows a plot sensor that measures light from the two LED fixtures and the sun. The bottom pictures and arrows represent typical cannabis flower and plant production cycles.

Figure 2 shows the number of secondary branches or cuttings (a) water use per plant, (b) water-use efficiency (branches or cuttings per liter of water) and (c) under three light levels (30, 40, and 52 mol m⁻²) using LED lighting in addition to the sunlight.

To see other research from Hernandez and Callado, please follow this link:  www.gecurrent.com/eu-en/inspiration/researching-the-impact-of-supplemental-lighting-on-cannabis-production

OptimIA researchers are using crop modeling to identify the most favorable environmental parameters for growth and yield of indoor farm lettuce crops and how to prevent tipburn.

One of the research objectives of the OptimIA project, which is being funded by USDA to the tune of $2.4 million, is to study the aerial environment for producing indoor leafy greens. The aerial environment refers to air circulation, humidity, carbon dioxide concentration, light intensity, and temperature. Prior to preparing the project proposal, members of the OptimIA team surveyed stakeholders of the indoor farm industry to identify the challenges and needs of the industry.

“There was a lot of feedback related to environmental parameters, especially airflow,” said Murat Kacira, an OptimIA team member who is director of Controlled Environment Agriculture Center and professor in the Biosystems Engineering Department at the University of Arizona. “The indoor farm industry had a real need for optimizing the environmental variables related to light, temperature, humidity management and control. Leafy greens growers wanted to be able to understand plant growth, quantify the plant response, yield, as well as the quality attributes under various environmental conditions.”

Crop modeling predictions, potential

Kacira explains crop modeling is simply crop growth and yield prediction.

“Given setpoints for air temperature, photosynthetic active radiation, humidity, carbon dioxide enrichment, we were able to model crop growth and predict the kilograms or grams of lettuce yield on an hourly or daily basis and also at the end of the production cycle,” he said.

Kacira’s lab used modeling to focus on plant growth and yield predictions for lettuce in indoor vertical farms considering environmental variables, including temperature, humidity, carbon dioxide level and light intensity.

“Considering the co-optimization of different environmental variables, there are many combinations of those setpoints that are possible,” he said. “It takes a lot of time and effort to study all those combinations. A model we did was focused on plant growth and yield prediction for growing lettuce in indoor vertical farms considering environmental variables. Using modeling can help to narrow down the combinations or the possibilities that can occur.

Another modeling study enabled Kacira to identify the possibility of dynamic carbon dioxide enrichment.

“We looked at whether carbon dioxide enrichment should be done for the full production cycle from transplanting to little leaf harvest or whether it should be done during different phases of production leading to savings either for electrical energy or carbon dioxide use,” he said. “Also, we considered how carbon dioxide enrichment and control would be incorporated with lighting controls. For example, can the light be dimmed while increasing the carbon dioxide level to achieve a similar yield outcome, but with a control strategy enabling electrical energy savings during production.”

Determining best airflow distribution

Kacira is also using modeling and computer simulations to study airflow and airflow uniformity to design alternative air distribution systems to improve aerial environment uniformity and to prevent tipburn in lettuce crops.

“Early on we used computational fluid dynamics (CFD) space simulation and modeling to study airflow,” he said. “We looked at some existing air distribution systems to understand what would be the environmental uniformity and aerodynamics in indoor vertical farms. Then we studied what-if scenarios. We developed design alternatives that can deliver optimal growing conditions with improved aerial environment uniformity and help prevent lettuce tipburn.

“Our CFD simulations and experimental studies confirmed that vertical airflow compared to horizontal airflow was more effective reducing aerodynamic resistance with improved airflow and transpiration, thus preventing tipburn in lettuce.”

Some of the outcomes determined by Kacira and his team have been presented to OptimIA stakeholders and CEA industry members through seminars, webinars and research and trade publications. Kacira will continue using computer simulations, modeling, and experimental studies to design and test more effective localized air-distribution methods, environmental monitoring, and control strategies for indoor vertical farms.

Production techniques for preventing tipburn

Chieri Kubota, who is a member of the OptimIA team and professor and director of the Ohio Controlled Environment Agriculture Center at Ohio State University, and graduate student John Ertle studied various techniques for reducing or preventing tipburn. These techniques have application to lettuce crops produced in indoor farms and greenhouses.

“Growers can reduce the light intensity at the end of the production cycle to mitigate the risk of tipburn,” Kubota said. “If growers want to reduce tipburn and they can tolerate reduced yields, they can lower the light intensity towards the end of the production cycle.

“For example, when the daily light integral (DLI) was reduced by 50 percent for the final 12 days of production (out of 28 days), the incidence of tipburn can be largely reduced for cultivars sensitive to tipburn-inducing conditions. However, this approach reduces the yield and likely the quality of lettuce, while reducing the loss by tipburn. Therefore, efficacy of this approach is dependent on the cultivars and their growing conditions. More research needs to be done to refine this approach.”

Another technique growers can use to prevent tipburn is to stop growing lettuce before it enters the final 1½ weeks of the six-week growing period. This is what many growers are doing because they can’t take the risk of tipburn occurring. Plants are being harvested at this young stage.

Among the techniques that Kubota and Ertle examined, they found that the most effective in preventing tipburn was using vertical airflow fans. This technique was originally discovered by a research group at University of Tokyo in the 1990s and implemented into greenhouse hydroponics at Cornell University.

“We confirmed that when vertical airflow is applied under conditions that highly favor tipburn induction, tipburn can be prevented very effectively,” Kubota said. “We created an environment based on our previous knowledge which always induces tipburn. We confirmed the use of vertical airflow fans reduces tipburn.”

For more: Murat Kacira, University of Arizona, Controlled Environment Agriculture Center; mkacira@arizona.edu; http://ceac.arizona.edu/.

Chieri Kubota, Ohio State University, Department of Horticulture and Crop Science; kubota.10@osu.edu; https://hcs.osu.edu/our-people/dr-chieri-kubota; https://ohceac.osu.edu/. OptimIA, https://www.scri-optimia.org/.

This article is property of Urban Ag News and was written by David Kuack, a freelance technical writer in Fort Worth, Texas.

OptimIA at Cultivate’23

If you are attending this year’s Cultivate’23, July 15-18 in Columbus, Ohio, you have the opportunity to hear OptimiA researchers, including Murat Kacira and Chieri Kubota, discuss some of the findings of their research. They will be speaking during the Essentials of Hydroponics Production – a tHRIve Symposium on Saturday, July 15 from 8-11 a.m.

The U.S. controlled environment agriculture (CEA) industry received lots of publicity over the past 10 years. From interviews on CNBC to articles in Forbes, investors and the general business community found interest in an industry that seemed new despite the fact that it was anything but.  

(If you are interested in the definition of and more information on the controlled environment agriculture and the indoor ag tech industry, please click here.)  

This new interest led to substantial capital invested into greenhouses, vertical farms, and other companies supporting the commercial ag-tech and horticulture industry. All this “noise” made it hard to discern what was real, hype or fabricated by overly creative (yet inspiring) pitch decks.

From this point forward, we must focus on a reset of known information. One that clarifies the reality of our U.S.-based commercial food producing horticulture market. This reset must take into account the benefits of all the money invested between 2017-2022 that led to building new farms.  

More importantly, it must encourage people, investors and business innovators to continue focusing on the benefits (mostly to growers or farmers) of our small but still-growing controlled environment agriculture industry.  

Note: The following information mentions ornamental and cannabis production because these segments contribute to our industry. However, they are not often included in the definition of controlled environment agriculture, indoor ag or vertical farming.

Industry Realities

Let us start with a handful of observations that you are free to comment on below.  We will do our best to respond as quickly as possible.

1) The cannabis industry began its path to legalization in 1996 when California legalized medical marijuana. Since then, 40 states followed California in legalizing medicinal use. But the real industry boom began in 2012 when Colorado and Washington legalized recreational use of cannabis.  

As of June 2023, 23 states have legalized adult cannabis use. This rapid growth impacted all commercial horticulture because growing cannabis uses the same inputs as all other crops. As such, the industry saw a drastic uptick in the sale of greenhouses, horticulture equipment, irrigation equipment, horticultural lighting and crop consumables (i.e., fertilizers, substrates and pest management products). 

The industry also saw massive expansion of companies providing wholesale supply, as well as new horticultural tech companies growing quickly with higher-than-normal profit margins.

• Overly high profit margins on the supply side were due to extremely high profits made by cannabis farmers. This happened because of a few key issues that we likely will not see again. The first was rapid farm expansion due to a race to be first in the market. Second is the semi-legal or illegal status of many farms, which always leads to high profits. And, finally, an emerging market was learning how to be commercial. Early-stage investors saw get-rich opportunities and spent almost anything to move their project to the front of the line. 
• The total acreage of legal cannabis production in the U.S. is small compared to commercial ornamental and food crops. In 2021, the average size of a commercial cannabis production operation was 33,900 ft squared (or about ¾ of an acre.)
• As more states legalize cannabis production, the increased volume of legally available weed continues to drive down the price per pound. As this price decreases, ag-tech equipment and supply companies also feel the pinch as operators become more aware of what they’re buying. (I am sure this makes perfect sense to anyone involved in agriculture. A perishable product’s price drops as availability increases.)

2) U.S. interest in vertical farming exploded in the mid-2000s. This was due in part to investment in and formation of Aerofarms in 2004; Dickson Despommier’s 2008 lectures and 2010 book; and numerous inspirational articles, architectural images, and stories from countries concerned with food safety and security. (See the Japan earthquake and tsunami of 2011.)

• All this (plus much more) inspired entrepreneurs, engineers, and technologists with little to no commercial agriculture experience to create business concepts and then pitch them to investors.
• Many of these pitch decks were based on successful Silicon Valley start-up business models that, to date, have struggled in the commercial horticulture and agriculture spaces.
• The investor market was blindly hungry for these ideas. The timing was perfect. At the same time, macroeconomic and political discussions were happening around the world. In 2004, the term “ESG” (environmental, social and corporate governance) was coined and used in a joint initiative led by the United Nations and 20 financial institutions. This report was titled “Who Cares Wins.” The financial industry believed investing in companies that embodied this strategy would win. After all, it would create resilient companies that contribute to sustainable developments, while strengthening the position of the stakeholder and bank. Not long after this, we started hearing thought leaders ask, “How are we going to feed 10 billion people by 2050?”  

