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Is Vertical Farming Economically Viable?

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By the year 2050, the global population has been projected to reach or even exceed 9 billion. According to the United Nations Food and Agricultural Organization, this would mean that the amount of available land area suitable for growing crops will decrease to one-third compared to what it was in 1970. With drastic climate changes likely to take place over the next few decades, our ability to grow a sufficient amount of crops for the huge population will be limited further because of more instances of damage to ecosystems, droughts, floods, and heat stresses. In this scenario, the need for a more innovative method of food production can’t be ignored.

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In recent years, vertical farming has emerged as a promising alternative where plants are stacked vertically in tall structures. The most encouraging fact about vertical farming is that it requires only one percent of land and water compared to conventional agriculture. Many experts strongly believe that vertical farming can address the global food production shortage while reducing the agricultural sector’s environmental footprint. There have never been any doubts about the environmental benefits of vertical farming. However, its economic feasibility has been a concern in the past. Fortunately, with the advent of advanced equipment and supplies, things have changed over the last few decades. The economic benefits resulting from decreased resource use and increased efficiency as well as sustainability can surely outweigh its large upfront cost.

The upfront cost has always been a major obstacle for large scale implementation of vertical farming. This is primarily because of the high real estate cost in urban centers and the infrastructure required for the regulation of plant growth. Steady access to LED lights is also a requirement because plants grown indoors have limited access to sunlight. It has been observed that the upfront infrastructural and equipment costs for just one vertical farm facility may touch hundreds of millions of dollars.

Agron, a wholesale agriculture platform, argues that once a vertical farming facility is up-and-running, the upfront cost gets outweighed by many elements. Real estate prices are certainly higher in urban areas. However, the transportation costs are reduced greatly by localized crop production in the vicinity of high-density population centers. This, in turn, may help eliminate wholesale produce price fluctuations caused by fuel price variability at a given time.

The controlled operating condition of vertical farming is the most important factor that makes it economically viable. The external environmental conditions impose serious additional costs in traditional agricultural production. However, the controlled environment of a vertical farm eliminates all such expenses. For example, there is almost no cost for pesticides because the crops are not open to the elements. There is no effect of seasonality because conditions such as access to light and water, humidity, at temperature can be regulated internally to the optimum level. This can help growers increase the production rate significantly. By controlling ambient temperature and nutrient level, growers can also optimize the plant growth rate and increase the nutritional value of the plants. The combination of more efficient production rates and higher yield helps balance the high capital cost of vertical farming.

Experts suggest that vertical farming will become even more economically viable in the near future as land and environmental conditions continue to become less suitable for producing crops, making it an extremely expensive affair to sustain the agricultural sector.

Now, the next big question is the economic viability of vertical farms as a replacement for broadacre farms. The answer to this question depends mostly on governmental funding and private investment. Vertical farming has been listed as a Program Area Priority under the USDA’s Agriculture and Food Research Initiative Competitive Grants Program for further study and potential implementation. The USDA also extends support to farmers adopting conservation practices, which may create federal funding opportunities of vertical farming in the near future.

 

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