5 Things to Consider While Starting Your Vertical Farm or Greenhouse

Written by: Niko Simos

December 10, 2023

Establishing your urban farm or farming company, whether it be a greenhouse operation, vertical farming business, or shipping container farm involves time-consuming steps. These new indoor farming techniques, particularly beneficial in urban areas and areas with limited arable land, employ advanced techniques for crop production. Achieving a sustainable financial model for such ventures requires meticulous effort and consideration of factors like resource management, technological integration, and strategic planning.

In this article, we are sharing five steps to serve as essential guides for those venturing into controlled environment agriculture with an interest in opening their own indoor farm.

Steps to Consider When Planning a CEA Farm

Embarking on the journey of planning a vertical farming business or a greenhouse farming company involves intricate steps and elements that must seamlessly fit together. This process demands substantial time, energy, and financial investment, with potential setbacks if errors occur.  

If you are new to controlled environment agriculture, we strongly suggest you spend a good amount of time educating yourself on the industry and the specific growing methods, particularly if you do not come from an agricultural background. The five steps detailed below will help you get started on that journey.

1. Decide Which Crops to Grow Based on Location

We often see entrepreneurs select their crops based on personal interest or a preconceived notion of what will be profitable. However, we always encourage studying the specific market first before selecting which crops to grow. While microgreens, mushrooms, and strawberries receive a lot of press and public interest, that does not mean your market area needs additional supplies of those crops. Remember, while CEA can offer fresher more nutritious products, they are more expensive to produce, and at this time, there is very little consumer distinction between a CEA and a field-grown product. Therefore, like it or not, CEA farmers have to consider traditional farming as a competitor.  

To gain a better understanding of a crop's marketability, we recommend comprehensive market research. This research will show which crop types are already saturated in the market and which ones have demand but are lacking in supply. We encourage growers to focus on the latter crop types. This determination will also shed light on who your customers might be and what those off-take channels are. For example, you may find demand from local restaurants that require a specific amount of a product daily, or perhaps your community demonstrates a strong desire for a direct-to-consumer brand with online ordering. The answers to these questions will strongly inform your business model and which of the vertical farming techniques works best.

2. Greenhouse or Vertical Farm?

Once you have determined the crops suitable for your location, the next crucial step is to decide between a greenhouse and an indoor vertical farm with stacked layers. While both greenhouses and indoor vertical farms are designed to facilitate optimal plant growth, they exhibit distinct differences that require careful consideration.

Consider the initial and ongoing expenses (CapEx and OpEx) associated with each option. Vertical farming techniques employ artificial lighting and generally incur higher upfront costs and ongoing energy expenses. This is in contrast to greenhouses, which may have higher water consumption but lower energy demands due to their reliance on natural sunlight. Understanding this financial aspect is pivotal in making an informed decision that aligns with your budget, resource availability, square feet constraints, and crop production requirements.

In addition, factor in the long-term goals and scalability of your chosen structure. Evaluate how easily you can expand your operation as your business grows, ensuring that your chosen cultivation environment can adapt to the evolving needs of your agricultural venture.

This determination is an important reason why we encourage pilot farms. Due to the complexity of these growing systems, it would be foolish to assume that your farm is going to translate perfectly from paper. Pilot farms are important for determining proof of concept from multiple angles including crop types, growing systems, growing environments, consumer base, and offtake channels. As these businesses require significant investments, starting with a pilot farm also requires less upfront capital and lowers financial risk.

Ultimately, this strategic decision-making process ensures not only the immediate success but also the sustainable growth of your greenhouse or indoor vertical farming business.

3. Automation Technologies and Resource Management

Optimizing resource utilization and implementing intelligent management practices is fundamental to ensuring the future success of your controlled environment farm. The integration of cutting-edge technologies such as drip irrigation, hydroponics, artificial lighting, and advanced climate control systems can profoundly transform your farming operation. Automation takes center stage, elevating efficiency by meticulously monitoring and controlling crucial aspects, including environmental conditions, irrigation schedules, and the precise timing of grow lights.