3) The Netherlands Increased marketing and the promotion of venlo-style, Dutch-designed glass greenhouses as a proven and safe investment for growing select fresh produce. This coupled with early semi-automated leafy green production systems and unique placement of rooftop greenhouses (see Gotham Greens/Whole Foods partnership in 2013), plus the early failures of multiple vertical farms, led to the next round of investments.

• The Dutch horticulture industry was initially left out of the big spending.  While they have a long history in horticulture production, the new concepts, crops and money were focused on growing in a unique way. By 2015-2017, the Dutch industry knew they had to be more involved and worked together to improve their market position and awareness. By 2020, leading Dutch companies and Wageningen University Research (WUR) published a report comparing four cultivation methods. Using their interpretation of Sustainable Development Goals (SDGs as defined by the United Nations), it was determined (and then heavily marketed) that “high-tech greenhouses with soilless cultivation, where recirculation of drain water is obligatory, substantially contribute to achieving SDGs.” Read the full WUR 2021 report here.
• Many of these systems did not live up to their marketing claims. Companies did not have the experience to work with or provide guidance on localized issues such as crops, weather (not climate), labor and after-sales service.
• It takes many years to develop crop expertise in each system and for a labor team to come together and operate a growing system that produces the highest possible yields. When done at commercial scales, no proven technologies allow a farm to shortcut these realities.

4) Controlled environment agriculture went “public” and investment firms stepped up with BIG capital. This sparked big interest and even bigger promises from companies looking to get a piece of the money pie. From greenhouse operators such as AppHarvest and Local Bounti, to supply companies such as Scotts Miracle-Gro (owner of Hawthorne Gardening Company) and Hydrofarm, to investment firms such as Equilibrium Capital, COFRA Holdings and Cox Enterprises, the dollars invested in the industry raised to levels never seen before. We all know that when significant dollars get injected into a market, it often leads to “boom” level interest.  (See David Chen’s 2021 comments.)

• Many people are responsible for making this happen. From traditional banks facilitating the IPO to recognizable investors to famous personalities, these large investments and public offerings did not happen because a couple farmers decided to take their proven farm public. They happened because of good old-fashioned capitalism and marketing. They happened because people can be inspired by good storytellers. They happened because the financial markets were ripe for such a move.

5) Cheap, abundant capital along with over-promising suppliers and so-called expert consultants chasing dollars led to a boom-industry mentality.

• Interest rates in the 2010s through the early 2020’s were at historical lows.  
• There was (and is) lots of cash available looking for annual returns of 10-15%. (In other words, lots of rich people were and are looking for passive income.)
• The pandemic helped the situation due to significant amounts of capital injected into the economy. From retail cannabis sales to garden centers to grocery stores, this cash created a boom for everyone in the supply chain that supported these markets.

A brief history of CEA fresh produce production and greenhouse tomato example

In 2005, UC Berkeley professors Roberta Cook and Linda Calvin published a paper titled, Greenhouse Tomatoes Change the Dynamics of the North American Fresh Tomato Industry. For purposes of this discussion, we will use this paper as a foundation to define industry growth. Reason being, many of the largest investments went into companies that were farms based on assumptions gained from years of CEA industry data. 

The reality of this data is that prior to 2010, most of it was based on producing greenhouse tomatoes. Historically, this was a high cap-ex industry with low profit margins that relied on careful cost control, operational excellence, high yields and old-fashioned luck.  

The above paper also correctly defines the market as a North American one since the product produced in these facilities competes directly with their field-grown competitors for sales and shelf space. It also stated that U.S.-based greenhouses will be forced to compete with products grown in Canada and Mexico.  

All this remains true today (regardless of crops grown). In 2003, about 1,630 acres of greenhouse tomatoes were grown in the U.S. Twenty years later, our data shows a 20-30% drop in this figure. What changed during this time is the number of crops grown at a larger scale. The addition of more peppers, cucumbers, strawberries, leafy greens, and culinary herbs means that the greenhouse production area has increased to about 2,150 acres.  

This means that even with all the money spent over the past decade, our production area only increased about 20-30%. It is also important to note that we are not considering the metric tons produced on these acres. Yield improvements of about 20-40% (depending on crop) have been seen over the past 20 years.  

The take home message should be, Americans are consuming more tomatoes.  American retailers are just importing more and more of them each year.  Even the ones we grow in a greenhouse.

Greenhouse Grower recently released an article showing their account of the largest greenhouse vegetable growers. While we think this is a good start, our data shows their information is slightly understated, somewhat incorrect and easy to misinterpret.

We estimate that the USA CEA production area by acres is +/- 2200 acres.  We are excluding vertical farms due to lack of data.  And we do not count structures that do not have 4 walls, a door and some means of mechanically managing the environment.  This means we do not count hoop houses, but we acknowledge there are many successful farmers using hoop houses to profitably produce crops across the USA.

Why all this matters

For companies such as Urban Ag News, we are built on the hopes that our U.S.-based controlled environment agriculture industry is sustainable and capable of continued growth. Our data indicates that we still have work to do before we can be considered an independent industry. (We depend on the global commercial horticulture industry, including the ornamental and cannabis industries, to be viable.)  

Additionally, the data shows that ag-tech investments face fundamental problems. (See Agfunder Report  and state of CEA investments in this article in Produce Blue Book as well as one can download this Pitchbook Report.) To understand these problems, consider Professor Michael Porter’s work on competitive strategy. He states that for an investment to be justified, you need a big enough market — and the portion of that market you can access is where you make your profits. So, for instance, if you produce ag technology only suitable for a small area of production, it is unlikely that you will gain a profitable return.

Remember how in 2003 the data showed 1,630 acres of greenhouse tomato production in the U.S.?. In 2022, only about 1,250 acres of tomatoes were produced in greenhouses. In 2003, four large greenhouse operators controlled 67% of the production acres. In 2022, eight large greenhouse operators controlled 80% of the production acres. 

There is significant dependence on a few clients who control most of the acreage for ag-tech companies focused on the U.S. market. This means new ag-tech companies must be accepted by nearly all the commercial greenhouses to be viable.  

If the technology targets leafy greens and culinary herbs, then it is important to realize that the 2023 industry is even smaller (just under 400 acres). In addition, the leafy greens industry is further challenged by the fact that most players use different production methods, making it harder to find similarities among farms.

All of this means that true ag-tech companies must be ready and willing to explore new geographies that have similar existing markets, target new crops, or focus on more general technology. The easiest are Mexico and Canada in terms of travel. The hardest is Europe. But do not expect them to accept new ideas quickly, as there are just as many local companies competing for business.  

The same competitive strategy applies to greenhouse operators and producers as well.  The market is highly competitive and as the data shows, much of that competition is coming from Mexico, Canada or the open field.  Greenhouse businesses must be solving a clearly identifiable problem while providing a value proposition (ie product) that is clearly “better, faster or cheaper” than the product that is already existing on the market.

Successful companies need capital, time, people and patience. Dutch companies invest heavily to access U.S. markets. Same goes for horticulture companies from Mexico, Canada, Israel, Spain, China, Sri Lanka and any other areas that can produce horticulture technology, supply, consumables and (yes) fresh produce.

We Must Know to Grow

While some might read this article and see it all as doom and gloom, we do not. As stated earlier,  we see it as important information to know and understand, so we can accept a reset. Our industry still has tremendous upside.  

For the industry to reach its potential, we must understand the following before we can grow:

1) With rising interest rates and increased company failures being announced, investment dollars are harder to come by. We must keep those dollars working and staying in the U.S. (or in your local economy or at least with companies investing in your local industry or economy.)

• If we believe in local, we need to encourage growth within the U.S. (You could make the same argument for any other country and companies looking to build their industry.)
• We know that many of the dollars invested were sent overseas because in excess of 250 acres of greenhouses were built in the U.S. by Dutch greenhouse builders from 2020-2023.
• The more dollars we keep local, the more this money can be used to develop research, education, data and technology that solves problems specific to growing in a local market.

2) We must increase the number of American-led companies “growing” or operating successful commercial horticulture businesses. The current lack of grower or production leadership shows that we do not have the expertise to run these facilities. Keeping dollars in the U.S. should promote the opportunities and education needed to get interested people into the right positions. If we do not do this, then we must change our current political position on immigration and start making it easier to bring in talent from other countries.

• We also need to be honest on our access to labor. It is among the largest costs for any company. Regardless of opinions on tech, we need access to labor in a way that keeps us competitive.

3) Currently, the cost of running U.S. CEA businesses is high because:

• Scalability has not been demonstrated for vertical farms.
• Growers are regional segregated from one another. So supporting businesses have a hard time servicing them as cost-effectively as condensed markets such as the Netherlands or Leamington, Canada.
• Labor costs are high. Local people do not want the jobs and struggle performing the work as effectively as individuals from countries such as Mexico working on visa programs. Unfortunately, visa programs are difficult to navigate, costly and politically unpopular.
• Distribution costs are high and often opaque to the grower depending on the size, scale and distribution or customer relationships the farm has built.

Once we overcome these obstacles, we can and will have a thriving industry. After all, we will still have the same problems we faced when people became excited about our industry. 

Traditional farms will continue to be impacted by changing climate patterns and extreme weather events. Fresh produce with little to no pesticides will continue to be sought after by consumers. And we will still need to protect our fresh water sources from nitrogen runoff and agriculture (as well as industrial) contamination. 

More about the authors:

Chris Higgins is the chief editor at Urban Ag News as well as the President of Hort Americas.  He has been active in the commercial horticulture industry since 1996 and has been focused on controlled environment agriculture since January 2004.

Nathan Farner is the General Manager at Hort Americas. Nathan built his career on helping companies with merger integrations, information technology implementations, business process optimization, and data governance.

All information in this article is property of Urban Ag News, Chris Higgins and Nathan Farner.  Any reproduction of this information can only be done with written permission.

Notes:  If there is a significant amount of interest in further facts and figures not covered in this article (like more information on legal cannabis market or production area of vertical farms) we will be happy to prepare follow up articles.  Please comment on what you want to learn below.

