The business case of vertical farming (US)
Indoor vertical farming is seen as the future of agriculture, but there are plenty barriers. These are listed below
- Tricky Economics: Current high capital and operating cost means a massive price gap in retail price of produce. Scaling up however, shows large cost savings. Examples from industry leader Aerofarms:
- Organic kale average cost $4.99 / 500g vs $14.18 / 500g from vertical farming.
- A 9 ha operation as estimated start up capital costs of $4 mill (~ R54 000 000) and estimated annual energy costs of $ 300 000 (~ R 4 000 000) depending on region. Improving lighting tech drives down costs significantly.
- Scaling up from 9 ha to 30 ha shows costs being cut by ~ 1/3.
- Internationally, there is an unproven demand for food grown indoors. In SA specifically, no commercial retail market for premium organic produce.