Nestled near the Hackensack River in the industrial town of Kearny, New Jersey, strawberries grow by the thousands.
These aren’t just any strawberries. They’re Omakase berries — known for a unique sweetness and creamy texture that’s attracted foodies and Michelin-starred chefs alike. Until recently, you could only find Omakases growing in the Japanese Alps. But Oishii, a startup in the burgeoning vertical farming industry, is bringing them stateside in its two New Jersey warehouses.
Through a combination of cutting-edge robotics, lighting, bees and time-honored growing techniques from his native Japan, founder Hiroki Koga and his team have figured out a way to replicate the elements of a “perfect day in Japan” in a carefully controlled artificial environment.
The conditions make the bees happy, which, in turn, helps the strawberries to grow quickly, without the need for pesticides. And because all of this produce is grown indoors, it does not get impacted by seasonal weather conditions, and can be grown right where the consumers are living.
“It significantly improves the customer experience when eating fresh produce,” Koga told Built In. “These are usually fresher, cleaner and tastier than what’s available today.”
What Is Vertical Farming?
The goal here is to grow higher-caliber food sustainably, meaning it limits its negative impact on the environment and the communities it serves. And Oishii is not alone in its quest to do so. Within the reported 2,300 indoor growing facilities in the United States today, a revolution is quietly taking root, promising to disrupt the very nature of farming itself.
For the first time in the 12,000-year history of agriculture, societies don’t need to have fertile soil or favorable weather conditions to grow what they want. Crops can be grown on trays stacked to the ceilings of 100-acre structures, with the assistance of temperature and light controlling technology, automation and even agricultural robots.
With vertical farming, the Netherlands — a country less than half the size of Indiana — is the second-largest agricultural exporter by value, sending more than $10 billion worth of produce annually to neighboring countries like Germany and Belgium. And the otherwise hot and arid nation of the United Arab Emirates is in the midst of building the world’s biggest vertical farm. All told, the industry is projected to grow to $9.7 billion worldwide by 2026.
The U.S. Department of Agriculture doesn’t track controlled environment production, so just how rapidly this growth is happening in the United States is difficult to quantify. But venture capital investment in indoor farming tech totaled nearly $1.2 billion in 2021, with companies like Plenty and AppHarvest pulling in massive, nine-figure funding rounds. Some of the nation’s biggest grocery stores are teaming up with vertical farming startups, too. After raising a $50 million round in March of last year, Oishii formed a partnership with Whole Foods to offer its strawberries at select locations around Manhattan, as well as online.
Eventually, Koga believes vertical farming will become the new standard, where everyone around the world will have access to fresh, high-quality produce, no matter the time of year. “That future is coming, it’s just a matter of time.”
Vertical Farming: Agriculture’s New Frontier
Like any other area of tech disruption, the road to that future is a long one, full of potholes and potential wrong turns. After all, agriculture is about as old as human society itself.
Thousands of years ago, hunter-gatherers began trying their hand at farming, originally in the Fertile Crescent — a region in the Middle East that includes modern-day western Iran, Iraq, Israel, Jordan, Palestine, Syria and southeastern Turkey. First they grew wild varieties of crops like peas, barley and lentils. Then, over the centuries, they switched to farming full-time, breeding both animals and plants and creating new varieties to help fit their needs. Eventually, they migrated to other regions in Europe and Asia.
Over time, farming has gone from a hyper-local practice to feed nearby community members, to a massive global enterprise. Lettuce grown in California’s San Joaquin Valley will travel about 1,400 miles to reach supermarkets in Des Moines, Iowa, and Chilean grapes will travel more than 7,000 miles by ship and truck to reach the same destination. Most tomatoes come from China, most bananas come from India.
The agriculture industry remains one of the largest sectors in the United States today, comprising everything from farm business to food manufacturing. In 2020, it contributed more than $1 trillion to the U.S. gross domestic product, or GDP, amounting to about 5 percent. Much of the food that is grown in the states consists of nuts, beans, grains and wheat, but the largest U.S. crop in terms of production is corn, the majority of which is used to feed livestock.