More importantly, will consumers pay a higher price for controlled-environment-grown produce?

Over the last five years, leafy greens have been the “it” crop for indoor farm production. Most indoor farms have started with leafy greens, primarily lettuce, and have looked to expand their product offerings to include herbs, microgreens, strawberries and tomatoes.

The OptimIA project, which is funded by USDA, is studying the aerial production environment and economics for growing indoor leafy greens in vertical farms. While much of the research of this four-year project has focused on managing the environment for vertical farm production, the economics related to this production is a major objective of OptimIA researchers. Based on feedback from commercial vertical farm growers, one of the primary areas of research is to develop economic information, including costs, potential profits, and to conduct an economic analysis to determine the strategies to improve profitability based on that information.

OptimIA researchers at Michigan State University who are focused on the economic aspects of vertical farm production include: Simone Valle de Souza, an ag economics professor; Chris Peterson, an emeritus professor in the Department of Agricultural, Food, and Resource Economics; and PhD student Joseph Seong, who is developing his thesis on the economics of indoor agriculture.

“I was invited by the other OptimIA researchers to use mathematical models that take into consideration the biology and technical parameters to determine the potential revenues and costs,” Valle de Souza said. “My team of economists is looking to identify the economic tradeoffs from the implementation of multiple environmental factors that the other OptimIA researchers were optimizing or planned to optimize as part of the project. Our job is to identify the optimal parameters for profitability in controlled environment production. As part of the OptimIA project, we tackled two aspects of economic analysis: production and resource-use efficiency and consumer preferences.”

Maximizing profits

As part of the economic analysis, Valle de Souza considered the variable costs of labor, electricity, seed, substrates and packaging materials. Based on the information collected from commercial indoor farm growers, labor was the largest cost at 41 percent of total variable operating costs, followed by electricity at 29 percent, seed and substrates at 22 percent and packaging materials at 7 percent.

“We did a sensitivity analysis to determine what would happen to profits if wages increased,” Valle de Souza said. “We conducted a series of simulations and determined on average a 1 percent increase in wages would reduce profit per square meter for a day of production by 6 cents. A 1 percent increase in the price of electricity would reduce profits by 5 cents per square meter per day. The contribution margin to profit is normalized on a per square meter per day of production so that we can make comparisons.”

While many growers might look to lower variable costs to increase profitability, Valle de Souza found that increasing the price of lettuce could be the better way to go.

“A 1 percent increase in the price of a head lettuce could increase profits by 60 cents per square meter per day,” she said. “Our analysis showed a revenue maximizing strategy is superior to a cost minimizing strategy. Reducing variable costs could result in savings of 5-6 cents in profit. However, during simulation scenarios that we tried, a revenue maximizing strategy could proportionately increase profits 10 times more by as much as 60 cents.”

OptimIA economists determined a 1 percent increase in the price of a head of lettuce could increase profits by 60 cents per square meter per day. A 1 percent increase in wages would reduce profit by 6 cents per square meter a day. A 1 percent increase in the price of electricity would reduce profits by 5 cents per square meter per day. Graph courtesy of Simone Valle de Souza, Mich. St. Univ.

Optimal length of production

Another part of the analysis done by the OptimIA economic researchers was to estimate the optimum length of the lettuce production cycle.

“In terms of production cycle length, we compared the trade-off between costs from one extra production day and revenues from yield that could be achieved from one extra day of growth,” Valle de Souza said. “We tried to estimate how long growers could allow lettuce plants to grow to take advantage of the fast growth rate the plants experience at the end of a production cycle. Using estimates of plant growth and plant density under an optimized space usage defined by our OptimIA colleagues at the University of Arizona, we found that under specific environmental conditions, day 19 after transplant, or 33 days from seeding, was the ideal harvesting day.”

Even though maximum revenue could be achieved earlier, at day 15 after transplant, costs per day of growth were higher for shorter production cycles. The contribution margin to profit, which was estimated as the difference between revenue and costs in this partial budget analysis, was larger at 19 days after transplant. After 33 days, profit starts to decline because the speed of plant growth rate is not as fast as the increase in costs associated with growing.

“We have determined the economic results from space optimization, estimated optimal production cycle length under given conditions, and the economic results from alternate scenarios of light intensity, carbon dioxide concentration and temperature,” Valle de Souza said. “In collaboration with our OptimIA colleagues, we are now working on a final optimization model that will associate optimal profitability with resource-use efficiency.”

Opportunity to educate consumers

Another aspect of the OptimIA economics research looked at consumer behavior and preferences in regards to indoor farms and the crops they produce. Using a national survey, the researchers determined whether consumers are willing to buy lettuce produced in indoor farms and how much they would be willing to pay for the enhanced attributes of produce grown in indoor farms.

“The survey showed no consumers rejected the innovative technology being used by indoor farms,” Valle de Souza said. “There was a group of consumers who were very supportive of the technology and completely understood what an indoor farm is. Another group of consumers were engaged, but not very convinced of the technology. Another group was skeptical of the claims of indoor-farm-produced leafy greens and were less willing to consume them. This same group said they had no knowledge about indoor farms and how they work.

“There were no consumers who had knowledge about indoor farms and rejected the leafy greens grown in these operations. Some consumers are still cautious given their little understanding about how the production systems work.”

Based on the survey results, Valle de Souza said the indoor farm industry has an opportunity to educate consumers about its production technology.

“The indoor farm industry could promote information materials that explain the benefits of a fully controlled growth environment,” she said. “Growers could explain how this technology eliminates the use of pesticides, how it can improve crop quality attributes, along with the environmental benefits of significantly lower water consumption, reduced land use, and the ability to deliver fresh produce to consumers in urban areas.”

Consumer willingness to pay more

Consumers surveyed by OptimIA researchers indicated they were willing to pay a premium for lettuce with enhanced attributes.

“We tested for taste, freshness, nutrient levels and food safety,” Valle de Souza said. “Consumers were willing to pay a premium for these attributes, especially in urban areas.

“Rural dwellers usually have their own backyards in which they can grow vegetables. They are used to seeing vegetables growing in the soil using sunlight. Rural residents were not as convinced about the need for indoor farms to produce leafy greens. Another interesting survey result was that consumers, in general, are not very decided if they prefer produce grown in indoor farms, greenhouses or outdoors.”

For more: Simone Valle de Souza, Michigan State University, Department of Agricultural, Food, and Resource Economics; valledes@msu.edu; http://www.canr.msu.edu/people/simone_valle_de_souza.

OptimIA Ag Science Café #40: Consumer Varieties for Indoor Farm Produced Leafy Greens, https://www.scri-optimia.org/showcafe.php?ID=111156.

This article is property of Urban Ag News and was written by David Kuack, a freelance technical writer in Fort Worth, Texas.

OptimIA researchers are studying how the environment can be manipulated to improve crop quality, increase yields and change the plant morphology of leafy greens.

You know how important maintaining the proper environment plays in the production of controlled environment crops. Is it possible to change the environmental parameters to improve crop quality and yield?

Researchers with the OptimIA project are looking at how the environmental parameters such as light, temperature, relative humidity and carbon dioxide concentration can impact plant growth, quality, yield and morphology of leafy greens.

“There is a not a lot of production information available for most leafy greens other than lettuce,” said OptimIA researcher and Michigan State University horticulture professor Roberto Lopez. “Lettuce is a significant crop for the controlled environment industry. Kale and arugula are up-and-coming crops that are being sold more as stand-alone, prepackaged leafy greens. Microgreens are also a relatively new crop and not much research has been done on them beyond the influence of light quality and intensity.

“Kale and arugula are similar to lettuce, they don’t grow too large and have a similar crop production time to lettuce. Microgreens are a short-term crop that only take a few weeks at most.”

Improving crop quality

Lopez and graduate student Devin Brewer are particularly interested in looking at leaf color in regards to improving crop visual quality and potentially nutrition.

“Consumers, when it comes to red leaf lettuce, prefer dark red leaves because they like the color and texture,” Lopez said. “One of our goals with OptimIA is to really push leafy greens crops to produce them as quickly and profitably as possible. By pushing the plants there is a lot of biomass produced quickly. However, one of the down sides is that the foliage can lack the desired color, especially red leaf lettuce and brassica microgreens.”

Brewer is studying how the color of lettuce and microgreens can be enhanced by altering the light quality and reducing the air temperature. He is looking at different light qualities, primarily a combination of red and blue light or blue light alone. He is also looking at reducing the temperature a few days prior to the crop being harvested.

“Devin found that reducing the temperature in combination with a light ratio (percent) of 75 blue:25 red light produced intense leaf coloration,” Lopez said. “However, in the case of indoor farms, it is much easier to heat than to cool. Most of these farms use LED lights. Even though there is a misconception that LEDs don’t generate heat, the fixtures can produce quite bit of heat.”

Depending on the time of year, lowering the air temperature would be more feasible for greenhouse lettuce production. During cooler times of the year, there is not going to be the heat load in greenhouses that could occur in indoor farms. Because lowering the temperature could potentially be a challenge for indoor farms, Lopez said he is looking at other ways of reducing the temperature including lowering the irrigation water temperature.

Another benefit of the end-of-production lighting or cooling is the impact it has on some plant nutrients, vitamins and carotenoids.

“Not only is the color being affected, but in some instances the parameters related to nutrition are increasing,” Lopez said. “We are looking at this with lettuce and this summer will be studying the impact light and temperature can have on microgreens. We are quantifying the changes in the amounts of anthocyanins. We will not be measuring these changes with kale or arugula.”

Two characteristics of leafy greens Lopez won’t be studying in the short-term are texture and taste.

“Leaf texture is an important factor to consider when studying the impact of light and temperature,” he said. “When lettuce is grown warm, it tends to be softer, not as crisp as lettuce that is grown at cooler temperatures.

“Unfortunately, with the OptimIA project we don’t have the time to determine if environmental parameters can affect taste. In a separate USDA Specialty Crop Research Initiative project called CEA HERB focused on culinary herbs, we will have a consumer taste panel looking at flavor profiles as well as studying the impact on nutrients within the plants.”

Increasing crop yields

Another aspect of Lopez’s research is focused on how temperature impacts the yields of lettuce, kale, arugula and microgreens.

