Lettuce Consider Indoor Farming: Plenty’s Plan to Scale the Kale
Plenty is using advanced technology for indoor farming to bring fresher produce to urban areas.
The modern commercial farming model is unsustainable. With a global population expected reach nearly 10 billion by 2050 and climate change trends indicating more droughts, the agriculture industry will be increasingly strained. [1] Furthermore, urbanization is reducing the rural labor force, shifting dietary preferences, and increasing competition for natural resources [2]. Today’s farming practices have short-term fixes, such as use of monocultures and pesticides, but these tactics are reducing biodiversity and creating weaker crops. [3] Thankfully the digital revolution is enabling companies like Plenty to accelerate food production and delivery with technologically advanced indoor farming.
While the indoor farming market is expected to reach $13Bn by 2024, innovators across the relevant ecosystem have been creating new products for farmers to more efficiently grow and distribute their crops [4].
- Farm Management Systems: Using a variety of sensors, Plenty’s farms track the status of each batch being grown, automatically control ressources & environmental variables, and collect large amounts of data to help optimize yield, crop turns, quality, and labor costs [5].
- Advanced LED Lighting: By modulating the light spectrum with very specific combinations of color LEDs, Plenty will be able to make further optimizations to growth time, yield and even the plants’ morphology and physiology [6].
- Climate Control: Modern systems can precisely control variables such as humidity, temperature and CO2 consistently throughout the farm in integration with the farm management system [7]
- Water and Nutrients: Plenty’s unique system uses gravity to provide the plants with water and nutrients, avoiding the extra cost and energy consumption of pumps. Via the management system, specific nutrient and water levels can be set for each batch based on age and crop type [8]. Overall this results in using just 1% of the water necessary for traditional agriculture [9].
With the mechanics of vertical farming, where tall racks of planter boxes working year-round typically enable 160x the output of traditional farms per unit of area, Plenty can locate in urban environments [10]. Combining this with the technological advancements above, Plenty’s produce will not only be more accessible, but far more fresh, nutritional, organic and tasteful than crops shipped in from distant outdoor farms [11]. Matt Barnard, CEO and cofounder of Plenty, summarizes it as a matter of distance in the supply chain. “What’s in the store today is the best that we can grow with a 3,000-mile supply chain. But the best that we can grow with a 50-mile supply chain is stunningly better. That’s why we’re working to ensure that all of our food gets to the store within hours, and not days or weeks [12].”
Plenty has not publicly announced many time-specific plans in their strategy, there mission is clear; keep scaling until there is a Plenty farm outside of every major city in the world [13]. Shortly after acquiring Bright Agrotech, the industry leader in vertical farming production system technology, in 2017 Plenty also raised $200M of Series B funding from funds including SoftBank and Bezos Expeditions in the largest agtech investment to date [14][15]. With these resources, Plenty is ready to start building farms globally with priorities in the United States and Japan [16].
Preparing for the long term, Plenty is also investing now in machine learning and AI [17]. With the new technologies and controls available, such as tuning the light spectra for various effects, they need to work on optimization of their farming systems for years to come. Finally, they will develop robots for planting, harvesting and logistics, minimizing the high labor costs which have caused similar start-ups to fail [18].
From an outsider’s perspective, there are a few other options that Plenty should be considering to outgrow their competitors. Today cannabis is the most profitable crop and has the most to gain from technology improvements [19]. Although there is too much risk for Plenty to cultivate cannabis, they could be selling the Bright Agrotech system to these risk-taking growers as a way for them to scale up manufacturing, validate designs and secure early revenue.
Planning long term, Plenty should be looking to reduce their “50 miles” down to zero. One way would be with a plug-and-play grow box to be installed in consumers’ homes. Another option would be to partner with Whole Foods, connecting farms directly to the store and charging a premium for the freshest produce possible. Although other start-ups have tried this before, none had Jeff Bezos as an investor.
