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Give me a basic overview of what vertical farming is, who the key players are, how they differentiate themselves along with a detailed overview of the company AeroFarms and how they fit into the space?
Hello! Thanks for your question about the vertical farming industry. The short answer is that vertical farming is a $1.4 billion industry worldwide, with rapid growth projected. AeroFarms is a key player in the market with a patented aeroponics system, and competes with other companies such as Indoor Harvest and Bright Agrotech. You'll find a deep dive of my research below.
METHODOLOGY
To respond to your request, I searched through industry reports, company websites, trusted media sites, and other sources to find the requested information. I looked first for a overview of what vertical farming is and how it works. Then, I looked into market research on vertical farming to understand the market size, growth, and key drivers. Third, I did a deep dive into AeroFarms. Finally, I looked into AeroFarm's key competitors.
OVERVIEW OF VERTICAL FARMING
Vertical farming is an agricultural system in which plants are grown in towers or other vertical structures, with the intention of producing high yields in a small amount of space. At most vertical farms, plants are grown without soil, instead using hydroponic or aeroponic methods, which involve nourishing the plants using a nutrient-rich water solution. In aeroponics, the solution is misted onto the crops. Artificial light is used instead of, or sometimes in addition to, natural light.
Advocates of vertical farming say that it will be necessary to feed the world's growing population as arable land runs out for traditional farming methods. Moreover, they argue that it is more environmentally sustainable, allows for the production of crops year-round, can facilitate a shorter travel distance between farm and consumer, and produces organic crops, which are growing in demand. The downside of vertical farming is that it requires massive overhead costs to purchase the necessary facilities and equipment, as well as high levels of technical knowledge to keep them operating well. Moreover, the production cost for vertically-grown crops is generally high. This article argues that vertical farming has many hidden costs. I'll list a few here:
1. Regulatory barriers.
2. Not understanding input costs for growing (power, fertilizer, waste, etc.)
3. Having a mismatch between different pieces of equipment.
4. Not selecting profitable crops to support your initial capital costs.
5. Equipment maintenance.
6. Legal expenses.
7. Hiring and maintaining high quality growers.
As of a few years ago, most of the world's vertical farms were based in Japan or other parts of the Asia-Pacific region. By 2012, there were about 100 companies worldwide. Now, there are at least 24 farms just in the U.S.
MARKET
The vertical farming market is currently worth an estimated $1.4 billion globally. It's projected to grow at a CAGR of 24.8% for the next several years, reaching a market size of $5.8 billion by 2022. One high-growth segment will be lighting. LED lighting systems are replacing traditional lighting systems for vertical farms, as they're more efficient and generate low heat, and are becoming more affordable. Hydroponic growth mechanisms are segment of strong growth. Hydroponics are less complex than other methods and more environmentally sustainable.
The Asia-Pacific region has the largest share of the vertical farming market, and this is expected to remain the same through 2022. The region has a high population and limited fertile agriculture land. China and Japan have already invested heavily in vertical farming and the industry has an established presence in the countries. In terms of product segments, many vertical farms sell microgreens or lettuce to high-end restaurants or retail stores. However, there is an untapped market for selling direct-to-consumer or to the food supply chain. Vertical farming could also be used for medicinal plants.
AEROFARMS
This company produces and markets an approach to vertical food production using LED lighting and aeroponics. In the company's own words, "We disrupt traditional supply chains by building farms on major distribution routes and near population centers. We defy traditional growing seasons by enabling local farming at commercial scale all-year round. We set a new standard for traceability by managing our greens from seed to package. And we do it all while using 95% less water than field farmed-food and with yields 130 times higher per square foot annually."
AeroFarms has a patented aeroponics growing system that produces crops in a fully-controlled indoor environment. This leads to faster harvest cycles, predictable results, increased sustainability, and improved food safety. It's a closed-loop system that uses less water than both hydroponics and traditional farming. The system constantly monitors plants to ensure optimal nutrition, and uses LED lights with a specific, engineered "light recipe" for each plant. AeroFarms has a heavy focus on data and analytics, claiming to monitor 130,000 data points every harvest, and using predictive analytics to fine-tune the growing system. Finally, the AeroFarms system is designed to be scalable, adapting to various sizes and locations.
AeroFarms has raised over $60 million since it was founded in 2004, and has an estimated revenue of $7 million. The company's headquarters in New Jersey is a 70,000 vertical farm that harvests up to 2 million pounds of crops each year. The company has grown so rapidly that it has a supply-and-demand problem, receiving calls daily from all over the world about building vertical farms. To support this growth, AeroFarms is rapidly hiring for new positions and getting involved in local and global policy making around sustainable agriculture.
COMPETITIVE LANDSCAPE
I've identified some of AeroFarm's key competitors, and I'll briefly explain what each company is offering and how they're doing it.
1. Fujitsu: A Japanese IT company known for growing lettuce in large-scale vertical structures. According to the company, the lettuce is just meant as an example. The real goal of the company is to convince growers to utilize IT.
2. Bright Agrotech: This company claims that it designs and builds the most-installed vertical farming technology in the world. They offer solutions for high-density, practical, and productive vertical farming. The company is best known for its flagship product, the ZipGrow Tower.
3. Illumitex: A key player in the lighting segment of the vertical farming industry, this company specializes in lighting for vertical farms and greenhouses. The company's LED lights "deliver custom-spectra photons directly and uniformly on plants, allowing growers to produce plants in less time and with less energy."
4. Sky Greens: Based in Singapore, Sky Greens is the world’s first low carbon, hydraulic driven vertical farm. The company has a patented vertical farming system that they claim results in 10 times more yield per unit land area.
5. Indoor Harvest: This company designs and builds indoor farms for a variety of crops. They use both hydroponic and aeroponic systems.
CONCLUSION
To wrap up, vertical farming is a $1.4 billion industry worldwide, with rapid growth projected. AeroFarms is a key player in the market with a patented aeroponics system, and competes with other companies such as Indoor Harvest and Bright Agrotech. I hope this information is helpful to you! Thanks for using Wonder, and let us know if we can help you with anything else.