“These four crops are being grown under various temperatures so that we can estimate what the base, the optimum and maximum temperature are for each crop,” he said. “This will enable us to determine the temperatures that are going to produce the maximum yields as well as the best quality.”

Lopez said growers may not always want to grow a crop at the optimum temperature because the light intensity might have to increase to a level that the crops won’t be profitable to produce.

“Lettuce, kale and arugula have been grown as field crops,” he said. “Studies to determine the base, optimum and maximum temperatures have not been consistent. Lettuce for example, has a much higher base temperature as well as optimum temperature than most growers thought. Considered to be a cooler season crop, lettuce can tolerate temperatures into the upper 70s. Yields can be pushed by growing them warm. Obviously, there is a point where too much heat is going to lead to lower quality crops and potentially bolting.”

Changing plant shape to meet market demand

Lopez said changing the shape of the plants will be important depending on how a crop is marketed.

“In the case of lettuce, if a head is too tall it may not fit into the clamshell packaging it is typically sold in,” he said. “We are only focusing on lettuce in regards to changing morphology. The responses that we see in lettuce to environmental parameters should be similar in the other crops we are studying. We estimate similar responses with arugula and kale.

“We are looking at various ways to produce more compact leaves or elongated leaves with the use or far-red or blue light. This will allow growers to manipulate the plants based on consumer demand.”

Looking ahead

Lopez said what has been learned with the crops from the OptimIA project will help in the studies that will be done with culinary herbs.

“Culinary herbs are much more diverse than the crops we are studying in the OptimIA project,” he said. “The environmental requirements for herbs vary considerably. Some do very well under high temperatures. Others require cooler temperatures. Photoperiod can induce some into flower. What we have learned from the OptimIA project will give us some good starting points so that we aren’t guessing as to where we need to begin with the various herbs we plan to study.”

For more: Roberto Lopez, Michigan State University, Department of Horticulture; rglopez@msu.edu; https://www.canr.msu.edu/people/dr_roberto_lopez?profileDisplayContent=contactInfo.
Devin Brewer, Michigan State University, Department of Horticulture, brewerd9@msu.edu.

This article is property of Urban Ag News and was written by David Kuack, a freelance technical writer in Fort Worth, Texas.

Researchers with the OptimIA project are working to solve the environmental control issues facing indoor farm growers.

While some might think that the environmental challenges facing indoor farm growers should be relatively minor and easy to overcome in a closed environment, they’d be wrong.

“Some of the challenges and bottlenecks facing indoor farms include insufficient airflow leading to a non-uniform environment, lighting that is wasteful and how light is delivered into the canopy,” said Murat Kacira, director of the Controlled Environment Agriculture Center (CEAC) at the University of Arizona and a member of the OptimIA project research team. “In addition to these challenges, there are those related to the humidity and water management in the aerial environment as well as identifying the best light quality, light intensity and light recipes for indoor farm crops.”

Prior to the start of the OptimIA project in 2019, surveys were conducted of stakeholders in the indoor farm industry, including growers, to determine what are the areas of greatest need for research.

“An indoor farm is a closed box,” Kacira said. “You know what goes in and what comes out, but it demands the resources to control that environment, which include controlling the light, temperature, humidity, carbon dioxide and all other processes to grow the crop to meet production expectations.  

“An indoor farm offers tighter control than in a greenhouse environment. There is not the same effect from the outdoor dynamics, for example the light intensity, temperature and water recirculation from the air. Being able to harvest the water from the air is easier in an indoor farm system compared to a greenhouse system. There is more controllability when it comes to an indoor farm compared to a greenhouse, of course with an additional expense for resource use to achieve such control.”

Focused on environmental control

Kacira and his team of graduate students KC Shasteen and Christopher Kaufmann at the University of Arizona are significant contributors on the environmental control aspects of the OptimIA project.

“We are also considering light because light brings the energy to the plants and then the energy has to be released for cooling and for proper transpiration and nutrient deployment from the roots,” Kacira said.

Kacira’s team conducted computer simulations to help improve airflow and to identify co-optimization of environmental variables for energy savings. Building upon computer simulation research outcomes, Kaufmann is conducting experiments in CEAC’s vertical farm facility to evaluate vertical and horizontal airflow system designs to mitigate tipburn on lettuce crops. Shasteen and Kacira worked on modeling with the co-optimization of variables, including light, temperature, relative humidity and carbon dioxide level.

“We have been able to quantify yield outcomes and to determine what the energy use would be for any of those environmental control strategies,” Kacira said. “These models and the outcomes and information that we have generated from this research are used by our OptimIA colleagues on the economics team. They are developing economic models for a variety of scenarios of profitability and economics for indoor farm applications and indoor farm systems.

“We are focused primarily on airflow system design and optimization, humidity management and co-optimization of environmental variables mainly for energy savings. Our collaborations also included Nadia Sabeh at Dr. Greenhouse on the humidity management side of the environmental control aspect.”

Real-world applications

Some of the research outcomes from the University of Arizona team related to airflow systems designs, concepts and recommendations have been incorporated into actual growing settings in commercial operations.

“We are able to incorporate some of our research results into commercial site trials through our collaborations,” Kacira said. “We have over 20 industry collaborators as part of the OptimIA project. Some of the collaborators showed interest in implementing some of the airflow system designs, environment control, and co-optimization of these variables into their operations. We will also have an opportunity before the OptimIA project ends to implement them directly and evaluate some of the research outcomes in commercial settings.”

Saving on energy costs

Sole-source lighting is the largest energy cost of indoor farms. Indoor farm energy costs account for at least 30 percent of the total operational costs. Other energy costs are related to operating fans, dehumidification and ventilation.

“The focus of the OptimIA research at Purdue University is to identify and try to reduce the energy costs related to growing indoor crops,” said Cary Mitchell, horticulture professor at Purdue University. “If an indoor farm grower is using sole-source lighting that is going to be the biggest energy cost. These indoor farms spend hundreds of thousands of dollars per year on electricity and it’s mostly for lighting.”

Mitchell has long been interested in energy as one of the profit-determining and profit-limiting parameters in indoor farming.

“All of the OptimIA researchers are interested in saving resources for growing leafy greens and culinary herbs indoors,” he said. “That is the common thread among all of us. Purdue researchers are focused on energy savings. “

Avoid wasting light

Mitchell and PhD graduate student Fatemeh Sheibani are working on close-canopy LED lighting. This lighting is similar to intra-canopy lighting that is used on some greenhouse crops including high wire tomatoes and fresh cut roses.

“One of our findings is if the separation distance is reduced between the LED light fixtures and the crop below without dimming the LEDs, the productivity of the plants goes up,” he said.

LEDs are a point source of light with much of the light radiating like a star in all directions.

“When LED fixtures are mounted overhead in an indoor farm much of the light goes to the side obliquely,” Mitchell said. “Not all of the light is going down towards the plants. There is a significant amount of photons wasted falling outside of the cropping area. There’s not much that can be done about it other than to move the lights closer to the plants.” 

Because LEDs are cool, unlike high intensity discharge (HID) lamps, the separation distance between LED fixtures and the plants can be decreased without burning the plants.

“The separation distance can be reduced so that most of the obliquely emitted photons actually are captured by the crop surface instead of going off the edge of the bench,” Mitchell said. “Regardless of whether growers run LED fixtures along the bench or across the bench, they don’t want gradients of crop growth. Growers want just as much growth on the edges as in the middle of the bench. This can cause growers to mount lights not only in the middle of the bench, but also out towards the edges. The further toward the edges the fixtures are mounted, the more photons are lost.”

Putting more light on the plants

Sheibani is studying two scenarios of close-canopy lighting. One scenario is as the LED lights are placed closer to the plants, the light is dimmed. Even though the light is dimmed, there is the same intensity of light at the plant surface because more laterally emitted photons are captured, but less electricity is used. In a second scenario, Sheibani placed the LED lights closer to the plants, but did not dim them.

“In this second scenario, placing the fixtures closer to the plants once again reduced the amount of photon loss,” Mitchell said. “In this case, for the same power and energy usage the plant yields increased because the effective light intensity increased. The plants grew faster and bigger. Each increment of closer spacing results in a higher energy utilization efficiency.”

In indoor vertical farms the traditional separation distance between the bottom of the LED fixtures and the top of the crop is 40-50 centimeters.

“We have tested separation distances between the fixtures and plants of 45, 35, 25 and 15 centimeters,” Mitchell said. “We found that energy utilization efficiency increases linearly as the lights are placed closer to the plants. This should be relatively easy to implement in most indoor farms, but may require some design modifications from equipment suppliers.”

Mitchell explained the reason the two scenarios were studied is because some indoor farms are equipped with non-dimmable LED lights.

“In the case of non-dimmable LED fixtures, when the lights are brought closer to the plants, the energy draw by the lights is the same, but the yield goes up, which means the plants grow faster,” he said. “This means the plants can reach the same biomass and be harvested earlier or the harvest date can remain the same and more biomass can be produced. This gives growers the option to use close-canopy lighting for what works best for their production needs.”

Mitchell points out that not every LED fixture commercially available works well in close-canopy lighting applications.

“There are some LED lights where the distribution of colors is not uniform, where there are clusters of blue light,” he said. “This is not a big deal with a 45-centimeter separation distance between the lights and the plants because with the amount of beam spread there is enough distance for the other colors to overlap the blue light. But when the lights are placed within 25 to 15 centimeters of the plant surface, there are clusters of blue light. Blue light inhibits leaf expansion and promotes leaf coloration. The result can be very strange looking crop stands if close-canopy lighting is done with LEDs with uneven light distribution. Fortunately for growers, most of the commercial LED arrays available today for horticultural lighting are quite uniform.”

For more: Murat Kacira, University of Arizona, Controlled Environment Agriculture Center; mkacira@arizona.edu; http://ceac.arizona.edu/. Cary Mitchell, Purdue University, Horticulture & Landscape Architecture; cmitchel@purdue.edu; https://ag.purdue.edu/department/hla/directory.html#/cmitchel.

This article is property of Urban Ag News and was written by David Kuack, a freelance technical writer in Fort Worth, Texas.

