PlayBook 3Q 2018

How vertical farming aims to eliminate food deserts from urban landscapes

September 17, 2018 View comment (1)

A leafy green salad or a juicy cheeseburger? For millions of Americans, the question's a no-brainer … and much of it has to do with a lack of fresh produce at affordable prices close to home.

According to the US Department of Agriculture, food deserts are defined as areas with limited access to supermarkets, supercenters, grocery stores, or other sources of cheap, healthy food. These deserts affect more than 20 million people in the US, per a USDA estimate, and they typically form in urban population centers—particularly low-income neighborhoods—as major food retailers followed waves of suburbanization to set up shop further from city centers during the latter half of the last century. However, food deserts can crop up anywhere with a pronounced lack of accessibility to inexpensive sources of nutrition, as measured by the distance to a store or by the number of stores in an area.

For those who must travel lengthy distances to eat a healthy dinner, there's often no real choice between buying ingredients for a salad or grabbing a burger from the fast-food joint around the corner. And it's not just Rust Belt cities like Cleveland and Detroit that have struggled to cope. San Francisco, despite its tech wealth and relative proximity to California's Central Valley, is also home to its own food deserts such as Bayview-Hunters Point.

But rapidly maturing agricultural technologies like vertical farming have already started to produce food oases where deserts once dominated by taking aim at the twin problems that perpetuate them: the amount of unhealthy foods readily available nearby and the relative inconvenience of attaining cheap, nutritional options.

A novel form of mass agriculture

With supply chains that depend on trucking produce into city centers, sometimes from thousands of miles away, conventional agriculture is inefficient and expensive—to say nothing of the carbon footprint involved in shipping and storing foods. Alternative methods of production within cities are needed to eliminate food deserts, and those developments can't come soon enough; global production will need to increase by 50% to feed another 2 billion people in 2050, according to the UN's Food and Agriculture Organization.

But alternative methods of production won't solve everything. A higher cost of living in urban areas can also eat into disposable income, resulting in even those with greater means choosing unhealthy options to trim expenses. That highlights the need for alternative methods of distribution within cities as another way to drive down prices.

That's where vertical farming comes in—though the term, much less the practice, hasn't been around long. Credit for the concept has gone to retired Columbia University medical school professor Dickson Despommier for his 2010 book, "The Vertical Farm: Feeding the World in the 21st Century."

Just as the first farmers domesticated cereals in nearby fields before inventing techniques like irrigation to improve yields, vertical farmers have adapted existing indoor ag methods to grow leafy greens in tall warehouses and freighters using advanced technologies like LEDs to replace sunlight.

Vertical farming tackles inefficiencies in production and distribution head-on by growing healthy food near to where it's sold. The evolution from simpler forms of indoor ag, such as growing tomatoes in greenhouses or producing several tons of kale in vertical farms, seemingly has a parallel in humanity's rise from single-story dwellings to the boom in skyscrapers 100 years ago—and the engineering and technological advancements are no less impressive.

By reducing inputs, eliminating crop protection products like pesticides from and incorporating machine learning tools into the growing process to optimize water and light levels, vertical farming has also started to combat many of the capital-intensive issues around growing nutrient-rich produce. Slowly but surely, companies operating in the space will draw down the price on fresh fruits and vegetables grown vertically. In the meantime, these companies have also boosted their bottom lines by targeting the cultivation of greens that carry higher premiums.

Those financial benefits and opportunities have lured deep-pocketed backers to the industry to cut some sizable checks. Venture capital investment, including from corporates, into greater agtech last year represented roughly $1.9 billion across 238 completed deals. Meanwhile, the indoor ag space rode that investment wave to hit a peak in 2017 of some $346 million across 37 financings. But the bulk of that funding went to just one startup.

Plenty: SoftBank's big bet on agtech 

Last summer, SoftBank deployed its massive Vision Fund to lead a $200 million Series B for Bay Area-based Plenty. The deal represented the Vision Fund's first major foray into agtech.

"By combining technology with optimal agriculture methods, Plenty is working to make ultra-fresh, nutrient-rich food accessible to everyone in an always-local way that minimizes wastage from transport," said Masayoshi Son, chairman & CEO of SoftBank, in a news release. "We believe that Plenty's team will remake the current food system to improve people's quality of life."

Founded in 2013, Plenty raised a $26 million Series A in 2016 from funds run by Amazon CEO Jeff Bezos and former Alphabet chairman Eric Schmidt alongside the likes of Data Collective, DCM Ventures and Finistere Ventures. Like others operating in the space, Plenty uses a tiny fraction—a measly 1%—of the water deployed on conventional farms and also leverages machine learning, the IoT and Big Data to optimize the growing environment for crops and minimize the energy used in production. Plenty's vertical farms occupy a few-hundred-thousand square feet—the indoor equivalent to a few acres of open field. Meanwhile, rows of arugula and kale sprout not from soil but columns covered in a growth medium comprising recycled bottles designed to hold roots in place and deliver nutrients.

Plenty's buildout with SoftBank's support should also encourage investments into the companies behind complementary agtech solutions like sensors and precision ag, the proprietary software programs created to provide data management and analytics for monitoring water and nutrient levels, along with the presence of plant pathogens.

A greener future

From early on in their rise, skyscrapers have been synonymous with the growth of urban populations. And from just as early on, some architects and engineers reveled at the prospect of farming in the sky.
 

Some 55% of the global population currently inhabits urban areas, and the UN estimates this figure will jump to 68% by 2050.


In 1909, Life magazine ran an illustration by the popular cartoonist Alanson Burton Walker depicting a skyscraper containing single family homes complete with their own gardens.

Although quaint to contemporary eyes, Walker's depiction of cultivation in the skies should no longer feel so farfetched with companies like Plenty starting to bring comparable methods closer to reality—developments that could eventually result in the elimination of food deserts from the contemporary urban scene.

Some 55% of the global population currently inhabits urban areas, and the UN estimates this figure will jump to 68% by 2050. Mega-cities of more than 10 million inhabitants are expected to number 43 worldwide by 2030. These cities will represent a long-term investment play for firms focused on the confluence of farming, food and infrastructure, with companies in vertical farming well-positioned to capitalize on these bets by cultivating a central role for indoor ag in sustainable urban development.

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