Staying ahead of the curve in agricultural technology is critical to maintaining competitiveness and productivity amid the ever-evolving modern farming terrain. A groundbreaking player in this arena is data farming technology. The integration of Artificial Intelligence (AI) into farming processes serves as a transformative force, automating decision-making tasks that span from real-time crop monitoring to precision pest control. Beyond streamlining daily operational tasks, AI contributes significantly to farm optimization, precise yield prediction, and error reduction.

Embracing AI, coupled with the strategic utilization of Software as a Service (SaaS) solutions, empowers your farm with the essential tools for making informed, data-driven decisions. This not only enhances operational efficiency but will be instrumental in helping to ensure the sustainability of your agricultural practices. 

4. Getting Quotes from Suppliers and Constructors

As you embark on the journey of building your farming operation, the acquisition of essential equipment and materials becomes a pivotal step. The list is extensive, ranging from grow lights, hydroponic systems, and racking systems to carbon dioxide supplies, water supply infrastructure, heating and cooling systems, and various processing equipment.

The process of obtaining quotes from multiple suppliers can be a time-consuming endeavor, involving meticulous comparisons of prices and specifications from various providers. This crucial step demands a keen eye for detail and a dedication to securing the best deals for your venture.

Agritecture's Partner Network steps in as a valuable ally, streamlining the quote acquisition process and assisting you in obtaining economic quotes. This not only saves you time but also ensures that you receive competitive pricing for the equipment needed to set up your operation.

Moreover, seek counsel from experienced farmers or industry experts during this equipment acquisition phase. Whether it be the Agritecture team or your own network of growers, their insights and recommendations can be instrumental in ensuring the reliability and quality of the equipment you are investing in, safeguarding your operation against potential setbacks, and fostering a foundation for long-term success. In the intricate maze of agricultural equipment, strategic planning and informed decision-making pave the way for a seamless and efficient setup of your farming venture.

5. Business Plan

As you approach the culmination of your journey in establishing a vertical farm or greenhouse, the importance of a comprehensive business plan cannot be overstated. A business plan is essentially a strategic document that outlines the goals, operations, and financial projections of your agricultural venture. It serves as a roadmap, guiding you through the intricacies of your business and providing a structured framework for decision-making.

The business plan compiles all the extensive research and decisions you have made throughout the planning phase into a cohesive narrative. It includes detailed estimates for Capital Expenditure (CapEx), Operational Expenditure (OpEx), waste management strategies, and the anticipated return on investment (ROI). These financial projections are critical components, providing a realistic overview of the financial health and sustainability of your venture.

When seeking funding from investors or financing institutions, your business plan becomes your most valuable asset. It not only showcases the viability of your agricultural endeavor but also instills confidence in potential backers by demonstrating a thorough understanding of your market, competitors, and risk mitigation strategies.

One tool available to help you with your business planning purposes is the Agritecture Designer platform. This user-friendly solution empowers you to create detailed projections, making the complex task of financial modeling more accessible. The platform guides you through each step, ensuring that you cover all essential aspects of your business plan, from revenue forecasts to expense breakdowns.

Within your business plan, emphasize a commitment to sustainable and environmentally friendly practices. This not only aligns with the growing demand for responsibly produced food but also positions your venture as a responsible player in the agricultural industry. In an era where environmental consciousness is paramount, showcasing ethical and sustainable business practices can attract investors who share these values.

A business plan is not just a document; it is a dynamic tool that crystallizes your vision, quantifies your goals, and sets the stage for the success of your vertical farm or greenhouse. 

Final Thoughts

The initiation of a vertical farm or greenhouse demands meticulous planning and consideration of a multitude of factors. Yet, in this intricate journey, you need not traverse the path alone. Agritecture Consultants stand as seasoned guides, ready to lead you step by step through the intricate landscape of controlled environment agriculture. Their wealth of expertise and unwavering support serve as a compass, directing you toward transforming your farming venture into a flourishing and sustainable reality.

Embarking on the agricultural journey with Agritecture Consultants means more than just assistance; it signifies forging a trusted partnership that extends beyond the conventional advisory role. Why undertake the intricacies of planning, decision-making, and implementation in isolation when Agritecture Consultants can be the steadfast companion on your odyssey to agricultural success? With their guidance, your journey becomes not just a solo endeavor but a collaborative venture, ensuring that each step is met with wisdom, experience, and a shared commitment to achieving lasting success in the realm of controlled environment agriculture.