The Controlled Environment Agriculture (CEA) industry is growing rapidly, driven by the increasing demand for fresh, sustainable and locally grown produce globally. As the industry continues to evolve and adopt new technologies, it is essential to standardize reporting metrics. This not only will improve the overall industry output by setting benchmarks for best practices and operating procedures but also will drive the adoption of efficient technologies and techniques that can improve performance. 

Yield is a key determinant of business revenue and a powerful metric for evaluating the performance of a facility. It can be measured in various ways making it difficult to compare and benchmark aspects such as varieties, technologies, and operational procedures across the industry. Internally, organizations likely have a variety of metrics to measure yield that range from total biomass production to units or cases produced and sold per week. However, to compare yield across various types of technology within the leafy greens CEA industry, it is important to have a standard reporting unit.  

Yield expressed as kilograms per square meter per year or pounds per square feet per year is a measurement that allow for an objective view of overall performance that is indifferent to the growing method, technology selection, plant weight, plant density, plant age at the time of harvest, and crop turns throughout the year.  This type of measurement also is useful when comparing CEA to outdoor field production, which is typically reported in terms of tons per acre per year. 

The greenhouse tomato industry provides a good model to follow when it comes to yield reporting. Growers in this industry often report yield as kilograms per square meter per year for all areas under glass. This includes the entire growing compartment, including walkways, and does not include non-growing areas of the facility such as packing and storage. The yield is annualized to account for downtime during cleaning, seasonal changes in production, interplanting influences on harvest, and other factors that can influence total annual production. When comparing yields, it is important to consider all the time and area needed to grow the plant.  While most large greenhouse tomato growers do not produce their own transplants, if we were to compare this yield to a grower that does produce transplants, the time and area required for transplant production should be taken into consideration for a fair comparison.  

Similarly, for the leafy greens CEA industry, it is important to measure the total annual biomass harvested, excluding roots, over the entire area required during each stage of growth – from germination to harvesting mature plants. This provides a more accurate picture of the operation’s overall productivity and can be a valuable data point for evaluating performance.

The leafy greens CEA industry is full of innovation and this method of yield benchmarking is valuable across many forms of production – from single layer greenhouses to multi-layer vertical farms. To compare the performance across different growing systems, it is important to estimate the annualized yield over the 2D ground floor area of the growing compartment for the greenhouse or vertical farm. This floor area should include everything in the climate-controlled compartment, including walkways and all areas needed from seed to mature plant. When multiple layers are used in production, there will be a larger total canopy area compared to the floor area. In these cases, it is still recommended to use the 2D ground floor area. There will be variation between some growers as to where certain equipment, such as seeding equipment, is placed and whether it is captured in the climate-controlled area or support/technical buildings.  What’s key is to be aware of those nuances when making comparisons. 

The lack of standardization is not intentional. As discussed in this article, standardization in CEA reporting is a complex topic with multiple factors and approaches. In most industries, regulatory requirements and certifications create incentives to standardize reporting. This has gradually started in the CEA industry with the Sustainability Accounting Standards Board explicitly requiring applicants to disclose the area under active production and the total facility area; however, more consistent reporting is required for the standards to become effective.

As CEA production becomes more mainstream, building a standardized measurement system will be vital to understand best practices and to evaluate the economic viability of new production methods. This also impacts how we measure the sustainability of different CEA facilities in terms of energy consumption, water consumption, and carbon footprint. With the federal government tightening the climate risk assessment process and the U.S. Securities and Exchange Commission introducing a proposal to standardize climate-related disclosures, cleaning up reporting and benchmarking practices has never been more important.

Jenn Frymark is the Chief Greenhouse Officer for Gotham Greens.

Charu Sharma is the Chief of Staff to the Chief Greenhouse Officer and Environmental Sustainability Lead for Gotham Greens.

About Gotham Greens

Gotham Greens is an indoor farming company and fresh food brand on a mission to transform the way we approach our food system, putting people and the planet at the forefront. Gotham Greens produces and delivers long-lasting and delicious leafy greens, herbs, salad dressings, dips and cooking sauces all year round to retail, restaurant and foodservice customers. A Certified B Corporation, Gotham Greens sustainably grows high-quality produce using up to 95% less water and 97% less land than conventional farming through its national network of climate-controlled, high-tech greenhouses. Since its launch in 2011, Gotham Greens has grown from a single urban rooftop greenhouse in Brooklyn, N.Y., to one of the largest hydroponic leafy green producers in North America. By 2023, Gotham Greens will own and operate 13 high-tech, climate-controlled hydroponic greenhouses, totaling more than 40 acres (1.8 million square feet) across nine states. Gotham Greens products are available in more than 3,000 grocery stores nationwide. 

OptimIA researchers are studying the impact light and its interaction with other environmental parameters can have on indoor leafy greens production.

When members of the OptimIA project contacted controlled environment agriculture industry members about their concerns about the growing environment, light was at the top of the list. The OptimIA’s project objectives were based on feedback from indoor farm representatives, growers and lighting manufacturers related to the production of food crops.

“Lighting is one of the biggest costs not only for purchasing the fixtures, but also for operating them,” said Erik Runkle, horticulture professor at Michigan State University and director of the OptimIA project. “Operating lighting fixtures is a big sink of electricity and therefore a major operating cost. Another large operational cost for indoor farms is air conditioning, but typically it is not as big as lighting.

“Looking at some of the other environmental control issues that indoor farms have had in the past, excessively high humidity was caused by inadequate HVAC systems. Humidity and temperature are tightly linked because temperature influences how much moisture the air can hold. We thought if we study humidity we should also study temperature. Temperature dictates the rate of development of plants.”

Runkle said carbon dioxide gets added to the environmental mix when looking at light intensity.

“The benefit of carbon dioxide increases as light delivered to plants increases,” he said. “Early on when we started this project we were delivering, what is considered by today’s standards, relatively low light intensities, so the value of adding supplemental carbon dioxide was minimal.

“Indoor farms are increasingly delivering higher light intensities, in which case carbon dioxide becomes more important. We knew that carbon dioxide is one of the factors to consider with indoor farms, but it was not considered one of the top factors like light, temperature and relative humidity.”

Divvying up the research projects

Prior to receiving $2.4 million in USDA funding in September 2019 for the OptimIA project, Runkle had started the Controlled-Environment Lighting Laboratory at Michigan State.

“The lab is a unique facility that has capabilities that few other researchers at the time had,” he said. “Having access to the lab, it made sense for me to focus on light quality or the different colors of light and how they affect growth. A lot of what each team member focused their project research on was imposed by their expertise in the topic and whether they had the facilities to conduct the research.

“Developing these research facilities is quite expensive, and usually with these types of research proposals, large equipment budgets are not favorably reviewed. OptimIA team members thought rather than requesting a large equipment budget, we would determine who had the equipment and facilities to do lighting studies. Also, we looked at who had past research expertise so it just made sense for them to perform the various environmental studies.”

Light was the single environmental factor that the OptimIA researchers keyed in on. Every member of the OptimIA team, other than its ag economists, has done some type of light manipulation research.

Studying different aspects of light

The three major areas of light study were: 1. light intensity or the brightness of the light; 2. the different colors of light, primarily blue light, far-red light and ultraviolet (UV) light, and 3. the uniformity of light, which is often an overlooked dimension of light.

“The brightness, the colors and how many hours light fixtures are operated per day are usually the focus of light research,” Runkle said. “Light distribution uniformity is often overlooked, but we have seen that uniformity can be an issue in indoor farms.

“For OptimIA researcher Cary Mitchell at Purdue University one of the focal points of his research is the positioning of light fixtures trying to reduce the amount of light that spills into areas where there are no plants. There is light that reaches the target within a crop, but there is also light that spreads out beyond where the plants are located. This is light that is wasted because it doesn’t reach the plants. Trying to deliver as much light from the fixtures to the plants can improve efficiency because the light is reaching the plants and is not wasted.”

The relationship between environmental parameters

OptimIA researcher Roberto Lopez, associate horticulture professor at Michigan State, is studying the interaction of light, temperature and carbon dioxide on leafy greens production.

“Previous research between these environmental parameters had been done in greenhouses,” Lopez said. “We are using walk-in growth chambers to provide more control over the light environment. Unlike in a greenhouse, there isn’t any sunlight in indoor farms that can impact the results.

“We wanted to see how carbon dioxide and temperature interact with light. Light and temperature studies can be done in a greenhouse, but carbon dioxide studies are going to be challenging. Being able to do the studies indoors makes it more feasible.”

Prior to the start of his OptimIA studies, Lopez was using dimmable white light LEDs in the growth chambers.

“Signify provided us with dimmable LED light fixtures which allow us to manipulate the spectrum,” he said. “With the new fixtures we not only can deliver white light, but we can change the spectrum whenever we need to during the growth cycle.

“In some of our later studies we have been looking at manipulating the color of the foliage with the spectrum. This allows us to start growing the plants under white light and towards the end of the production cycle we can change the light spectrum to potentially manipulate the color of the foliage or increase the amount of anthocyanin and other nutritional compounds.”

Impact of light intensity

Lopez said the impact of light intensity on lettuce production appears to be cultivar dependent.

“With some lettuce cultivars we found 150 micromoles of light is sufficient and with others we had to increase the light level to 300 micromoles to achieve an increase in yield,” he said. “With other cultivars we found by doubling the amount of light there isn’t an economic benefit to increase the light intensity. It wasn’t worth increasing the light intensity in terms of the yield that we were able to achieve, at least when based on our economic assumptions.”

Lopez said some indoor farm growers of leafy greens are increasing light intensity levels to 600 micromoles.

“Is that light level necessary? In our opinion—no,” he said. “It doesn’t make sense because at some point the plants become saturated with light and the growers are wasting money. The plants may not be utilizing the light if the other environmental parameters are not adjusted accordingly.

And economically it doesn’t make sense. To achieve these light levels requires more lighting fixtures and there are increased electrical costs.”

Impact of light color

Results of OptimIA studies have confirmed the importance of blue light on plant growth.

“Blue light has a strong effect on inhibiting leaf size, which means plants are smaller compared to plants grown under lower intensities of blue light,” Runkle said. “Blue light also controls the coloration of leaves as well as other quality attributes, including the nutrient density and perhaps taste.