Vertical farming really didn’t become prominent in the United States until just a few years ago, but it has been used in countries like Japan and the Netherlands for decades, according to Koga, where greenhouses in general are a much more integral part of their culture and food production. Now, the much-older greenhouse farming industry informs much of how the vertical farming industry currently operates.
Planting the Seeds of Innovation
While there are a handful of vertical farming startups receiving large amounts of funding, the scale of most of these operations is relatively small compared to Big Agriculture. As such, mainstream agriculture does not really view this budding industry as a threat, according to Weslynne Ashton, an associate professor of environmental management and sustainability at the Illinois Institute of Technology. Instead, she likens it to where the alternative protein industry is in disrupting the $2 trillion global meat industry.
Ashton’s research focuses primarily on how industrial ecology and urban food systems relate to equity and sustainability. She works with vertical farming companies quite a bit, examining their sustainability, environmental impacts and their influence on issues related to social equity among traditionally marginalized communities.
“A lot of nutrients that we need we can get from leafy greens and vegetables like tomatoes and berries, which are things that can be grown in a vertical farm environment in cities,” Ashton told Built In.
But the likelihood of growing things like wheat or corn — staples of American agriculture — in an indoor environment is pretty remote. Even if it does happen, we are “very far away from that,” she said. “I don’t think we’re going to move to all vertical agriculture, but I think it can be an important component in a diverse food ecosystem to provide more nutrient-dense food for people in cities.”
“I don’t think we’re going to move to all vertical agriculture, but I think it can be an important component in a diverse food ecosystem to provide more nutrient-dense food for people in cities.”
Much of the work in creating more nutrient-dense food via vertical farming comes down to science. But, instead of tweaking seeds so that they are optimized for weather and soil, researchers are working to create seeds that are best suited for an indoor, controlled environment.
One organization helping to fund that research is the Foundation for Food & Agriculture Research, or FFAR, which was established in the U.S. Department of Agriculture’s 2014 Farm Bill in an effort to foster private-public partnerships in this space. For instance, FFAR invested some $7.5 million in the Precision Indoor Plants consortium, or PIP, to research varietals specific to indoor planting.
“We’ve adapted plants throughout history. Since thousands and thousands of years ago, since the advent of agriculture,” John Reich, PIP’s director and a scientific program director at FFAR, told Built In. Now, exactly what we’ll be able to grow inside remains to be seen, and people are “definitely trying to push the limits,” he said. “We need to try to see if we can adapt plants specifically to indoor agriculture, to see if that makes it more economically viable for the future.”
Vertical Farming Comes at a Cost
The challenge of adapting plants to an indoor growing environment isn’t the only thing standing in the way of this industry’s economic viability. As it stands right now, vertical farming’s barrier to entry is very high, requiring a lot of capital up front to both build the facility itself and scale the business.
Even if vertical farming companies do manage to scale up and reduce costs, it will still require humanity to pay a high price in a different way: environmental impact.
While it’s true that indoor agriculture brings the food closer to the consumer, meaning fewer resources are being used to ship produce around the country, Illinois Institute of Technology professor Ashton said the industry is not as sustainable or environmentally friendly as some make it out to be.
“There’s a very high energy cost associated with the amount of light that you need to grow different types of plants. And, depending on the configuration, a need for heating, ventilation, cooling,” Ashton said. “That energy cost is really significant, and it is an important component of its carbon footprint.”
For instance, the carbon footprint of a tomato (one of the leading crops in indoor farming), varies quite a bit depending on factors like energy sources, ambient temperature and available natural light. But studies conducted in the United States, Canada and Europe have found that, on average, producing a pound of tomatoes indoors using fossil fuels releases up to 3.5 pounds of carbon into the atmosphere — about six times the carbon footprint of tomatoes that were field-grown in the tropics and shipped to other parts of the world, even when accounting for the diesel emissions from the refrigerated trucks that ferry them around.