Although Plenty has major backing, they have only announced plans for one new farm in the next year. Should they accelerate expansion? Their technology has little unique advantage and there are plenty of competitors. How will they not go belly-up like so many have before them?
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[1] – “The future of food and agriculture,” Food and Agriculture Organization of the United Nations, 2017, http://www.fao.org/3/a-i6583e.pdf
[2] – Ibid.
[3] – “Biodiversity and Agriculture.” Harvard TH Chan Public School of Health, accessed November 2017, https://chge.hsph.harvard.edu/biodiversity-and-agriculture
[4] – “Vertical Farming Market to exceed $13bn by 2024,” Global Market Insights, accessed November 2017, https://globenewswire.com/news-release/2017/05/17/986832/0/en/Vertical-Farming-Market-to-exceed-13bn-by-2024-Global-Market-Insights-Inc.html
[5] – “Bringing Digital Intelligence to Indoor Farming,” Orange Silicon Valley, accessed November 2017, https://s3-us-west-1.amazonaws.com/reportassets/BringingDigitalIntelligencetoIndoorFarming.pdf
[6] – “Improving ‘color rendering’ of LED lighting for the growth of lettuce,” Nature, 27 January 2017, https://www.nature.com/articles/srep45944
[7] – “Control Yourself: Understanding the Basics of Indoor Climate Control,” Maximum Yiel, 27 December 2017, https://www.maximumyield.com/control-yourself-understanding-the-basics-of-indoor-climate-control/2/1267
[8] – Plenty, https://www.plenty.ag/the-happiest-plants-in-the-world/
[9] – Plenty, https://www.plenty.ag/my-food-uses-how-much-water/
[10] – “State of Indoor Farming,” Agrilyst, September 2016, http://www.dem.ri.gov/programs/agriculture/documents/stateofindoorfarming-report-2016.pdf
[11]- “Has This Silicon Valley Startup Finally Nailed The Indoor Farming Model?,” FastCompany, 18 May 2017, https://www.fastcompany.com/40420610/has-this-silicon-valley-startup-finally-nailed-the-indoor-farming-model
[12] – Ibid.
[13] – “This Company Wants to Build a Giant Indoor Farm Next to Every Major City in the World,” Vox, 8 November 2017, https://www.vox.com/energy-and-environment/2017/11/8/16611710/vertical-farms
[14] – “Plenty Acquires Bright Agrotech to Globally Scale Impact of Local Farmers,” Business Wire, 13 June 2017, http://www.businesswire.com/news/home/20170613005517/en/Plenty-Acquires-Bright-Agrotech-Globally-Scale-Impact
[15] – “SoftBank Vision Fund Leads $200 Million Bet on Indoor Farms,” Bloomberg, 19 July 2017, https://www.bloomberg.com/news/articles/2017-07-19/softbank-s-vision-fund-leads-200-million-bet-on-indoor-farming
16 – “SoftBank Invests in Largest Ever Agtech Deal, a $200m Series B for Indoor Ag Startup Plenty” AgFunder News, 1 July 2017, https://agfundernews.com/breaking-plenty-raises-200m-series-b-largest-ever-agtech-investment.html
[17] – Ibid. “This Company Wants to Build a Giant Indoor Farm Next to Every Major City in the World,” Vox, 8 November 2017, https://www.vox.com/energy-and-environment/2017/11/8/16611710/vertical-farms
[18] – Ibid. “This Company Wants to Build a Giant Indoor Farm Next to Every Major City in the World,” Vox, 8 November 2017, https://www.vox.com/energy-and-environment/2017/11/8/16611710/vertical-farms
[19] – Ibid. “State of Indoor Farming,” Agrilyst, September 2016, http://www.dem.ri.gov/programs/agriculture/documents/stateofindoorfarming-report-2016.pdf
This is a really interesting concept. While it certainly could have a positive impact on the agricultural business, I do think it raises a few questions. First, what kind of carbon footprint do indoor farms leave relative to outdoor farms? Is the increased energy used from maintaining a massive climate controlled complex with a lot of computerized components offset by other efficiencies such as a shorter supply chain and pumps? Otherwise, the carbon footprint of indoor farms could possibly be contributing to climate change as well.