“OptimIA researchers weren’t the only ones to discover the effects of blue light, but we are building upon other blue light research to learn how important it is and what different intensities of blue light do to leafy greens crops.”

Runkle said the light spectrum or the color of the light is more important in indoor farms than in greenhouses.

“In a greenhouse there is sunlight and the ability to change the spectrum is influenced by how much sunlight is entering the greenhouse,” he said. “During winter when supplemental lighting is used the most in greenhouses, is when lighting is most valuable and the ability for the spectrum to influence plant growth is also the greatest. Because blue light has such a strong effect on the shape of plants, the percentage of blue light chosen for an indoor farm can be a much bigger decision than the percentage of blue light in a greenhouse.”

Runkle said the verdict is still out on whether or not far-red light is necessary in indoor farms.

“Far-red light is similar to blue light and how much light should be given to plants,” he said. “Blue light and far-red light act antagonistically. Far-red light increases leaf expansion, which often leads to more growth because the plants can intercept more light. This growth increase is somewhat countered by a decrease in the quality. Plants exposed to far-red light typically produce leaves that are lighter green in color or the leaf texture is affected, including thinner leaves and leaves that are not as crisp or firm.

“Applying far-red light can lead to tradeoffs between maximizing biomass and plant quality. There are usually tradeoffs between the harvestable index or what can be harvested and the quality of that harvest.”

Verdict still out on UV light

There has not been a lot of research done with UV light in the indoor production of leafy greens.

“There are various reasons research with UV light hasn’t been done,” Runkle said. “LEDs that deliver UV light are not very efficient and they typically don’t have a very long life span.

“We have done a few studies looking at the efficacy of using UV-A light compared to blue light. We found that blue light and UV-A light are similarly effective in terms of plant responses. But blue light is a lot cheaper to deliver. Blue light LEDs are cheaper and last a lot longer. If the same response can be achieved with blue light LEDs than UV-A LEDs, then at least in our research we haven’t seen any reason to include UV-A light.”

Relationship between light and carbon dioxide

Ambient carbon dioxide level is about 400 parts per million (ppm). Lopez did studies with lettuce supplementing plants with 400, 800 and 1,200 ppm.

“Going from 400 ppm to 800 ppm there was an increase in yield,” he said. “Going above 800 ppm there wasn’t much of an appreciable increase. There is definitely a limit and beyond 800 ppm, there wasn’t any economic benefit as well.

“Whenever any of these three environmental factors are limiting, a grower could provide optimal light levels and the optimal temperature, but if carbon dioxide is limiting, then ultimately photosynthesis is limited, which impacts crop yields. It’s important to measure, monitor and control all three parameters. In a greenhouse it is challenging to do this. With an indoor farm it is possible to have much more control of these environmental parameters.”

For more: Erik Runkle, Michigan State University, Department of Horticulture; runkleer@msu.edu; https://www.canr.msu.edu/people/dr_erik_runkle.
Roberto Lopez, Michigan State University, Department of Horticulture; rglopez@msu.edu; https://www.canr.msu.edu/people/dr_roberto_lopez?profileDisplayContent=contactInfo.

This article is property of Urban Ag News and was written by David Kuack, a freelance technical writer in Fort Worth, Texas.

Thoughts of a businessman just trying to figure it out, while not messing up.

“Isn’t it pretty to think so?” – The Sun Also Rises, Ernest Hemingway

In a previous article, I posed the question, Who Should Lead The Environmental Movement? In this follow up-piece, I want to explain why I struggle seeing myself or any other small, medium or large business owners being leaders or role models in this movement. 

You see, I believe most of us start or go into business for similar reasons. We also evaluate success in similar ways. And while I don’t think this stops business people and entrepreneurs from trying to be as sustainable as possible, I believe we should not be the ones leading the environmental charge. However, businesses in agriculture or horticulture must still keep the environment in mind with every decision because we rely on access to natural resources for our success, regardless of the facility we farm in.

Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. To pursue sustainability is to create and maintain the conditions under which humans and nature can exist in productive harmony to support present and future generations. – United States Environmental Protection Agency 

Why did I start my business?

I started my business because I was tired of working for someone else. It’s really that simple.  And like most entrepreneurs, I was not (nor am I) independently wealthy. So I obviously needed my idea to make money. I also had to add value to an industry I was experienced in and ensure that value was great enough to monetarily reward me for the effort and energy I put into my business.

All businesses share certain characteristics. Making money might be the factor that binds each one together. And whether you own or manage a business, you do what’s needed to turn a profit (while acting within the law and a certain set of ethics). I would go one step further and state that businesses don’t have a choice other than to focus on profit. After all, banks, investors and vendors demand profit (at some time), or they create a situation where a business struggles to exist or continue to operate. (See current state of the CEA Industry.)

The Realities of Running a Business of Any Size

1. First and foremost, it exists to turn a profit. 
2. Owners or managers are beholden to banks, lenders, shareholders and investors.
3. Owners have to consider the realities of attracting and retaining good employees in a competitive market place.
4. Most businesses (especially agricultural/horticulture) operate within the limits of tight profit margins. Managing cost drives many operational decisions.
5. Selling less from one year to the next is not normally an option.
6. Business people are not inherently bad people. Capitalism is not an inherently bad system. Both at times can force bad decisions to be made on behalf of a group of people.
7. For many business people, success is measured by one’s ability to accumulate wealth.

As a small business owner, I feel these pressures even though I have patient investors and business partners who believe in our vision and want sustainable growth. My business is also traditionally financed, meaning we rely on our own money or loans from the bank to operate. If we are to grow, both require that we turn a profit, as the bank won’t loan to us or we won’t have funds to grow if we’re not profitable.

I also have great employees who have dreams, which cost money. These range from something as basic as buying their kids new clothes or taking the family on an annual vacation to bigger dreams such as buying their first home or saving for a well-deserved retirement. So assuming business owners truly value their employees, they must achieve profit to retain them. If we fail, they will leave for opportunities elsewhere.

We must also take into account the reasons people start businesses. Businesses exist to fill a market need in return for a monetary reward. For most of us, this is seen in our mission and vision statements. 

Here are a few examples from leaders in the controlled environment agriculture and food industry:

First, I admire these companies for publishing their mission statements (which came directly from their websites). Yet how many times do you see the word “environment” mentioned? For those that use the word “sustainable,” how do they define it? A business can be sustainable by definition and not environmentally friendly at the same time.  

I am well aware of the impact my companies have on the environment, and that our vision and mission don’t mention the environment until you get much deeper into the business plan. The environment is part of our decision-making process, but it is not the primary driving factor (although I might want it to be).

Hort Americas Mission and Vision: 

Our Vision: To become North America’s leading commercial horticultural supplier of innovative goods and technical services.

Our Mission: To link the global manufacturers and providers of horticultural goods, services and technologies with the North American greenhouse grower/distributor community timely, efficiently and effectively. 

What does it mean to be a successful business person?

Oxford defines successful as “having achieved popularity, profit, or distinction.” I think most of us agree with this definition. While being challenged, the American Dream still drives the definition of “making it,” which mostly centers around financial measurements such as annual salary, financial freedoms, fewer hours worked, having a family, driving a nicer car, owning a bigger home and traveling more. Depending on where you live, “making it” may also include independent wealth and or fame.

This is no different for business people and entrepreneurs. In fact, we are more likely to be focused on “money” than others. In many ways, we have to be. Turning a profit makes our lives easier or less stressful. 

Because we prioritize profit, we also heavily focus on costs. It feels like we are pre-programmed to spend less on mundane items in our business processes, even if that means ignoring potential environmental impacts. Here is an example:

Greenhouse tomatoes make up the largest segment of any crop grown in a controlled environment, as determined by the production area dedicated to one crop.

Most growers need something that attaches the vine to the twine to support upright crop growth. Although plastics create environmental issues, it’s often used even though biorational or biodegradable products are available. Below are some real numbers to show the difference in product costs. Which would you choose?

Mid-2022 pricing provided by Hort Americas. Discounts are available to growers ordering bulk quantities. These discounts can sometimes make the differences even greater than shown in this example.

Choosing the plastic option does not make you a bad person. It simply shows you’re concerned with managing your costs because your immediate need is to turn a profit. It means you are a manager who is concerned with avoiding costs that make you non-competitive at the farmers market or in the produce aisle. In the end, your choice makes you normal.

Capitalism is winning around the world, according to the Fraser Institute Economic Freedom Report.

We must be willing to accept that the world is driven by capitalism. In many ways, this is not a bad thing. Countries that adopt capitalism pursue more economic freedoms and enjoy better socio-economic outcomes. But this in itself outlines problems because the focus is on achieving socio-economic outcomes.  

So if businesses are built for profit and governments govern so that we achieve better socio-economic outcomes, at what point do we prioritize the environment? The simple answer is, after people and profit (for many businesses, sustainability is broadly guided by the 3 P’s — People, Planet, Profit). 

I believe this is why we look to businesses and technology to solve our problems. Think about it, what are some of the most popular solutions to solving climate change?

• Transportation: Switch from gas-powered transportation to electric.
• Agriculture: Switch from cattle to a meat substitute cultured in a lab.
• Electricity: Switch from coal to clean energy alternatives stored in new battery technology.
• Fashion: Switch from virgin materials to reclaimed or recycled materials with cool labels and logos.
• Consumer packaging: Switch from virgin plastics to bio-based alternatives.

While as business leaders, each of these examples is something we should consider, I find it odd that you rarely hear sustainably-driven companies encouraging customers to “consume less” or “change individual habits.” Why? Changing consumer habits would likely lead to a larger environmental impact than creating a new product or business. Plus, consuming less is not good for our economy or businesses.

Finally, let’s consider discussing the definition of success. In current American culture, successful business founders and owners are often seen as celebrities, icons and role models.  Remember that politicians desire socio-economic growth under their watch because this means they stay in office. This encourages governments to elevate business to an elite status, allowing them to dictate or influence the way laws are written. Cities and states then court businesses, offering them incentives to come to their community and invest to increase the economic prosperity of those living there.  

And again, we are right back to profit. Without profit or prosperity, these communities would not offer incentives. Young people would not be interested in modeling their lives after business owners, and the government would ultimately care less about their opinions.