In short: Its outsized environmental impact is one of the main roadblocks preventing vertical farming from going full throttle. A way to get around that is to use more renewable energy. But, of course, the source of energy used by a given indoor farm is entirely dependent on its location, so it will be difficult to accomplish quickly. Getting there will require the improvement of our entire energy infrastructure, and the adoption of more renewable energy.
“You have to start thinking about not just one facility or the types of plants you’re growing, but how those facilities interact with the environment. What are the inputs that go into it? Can they be renewable? Where do they come from? Do they participate in a circular economy?” Reich said. “If the industry is going to be sustainable in the future, a lot of that needs to happen.”
Vertical Farming’s Challenging Future
Nevertheless, in a world that is warming ever more rapidly, whether we move some of our agriculture indoors may not be much of a choice. The global population is expected to grow by 25 percent to nearly 10 billion people by 2050. To meet that demand, food production will need to increase by 60 to 100 percent.
But with fresh water supplies and arable land becoming increasingly scarce due to droughts exacerbated by climate change, the great outdoors is becoming a much less viable option.
In the last year alone, a January cold snap in Florida killed much of its tomato crops, leaving the survivors vulnerable to disease. A couple months later, an abnormally hard freeze in the Carolinas left farmers with little to no strawberries and blueberries. Right now, California’s Central Valley is in the midst of a record drought, forcing farmers there to leave large swaths of fertile land unplanted. And that’s not to mention the veritable laundry list of supply chain-related food shortages.
While these issues stand to impact the whole world, they are uniquely harmful to people of color in the United States. Therefore, the areas in the United States that stand to benefit the most from vertical farming (and its ability to grow food right next to its consumers) are its cities where access to affordable, nutritious food is virtually nonexistent — especially for low-income communities of color.
“Putting vertical farms in cities and areas that are facing food apartheid would be really important to help not only provide food, but also job opportunities and business opportunities for local people. Particularly Black, brown and Indigenous communities that do face more marginalization and food apartheid,” Ashton said.
That being said, the intricacies and intersectionality of food scarcity, poverty, racism and hunger in the United States is a complicated issue, dating back further than the country itself. And despite all of its venture backing and technological innovation, vertical farming is not some magic bullet that is going to solve that.
For this to truly have a positive impact on the community it aims to help, Ashton said the more “tech, capital-intensive” vertical farming companies are going to have to give these people the opportunity to not just participate in this industry, but actually own it.
“If you’re wanting to address issues of food insecurity and food access in cities, then we need to think about how to build relationships with communities.”
“If you’re wanting to address issues of food insecurity and food access in cities, then we need to think about how to build relationships with communities. We need to give communities more of a say in terms of what’s grown, opportunities for jobs and opportunities for truly benefiting from these enterprises,” she said. “There needs to be a good relationship so that the community benefits well from such an enterprise.”
The price of food grown in indoor farms would also need to go down considerably. Oishii’s strawberries, for example, are much pricier than average — a box of three medium-sized berries costs $6, a box of eight large berries costs $20.
The prices were more than double that before the company opened its second growing facility in Jersey City (three cost $15, eight cost $50). And founder Koga said those price tags will continue to shrink as Oishii scales and optimizes its technology, likening the business to where Tesla was more than a decade ago. When the electric vehicle giant unveiled its first Roadster back in 2008, it set consumers back upwards of $170,000, now a Tesla Model 3 costs less than $50,000.
“The cost of conventional agriculture is only going to go up. If you think about unstable weather conditions, the cost of labor, the cost of land, water — all of these things are never going to go down,” Koga said. “Vertical farming is only going to become more efficient over the years. So there will come an inflection point.”
If and when that inflection point comes, FFAR scientific program director Reich said it will have the biggest impact if it works in concert with the agricultural system that came before it.
“We need to have a system that complements each other,” he said. “I don’t think there’s one solution that cures everything we hope. It’s going to be a combination of a multitude of things that will allow us to have a food system that we all want.”