Jan 11, 2023
Originally published: July 15, 2021
Updated on: January 11, 2023 by Niko Simos and Sarah Jordan
In recent months, the vertical farming industry has been going through a correction period. We have seen high-profile farm closures and significant layoffs, leading many to wonder if there is truly a future for vertical farming.
In December of 2021, Agritecture’s Founder and CEO, Henry Gordon-Smith, predicted that the industry would experience a dip in hype or profitability, which he identified as the “trough of disillusionment”. This is not entirely bad, however, as it allows for vertical farming to correct its course and head on a more profitable path. It is important to learn from the mistakes being made now so we can avoid similar mistakes in the future.
We are sharing 5 common mistakes that various vertical farms have made in the hopes of redirecting our readers toward a more profitable future.
So, why are these vertical farming businesses facing so many challenges?
#1: Not collaborating with other industry professionals
Due to the competitive nature of the vertical farming industry, most experts tend to keep their methods and data close to their chest. This results in a lack of knowledge-sharing and collaboration which comes at a disservice to both entrepreneurs and the overall industry. Collaboration could make an immense impact on the development of new techniques, technologies, and solutions for common problems.
#2: Not investigating failed vertical farms to figure out where they went wrong
Table 1: List of Closed Indoor Farms Prior to 2022
Table 2: List of Q4 2022 Challenged CEA Operations, Europe and U.S.A. (Vertical Farms & Greenhouses)
Most of us tend to overlook failed businesses, only studying successful businesses to crack the code on what made them successful. We believe that we have nothing to learn from the mistakes of failed businesses when, in truth, there’s a lot of knowledge hidden here. Looking into why these failed businesses chose a specific supplier, location, business model, etc., can help you make better decisions for your own operation.
#3: Not collecting or analyzing data gathered from your farm
With an increasing number of technological advancements in the AgTech space, more and more vertical farms have sensors and cameras tracking everything from growth rate, plant quality, leaf count, soil moisture and health, and more. When measured and interpreted properly, controlled environment farming operations can use this data to improve yields and processes.
The problem here is that even though there is an incredible amount of data being collected, very little of it is being used to increase crop yield and improve operations efficiency. Conversely, many farms aren’t measuring or benchmarking their operation at all. A lot of farms go on to use generalized sustainability claims in their marketing and fundraising without having the ability to prove that their operation meets those same data points, misleading both consumers and investors.
#4: Not modeling and testing different growth scenarios for your business
Entrepreneurs are eager to launch their businesses. As a result, many fail to dedicate an appropriate amount of time to consider all the scenarios that may occur once they start operating their farm.
Agritecture’s Director of Operations, Yara Nagi, suggests speaking “to fellow farmers and to do your research in order to account for those scenarios. An example scenario is making sure you do a climate analysis before choosing your HVAC system.” This type of forward-thinking can save farmers a lot of hassle in the long run.
#5: Not thinking of your farm as a holistic business, but rather as parts of a whole
When planning a vertical farm, it is crucial to consider the future of the operation, from conception and design to growing and harvesting. Failing to consider issues you might encounter down the line is a huge problem. Creating an efficient farm layout and workflow is critical to the success of your vertical farm. The problem is not the production or yield of your crops. It’s operational efficiency and cost minimization.
Using conventional stacked layers with scissor lifts and multiple spaced-out rows of produce makes it difficult for growers to navigate the grow space to efficiently access and tend to each crop, thus wasting time and money.
Here, it’s key that you evaluate farm equipment options to choose the right solutions for your crops and grow operation.
How can you be better prepared for these challenges?
If you are just starting out in vertical farming or are in the process of transitioning your operation, Agritecture Designer can help guide you through the numerous incoming challenges.
Through our Commercial Urban Farming Course, you can learn more about failed vertical farming businesses and how you can avoid their mistakes. With our farm planning tool, you can get a better grasp of which grow system best suits your needs, and use this to better estimate the costs to start and run your operation. This is crucial in helping you launch a profitable business in your specific market.
Additionally, Agritecture’s rapidly expanding Partner Network can connect you with trusted equipment vendors and financing partners that can help support your business and make it profitable.