What does it mean to be sustainable?

The environment is everything that isn’t me. – Albert Einstein

So where does this leave us? A realist might suggest this presents us with multiple conflicts of interest. I believe these conflicts are best illustrated by asking a series of questions that I struggle to answer. So I will not pretend that I can provide answers for them.

1. How can businesses make the right choices for the planet if the market’s competitive nature does not afford this opportunity? 
2. How can a business continue to grow indefinitely and in an environmentally sustainable fashion, regardless of the product it makes or the services it offers, if the planet has finite natural resources? 
3. How can a business be truly sustainable if it relies on access to cheap or artificially inexpensive natural raw materials to be successful?  
4. How does a business appease investors, financiers and employees over time while focusing on environmental sustainability?
5. Do we need to select which parts of our businesses we make sustainable? And just outwardly agree that our businesses cannot be completely sustainable?

Answering these general questions always leaves me with a series of even more difficult questions. For example, how does technology save us from climate change when it leads to increased manufacturing and continued dependence on energy consuming of technologies? How do business owners change when they operate in an increasingly competitive global market? Why is preserving the environment the responsibility of businesses?  

But, the most difficult internal question for me to tackle is this:

If I am truly concerned about our planet’s health and the people who come after us, do I need to redefine what it means to build a successful business? 

I think the answer to this question is most definitely yes. This means identifying alternative  sources of funding, as well as ways to compensate employees and produce value. This may also mean we should no longer be concerned with profit. (Note, I said “may.”)

So now ask yourself, with all the realities of being a small or “big” business person, are we (as business owners) the right people to lead the environmental movement? And furthermore, are we the right people and vehicles to tackle social and legislative problems? After all, are we not part of the same people who profit from and created the system?

I loved to be proved wrong. Please email me any comments or questions regarding this article.

Chris Higgins is the founder of Urban Ag News, as well as President and co-Owner of Hort Americas, LLC. Message him here.

For business owners and operators in the indoor agriculture or controlled environment agriculture (CEA) space, whether you grow leafy greens, strawberries, or cannabis, or those  support these businesses, the main questions about the Inflation Reduction Act of 2022 are most likely going to be: 

What is the Inflation Reduction Act? 

How will the Inflation Reduction Act help CEA businesses be greener?

Will the Inflation Reduction Act help CEA businesses earn more revenue?

What are the next steps for interested businesses?

So what is the Inflation Reduction Act of 2022? 

There are two core elements of the Act: 

1) to advance the adoption of clean energy technologies and,  

2) to promote the use of climate-friendly agricultural techniques and products. 

It was signed into law by President Joe Biden on August 16, 2022, based on the ambitious but scuttled Build Back Better Act. 

The Act is slated to activate over $1 trillion in spending on energy and climate change, making it the largest investment into addressing climate change in United States history. 

According to several independent analyses, the law is projected to reduce 2030 U.S. greenhouse gas emissions to 40% below 2005 levels. 

It also supports:

• broader deficit reduction efforts, 
• provides Affordable Care Act subsidies, 
• re-invigorates prescription drug reforms, and 
• reforming elements of the tax code. 

Businesses that purchase large quantities of energy and/or produce agricultural goods will want to stay tuned for developments related to the IRA. 

How will the Inflation Reduction Act help CEA businesses be greener?

Three aspects of the Act should help indoor farmers reduce the energy and environmental footprint of their operations: reduced cost for grid-based and onsite clean energy, and additional funding for a key clean energy U.S. Department of Agriculture (USDA) program.

Reduced costs of grid-based clean energy

The Act incentivizes the creation of utility-scale renewable energy generation in the U.S. One of the primary benefits that indoor farmers – and all power users for that matter – will see is steadily lowering costs for that clean power. Clean energy will likely become even more competitive against fossil fuel-based electricity, making the promise of a net-zero carbon indoor farm more attainable.  Especially as CEA operators will feel increased pressure to operate their businesses with a lower carbon footprint, buying clean power from the grid will become an increasingly attractive option to do so.

Reduced costs of on-site clean energy technology

The Act extends the Investment Tax Credit for some technologies that may be directly installed in an indoor farm. For example, Combined Heat and Power, waste energy recovery systems, energy storage, biogas digesters, microgrid technology, geothermal heat pumps, and other clean energy technology will benefit, and as a result, the cost of adopting these technologies will likely drop. Customers who install and operate these technologies at facilities in brownfield sites, in certain low-income communities, or on tribal land will see additional benefits.

Reduced costs of clean vehicles

For farms wishing to operate a clean fuel vehicle fleet, the Act will reduce the upfront cost of new or pre-owned electric vehicles by extending and expanding a popular federal tax credit.

Strengthened USDA programs

The USDA will be a recipient of billions of dollars from the Act. If an indoor farm benefits from a USDA program, it will likely see some of the Act funds. For example, the USDA Rural Energy for America Program (REAP) will receive $2 billion through 2031 for competitive grants and loan guarantees to farms – including to urban indoor farms – for renewable energy systems or energy efficiency improvements. 

Will the Inflation Reduction Act help CEA businesses earn more revenue?

Perhaps one of the most intriguing parts of the Act is that it actively supports the development of agricultural processes and products that actively reduce carbon emissions. The authors of the Act, to be sure, primarily intended outdoor farmers to be the ones pursuing these activities. Typically, these activities would include improving ground and surface water, soil health, air quality, and drought and weather volatility.

But although indoor farmers don’t get an explicit mention in the Act, it is reasonable to expect that indoor farmers producing can also get in on the action. 

For example, producers of low-carbon building materials and other carbon-sequestering biomass products, such as those grown by some indoor hemp farms, will likely see increased orders due to preferential procurement rules that favor these materials.  Further, the Act will strengthen the Government’s ability to identify, source and procure low-carbon building materials for public and private building projects. 

What are the next steps for interested businesses?

We won’t know how or when the funding from this legislation will eventually trickle down to individual businesses, or for that matter, how much of the Act will survive attempts at dismantling it by Republican politicians. 

What we do know is that – to use an apt analogy – that the seed has been planted and is being nourished behind the scenes. Already, the U.S. Department of Energy and the U.S. Department of the Interior are advancing important projects with Act funding. 

Regarding agricultural opportunities, at the publication of this piece, the USDA is collecting public input to help identify strategies and provide recommendations that provide quantifiable reductions in greenhouse gas emissions. USDA is also seeking ideas for how to further streamline and improve program delivery to increase efficiencies and expand program access for producers, especially underserved producers.    

We are watching this space closely for development that can benefit our clients and indoor growers. Contact us directly and/or sign up for updates from Climate Resources Group to stay informed about the latest regarding how indoor farmers can benefit from the Inflation Reduction Act. 

Sam Milton is Owner and Founder of Climate Resources Group, a company that provides Energy and Sustainability services to the cannabis industry through its Enlighten Your Grow program. 

Recent company failures and layoffs will likely have people second guessing their commitment to the agtech movement and possibly controlled environment agriculture (CEA).

The past 15 years of my career have seen a rollercoaster of interest in my chosen industry. In the 2000s, the Canadians and Mexicans drove investments as they rapidly expanded to give U.S. consumers year-round access to greenhouse-grown tomatoes.

Then, starting between 2010-2015, vertical farmers and greenhouse leafy greens producers again jumped at the opportunity to rapidly scale new ideas as consumers demanded locally grown options. Also, investors (flush with cheap capital) enabled rapid development of new start-ups.  

The years 2000-2021 were also a very good time to be a cannabis grower as laws changed and investors took interest and advantage of legislative changes by quickly setting up growing facilities that spared no cost.  

And finally, from 2020-2022, ornamental growers benefited from a seismic shift in consumer activity as people stayed home (from work and vacations). They focused on beautifying their home spaces and discovered new interests in gardening and landscaping.

With all this activity, one fact is certain: Business people from all industries tried to join the excitement. They deployed capital and that capital inspired engineers. Those engineers then looked for (and continue looking for) opportunities to solve problems. 

Yet like all business cycles, opportunities shrink, people lose their jobs and investors lose money. This often occurs because much of the hype is not real or capable of creating a solid foundation for growth. 

Some of this is also driven by people not understanding our industry (which is nothing new), its problems and the amount of money existing industry players can afford to pay for creative solutions to their problems. 

Yet, just like other cycles, outside interest in our industry has created some amazing companies. Some of them will go on to be widely successful. Others will fail — but necessarily because of their ip, products or services. What they offered will be picked up by new investors and relaunched with different degrees of success. And many of these successes will fill industry needs, including in natural resource conservation, labor management and energy management.

Now, many of you know me. You also know that I am friends with a number of people who created and operated both the “innovative” farms and advanced agtech companies. Many are quick to point out their failures due to the layoffs, poor stock performance and door closures. As a result, this leads you to ask me questions such as, “Why are these farms and companies closing?” 

I wish I could give a simple answer. But as with most issues that matter, the real answers are not simple, and the simple answers fail to address the real problems. 

Why are doors closing?

In general, most farm failures and issues can be summarized under operational issues. Some forget that regardless of the technology used, these businesses are still farms. Farms that must operate and compete in a market with notoriously low profit margins and cutthroat competition.  Operational excellence and a conservative fiscal focus are not necessarily issues that can be solved by technology. (Technology can assist experienced managers, but it can not provide managers experience.)  

Operational factors such as labor, efficiency and quality are all areas that technology can help improve. But in the wrong hands or at the wrong price, technology can also create bigger problems by increasing burn rate in new businesses and putting considerable pressure on new ideas. 

In other words, AI is already used in our industry. The degree to which we use it is now being explored. But, AI itself will not solve the issues farmers deal with on a daily basis. In fact, used improperly, the additional cost of AI may cause certain farms to fail much faster because it can increase costs with no positive offsets.

What does this mean for our industry?

Failures are a part of business. Nearly 1 in 5 U.S. businesses fail within the first year, according to the latest data from the U.S. Bureau of Labor Statistics. And while these businesses fail for a variety of reasons, the top reason startups go under is due to misreading market demand — a mistake found in 42% of cases.  