The second question is how scalable is this when you run the financial models for these indoor farms. I would imagine the fixed costs of building massive complexes with advanced technologies are significant. Additionally, doing this in an urban setting means that real estate prices will be generally more expensive than normal farm land. I could see this resulting in great produce, but will it be sold to consumers at a prohibitively high price that precludes it from being sold in a Market Basket as opposed to a Whole Foods?
Very interesting post, thanks for sharing! I agree with you that indoor farming has a lot to offer in terms of mitigating the risks associated with climate change. However, I am concerned about price and was curious about your thoughts on it. While you mention that upfront investment is a pain point and that (very) fortunately Plenty has Jeff Bezos to deal with that, I have seen first-hand that prices of the products themselves can be much more costly than conventional or even organically grown products. Therefore, I worry about accessibility and large-scale demand and wonder how Plenty is planning to deal with this in both the short and long term. To your point about accelerating expansion, I would only do so if they can get the prices of their crops somewhere in the competitive ball park of outdoor grown food (assuming Plenty’s prices are similar to other indoor farming organizations) – or decide if there is a big enough target market who will pay premium price.
This is a super critical topic that does not get discussed enough. I agree with Alex that this will be costly, but as ES mentioned they have SoftBank and Bezos who are both now worth $100B so funds will not be a problem. Also this issue will only grow as the population is expected to add 3 billion more people in the next 20 years and the cost will not be as relevant when there are fewer options to feed the world. Plenty seems well positioned and well backed to take over this market.
This is a great topic. As ES mentions, vertical farming would be of great value to the public if it could produce food at a competitive price. The jury is still out on whether this is doable. It does seem, however, that vertical farming would be valuable in areas suffering from water stress. As the author notes, vertical farming utilizes a mere fraction of the water that is normally consumed in an outdoor farm. If vertical farming uses less water, I could envision adoption taking off. Water deficit is primed to reach 30% globally by 2030 as chronic supply mismanagement continues to accelerate.
Futuristic concept! I am curious to hear your opinion on the cost of vertical farms relative to tradition agricultural businesses as your article did not address this critical consideration. Vertical farms are capital intensive while tradition farming is labor intensive. Do you think vertical farms can generate the scale to produce theses plants at a low cost for the end-consumer? Do you think vertical farms can reduce the need for human planters and harvesters over time? How will production cost vary for different plants? I believe that the responses to these key questions will determine the viability and scalability of vertical farms over time.
I really enjoyed reading this. This type of farming requires high labor and infrastructure cost…. and the product is clearly aimed toward the higher-end consumer who can afford to pay premiums for the produce. Do you think there is a way for these farms to be scaled and made affordable to the average consumer?
Great article Dave! Similar to Justin, I was impressed by the water savings that Plenty’s system can achieve. Potable water will be a scarce good and any mechanism to alleviate pressure on this resource is very welcome. As others have alluded to, the success of Plenty’s concept will depend on gaining enough scale so that technology and instrumentation costs are reduced.
However, I believe it constitutes a great opportunity not only for the developed nations, but rather for developing and third world nations where its cities are forecasted are growing at incredibly fast rates. As the UN identified, there will be 662 cities with more than 1 million inhabitants by 2030, so I am pleased to learn that big investors are backing companies tackling how to make food more accessible in light of the urbanization trend. [1]
[1] http://www.un.org/en/development/desa/population/publications/pdf/urbanization/the_worlds_cities_in_2016_data_booklet.pdf
Such a cool concept! Thank you for writing about this topic, Dave. While I love this innovation, I am concerned about its scalability and in particular whether as Eduard suggests it could be adopted in developing countries. The model appears to require high capital investments that would be difficult to justify in many of those markets. In addition, existing farms are not likely to want to transition or add vertical farms to their property since it would render existing agricultural machinery for the most part useless and require new training of workers.