Can vertical farming overcome its growing pains? | FT Rethink

Overview

Vertical farming attracted more than $6 billion over the past decade, but high energy and financing costs, labor shortages, and limited knowledge-sharing have contributed to falling investment and company failures. The industry may still grow as food-security and climate pressures increase and AI improves farm efficiency, though its strongest opportunities may be in places such as Singapore and its path beyond a niche market remains uncertain.

Key takeaways

Vertical-farming investment dropped from more than $2 billion in 2021 to about $280 million last year, despite more than $6 billion invested over the prior decade.
Energy-intensive LED lighting and ventilation, higher borrowing costs, and skilled-labor shortages have undermined the economics of many vertical farms.
Secrecy about farming technology has limited the industry’s ability to share lessons and avoid repeating operational mistakes.
Grand View Research forecasts market growth from about $8 billion last year to $25 billion in 2030, while climate, water, and food-security pressures could support demand.
AI may improve farm efficiency, but vertical farming’s strongest prospects may be in specific locations such as Singapore, which produces only 6% of its own produce.

Chapters

0:00 Vertical Farming’s Investment Boom Meets High Costs

Investors put more than $6 billion into vertical-farming startups over the past decade, drawn by promises to reduce emissions, pesticide use, water consumption, pollution, and food miles.
Funding fell from more than $2 billion in 2021 to about $280 million last year.
Major failures including Bowery Farming and AppHarvest highlighted the strain of energy-intensive LED lighting and ventilation, higher interest rates, and shortages of skilled labor.
Companies’ secrecy around technology has made it harder for the industry to learn from mistakes.

1:15 Food Security and AI Could Renew Demand

Grand View Research projects the global vertical-farming market will rise from about $8 billion last year to roughly $25 billion by 2030.
Population growth, soil degradation, water scarcity, climate pressures on crops, and land diverted to biofuels strengthen the case for alternative food production.
Food-security concerns could encourage countries to produce more food close to home, while advances in AI could improve vertical-farm efficiency.

2:25 Singapore and Other Niche Markets May Lead Adoption

Singapore, which grows only 6% of its own produce, illustrates where vertical farming may have particular value.
Advocates argue the concept is sound but has so far been implemented inefficiently, with its potential varying by location.
As a young industry, vertical farming could pass through consolidation before new entrants and mainstream adoption emerge.
Past mistakes and the possibility of further failures mean there is no guarantee the sector will grow beyond a niche market.

Summary, takeaways, and chapters were generated by AI from the video's transcript and may contain errors. The video belongs to its creator, Financial Times.