I think this is especially true in the world of modern commercial horticulture and agriculture.  These are mature markets which (as stated before and cannot be stated enough) historically operate on razor-thin margins. Many underestimate how farmers learned to do so much with so little. They also underestimate how hard it is to sell produce, get shelf space and maintain that market position.  

Most importantly, however, people don’t understand the real scale that even “family” farms operate at. Agriculture is one of the world’s oldest industries. It has seen new trends, innovated and adapted to change for centuries. A few failures in the world of agtech will not have a major impact on the industry.

Looking for agtech? Watch for their pitfalls and know what questions to ask.

• Which systems are proven to be compatible with new tech?
• Which crops are the tech proven on and in what climate conditions?
• How much does the new tech cost to implement?
  • Know the internal labor cost vs savings, as well as potential cost.

So many new ideas and technologies

As I left Greentech in Amsterdam this past summer, a valued customer told me, “There is so much cool stuff in there. Too bad I cannot afford any of it.” This is such a true statement.  

Tradeshows and industry fairs are filled with all the newest tech and gadgets — some proven and many unproven. Manufacturers and vendors search for farms to buy their technology, so they can prove it on a commercial scale. This can lead to dangerous scenarios for both farms and factories. Tech providers can assume that every farm operates the same as their client(s). As a result, farms can sacrifice valuable production space to a technology that does not provide the equal amount of value to each partner (depending on the contractual agreements).

This has led some tech companies to build their own farms. It’s also where I believe the biggest problems occur.  Investors back inventors to build farms to prove out their tech. Many of these business models then expect the farm to turn a profit after developing and deploying their proprietary technology —  but this is not as easy as it seems. Not only is rolling out and developing technology an expensive process, it’s highly unlikely that one farm can cover these costs by selling crops that have historically low profit margins.  

For those taking capital from investors, remember not all capital is the same and it all comes with expectations.

For those looking to invest in farms, remember not everything can be solved with technology. Farming is filled with thousands of examples of technology that all produces the “same products” profitably and successfully.

The reality is, Agtech, AI and robotics in commercial horticulture and agriculture are here to stay. A few failed start-ups will not change this. What remains to be seen is, which companies will win the race to dominate the future of agriculture? What we know for sure is, at least 20% of the new companies formed over the past 2-5 years are destined for failure. 

Conclusion: AI and robotics have a role in the future of CEA.
Both are already being used in farms at multiple levels.
The truth is that the future has not been defined yet.

OptimIA is a research and outreach project aimed at offering production and economic information that is useful and can be applied to the indoor farm industry.

The concept of OptimIA originated when Erik Runkle at Michigan State University, Chieri Kubota at Ohio State University and Cary Mitchell at Purdue University were involved in an LED lighting project focused on greenhouse applications.

“It was getting to the end of the project and we asked ourselves what is the next frontier of lighting and growing,” said Runkle, who is a horticulture professor at Michigan State. “We came to the realization that the greatest opportunity and need for information was managing the environment for vertical farming production. We saw the next frontier as growing indoors and the need for research-based information. The name OptimIA came from our focus on optimizing indoor agriculture–Opti for optimizing and IA for indoor agriculture.”

In 2015 the three researchers submitted a USDA Specialty Crop Research Initiative grant proposal for funding that would focus on lighting, but would include other aspects of growing indoors.

“We went through the proposal submission process for several years before the USDA approved the grant for the OptimIA project,” Runkle said. “The proposal that was finally approved was to study the aerial environment as well as economics for indoor leafy greens. The aerial environment refers to air circulation, humidity, carbon dioxide concentration, light and temperature. Some of our team members are also studying root zone management of hydroponic crops using additional funding.”

USDA awarded $2.4 million to the OptimIA project in September 2019, which was scheduled to be completed in four years. Runkle is the project director with the funding split between six researchers. In addition to Runkle, Kubota and Mitchell, the OptimIA team consists of Roberto Lopez, horticulture professor at Michigan State, Simone Valle de Souza‬, ag economist at Michigan State, and Murat Kacira, director of the Controlled Environment Agriculture Center at University of Arizona. Besides these co-principal investigators, other collaborators on the project include Chris Peterson, ag economist emeritus at Michigan State, Jennifer Boldt, a research horticulturist at USDA-ARS, and Nadia Sabeh, president and founder of Dr. Greenhouse Inc., which specializes in the design of HVAC systems for indoor plant environments.‬‬‬‬‬‬‬

Focused on the needs of indoor growing

The OptimIA project objectives were based on feedback from commercial vertical farms.

“Erik, Cary and I visited several commercial vertical farms before we started this project,” said Chieri Kubota, who is director of the Ohio Controlled Environment Agriculture Center at Ohio State University. “We received feedback from growers as to what to work on using USDA funding.”

Based on input from commercial indoor growers, three areas of research were identified:

1. Develop economic information, including the costs, potential profits and conduct an economic analysis to determine the strategies to improve profitability based on that information.

2. Vertical farms have the capacity to optimize multiple environmental factors at the same time. The information for co-optimizing more than two of these factors together didn’t exist. OptimIA is looking at co-optimization of multiple factors in order to optimize production performance of plants to increase yields.

3. OptimIA is looking to provide extension outreach to educate the professionals who are involved in vertical farming. Often the people who are trying to develop commercial indoor farms are educated in the business sector or other sectors like agronomy and may not have training in controlled environment production.

“Economics is a major part of this project,” Runkle said. “There is no doubt that high quality leafy greens can be grown in indoor farms. The challenge is how to do this profitably and sustainably. The economists on our team are working to quantify the costs of production and then determine the greatest opportunities to reduce input costs.

“There is very little financial information available about this sector of the controlled environment industry. It is very competitive and secretive, so it is difficult to get a clear sense of the economics. There are more researchers studying the plant production side, but the OptimIA team realizes the importance of the economics.”

Industry participation opportunities

Commercial growers and allied trades people can become involved with OptimIA by attending OptimIA’s annual stakeholder meeting.

“In the stakeholder meetings those people or companies willing to collaborate or who have been collaborating with us can participate in determining specific collaboration opportunities and to provide feedback to our research outcomes,” Kubota said. “We have on-site trials planned for testing some of OptimIA’s research findings in commercial settings. These findings might include the optimum light spectra for growing specific leafy greens or sensing the environmental inputs that might cause nutrient disorders like tipburn. If any stakeholders or companies are interested in testing a new approach in their facilities through this on-site collaboration we welcome that opportunity.”

Another form of support from the industry can come through in-kind support pledges.

“Initially this project proposal was submitted to USDA with a pledge of in-kind support,” Kubota said. “Many companies, including lighting, growing media and fertilizer manufacturers have provided in-kind support pledges. We can add additional in-kind support contributions if other companies want to provide technologies useable in the project, as well as on-site trials if a company wants to conduct trials. Doing the trials means a company has to be willing to spend the time, production space and employee participation. These are evaluated as in-kind support.”

Need for more grower collaboration

Because of the competitiveness currently within the indoor farm sector, there has been some hesitancy from commercial growers to share production and economic information.

“Some of these indoor farm growers are of the mindset that they want to dominate their sector,” Kubota said. “They aren’t thinking that the industry is new so let’s help each other in order to establish the sector together so that it can grow.

“Another issue is most of the funding for the indoor farming sector comes from venture capital. These indoor farms are chasing a limited number of investors. The potential leafy greens and other indoor farm crops market is huge. If growers work together to try to bring the technology together and develop some type of standardization, it would be easier to introduce new supporting technologies.”

Kubota said many indoor farms are designing and developing unique production systems.

“Because of the unique technology being incorporated into these farms, it is not easy to develop automation or adapt other existing technologies to support current systems because they are not standardized,” she said. “Because of the funding issues and the culture it can be difficult to get started in the indoor farm sector.”

OptimIA researchers said at times it has been difficult collecting specific information from indoor farm companies.

“The challenge is indoor farm companies don’t like to share much about their technology or about their production,” Runkle said. “They don’t like to share what their light set points are or what their production cycles are. They don’t like to get into specifics because it is their intellectual property.

“When we have opportunities for input on our research, we do receive some helpful information. One example is with our light studies, we have been delivering light intensities that were common three years ago, but now indoor farms are delivering more light. Growers would like to see studies done with higher light intensities, which shows the industry is developing very quickly. It’s good that the indoor farms provide input, but they need to share more of their interests and feedback related to our studies. This could influence what our treatments might be.”

Disseminating research findings, educational information

One of the major ways OptimIA is disseminating information about its research findings is through its monthly Indoor Ag Science Café webinars.

“We often include our own research findings in the webinars, but we also invite other presenters to share educational information,” Kubota said. “Originally the webinars were supposed to be a closed forum so that people could discuss things without having to worry about comments or information being publicized. When the Café started in 2018 there were about 60 participants in the listserv who received information of the monthly topics. Since then the number of people participating in the webinars has increased to over 1,300. 

“Many of the participants are international because they don’t have these kinds of events in their own countries. That is one of the reasons we wanted to improve communication. We want to respond to their needs more effectively. We keep looking for ways to provide information to the indoor farm industry.”

Researchers, who are not members of the OptimIA team, have also done presentations for the Café.

“These other researchers are working on critical areas of indoor vertical farms,” Kubota said. “For example, Paul Fisher at the University of Florida has discussed biofilm, food safety and water quality. A.J. Both at Rutgers University talked about the basics of sensors, how to use them and how to install the appropriate sensors.”

Although some commercial indoor farms, including Plenty, 80Acres Farms, Oishi and Harvest Moon Farms have done webinars, some have declined because the presentations are usually recorded.

“Many representatives from commercial indoor farms do not like to be recorded. Consequently there aren’t as many commercial corporation presentations on the OptimIA archive page. Some companies do not want me to record their presentations. Companies that do presentations sometimes deliver very general information that lacks specifics.”

For more: Erik Runkle, Michigan State University, Department of Horticulture; runkleer@msu.edu; https://www.canr.msu.edu/people/dr_erik_runkle. Chieri Kubota, Ohio State University, Department of Horticulture and Crop Science; kubota.10@osu.edu; https://hcs.osu.edu/our-people/dr-chieri-kubota. OptimIA, https://www.scri-optimia.org/.

This article is property of Urban Ag News and was written by David Kuack, a freelance technical writer in Fort Worth, Texas.