Sunday, December 3, 2023

How new indoor farmers can avoid growing pains

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High-profile indoor farming failures have made the news in the past two years, but that just means the sector is moving into a new era, says an expert.
Professor Paul Gauthier is urging the CEA sector in Australasia to kick off with a more collegial, open environment than that witnessed in the United States.
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A world-leading authority on vertical indoor farming is urging companies to avoid re-inventing the wheel when they start, and share more information among themselves on how to build successful, long-term business models.

Professor Paul Gauthier of the University of Queensland provided some candid insights to sector interests at a Plant & Food-Callaghan-sponsored seminar on controlled environment agriculture (CEA) this month.

It is estimated that the global vertical farming sector will be worth US$12 billion a year by 2026, well up on  the US$2.13bn of 2018.

Gauthier said he sees the sector moving into a new phase, amid a number of company collapses and significant staff layoffs in the past two years.

One of the highest profile failures has been the bankruptcy of Swedish urban agriculture company Plantagon in 2019 after cash flow problems overwhelmed the business, which was trying to integrate food production into an urban environment.

But Gauthier said the losses and changes represent a sector moving to a new phase, where much of the early research work has been done.

“Some companies will collapse, some will lay people off, it is just a way of saying we need one sort of person at that stage, and now we need this sort of person at this stage. When you start you are a pioneer.”

He pointed to more than 40 CEA companies around the world that are proving successful.

One of the big winners in the past year has been United States-based Plenty, also an early starter that has been restructured and has landed a US$1bn (about $1.58bn) deal for vertical farm development.

The company burnt through $200 million in its first year on R&D, but now it is in 100% control of all of its own technology, growing IP and farm design. 

The latest deal means expensive growing facilities have funding security, leaving the company to focus on its growing capability.

He pointed to the continuing surge in food demand out of Asia as a factor that will almost guarantee CEA will become increasingly viable in a more mature, informed market.

“China will be the single biggest importer of food by 2050 and compete for food imports. It will hoover up all countries’ supplies, making food security for things like meat, fish and vegetables important.” 

That comes at the same time as climate change threatens the world’s ability to increase food production by 77% by 2050, as needed.

Even Australia, a country where most take food security and capacity for granted, is at risk.

“Imports to Australia are higher than most expect,” Gauthier said. 

Even fertile Queensland imports AU$134m ($142m) of fruit and vegetables a year.

CEA provides a means of localising food production, and removing the increasing risk of climatic and weather impact that is starting to play on the minds of growers who may have already been wiped out by events.

“The Australian wine industry is struggling. A grape represents eight years of growing and the sector has had two years of flooding. Growers are asking ‘Is it worth replanting to have this happen again within eight years?’”

Gauthier said the decision to possibly invest in a $25-$30m CEA farm may offer greater security of return despite the high capital cost, given the removal of weather risk factors.

He urged the industry to step up collectively and learn from greenhouse growers in the Netherlands who have a open, collegial environment for sharing knowledge.

“Share information, because if you do not you will all collapse at the same time.” 

Sharing knowledge can help prevent having the same mistakes made again, and the wheel re-invented –  something he said he has seen plenty of.

He also urged more targeted R&D and enhanced public-private partnerships. 

In late March the New Zealand government announced the investment of $3.53m into a four year programme partnership with Hamilton-based vertical farming company Greengrower. The investment is to explore crop options and processes in the CEA sector.

A focus on up-skilling staff is also a priority, he said.

Skill shortages plague the sector, and are proving the greatest issue in the US, where one company has a new farm constructed but lacks the staff to operate it.

Gauthier is overseeing the formation of an indoor farming research centre at the University of Queensland. He is also urging growers throughout Australasia to form a united body to promote better knowledge sharing.

“We have one shot to do it right, compared to what the United States has done.”

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