Hundreds of millions of dollars were raised to meet what investors felt were market demands. Now the economy, access to money and the cost of money has changed. Also, many farms that were recently built are now out of business.  

This leads me to a few questions:  

Was there ever a real need for locally grown fresh produce? If the answer is yes, is that need still there? And can controlled environment ag facilities fill those needs?

Inevitable reasons we started talking about innovating farming.
1.)  Feed the Future and its Population Growth.
The world’s population is expected to reach around 9.7 billion by 2050, according to United Nations projections. Accommodating this growth requires a significant increase in food production.

2.)  Climate Change
Climate change is affecting agricultural systems globally, leading to shifts in growing seasons, changes in precipitation patterns, and an increase in the frequency and intensity of extreme weather events. Adapting agriculture to these changes is crucial for future food security.

3.) Resource Scarcity
Challenges such as water scarcity, soil degradation, and a decrease in arable land pose constraints on traditional agricultural practices. Finding sustainable ways to produce more food with fewer resources is essential.

This review won’t discuss why these new businesses struggled or failed. Instead, we want to focus on the question, is “locally grown” still a thing? Or was it one of many consumer trends that have come and quickly past?  

First, let’s answer a few questions.

1. Why locally grown?
2. What is the definition of locally grown?
3. Where can you find locally grown products?  

Initial research (learn more about the research here) shows that consumers wanted access to locally grown products because they believed goods produced close to them were more environmentally sustainable, provided support for their local economy, and gave their families fresher and healthier options. While many consumers believe locally grown vegetables are worth paying more for, inflation has hit grocery budgets hard.  The cold reality is that a certain segment of the consumer shopping public buys imported produce because it’s more affordable, still a healthy option and generally good quality.

More immediate reasons to innovate the way we farm:

Globalization and Urbanization:
Increasing urbanization and globalization impact food distribution systems. The demand for food in urban areas is rising, requiring efficient and resilient supply chains to ensure that urban populations have access to a diverse and nutritious food supply.

Technological Advancements:
Leveraging technology and innovation in agriculture is crucial for increasing productivity, improving resource efficiency, and developing more resilient crop varieties. Precision agriculture, genetic engineering, and other advancements play a role in shaping the future of food production.

Sustainability:
There is a growing emphasis on sustainable agriculture practices that minimize environmental impact, reduce greenhouse gas emissions, and promote biodiversity. Balancing the need for increased food production with environmental sustainability is a key aspect of feeding the future.

In addition, as time passes, it is becoming clearer that a certain segment of the consumer public and retailers are more conscious of the environmental impact their purchases make and what their brands represent. They believe that buying locally can help reduce the carbon footprint and lower transportation miles on the food they consume. 

While this remains true, more established businesses and knowledgeable investors are looking at the resources needed to produce in the off-season or in a controlled environment. This requires using electricity or natural gas to light, heat and cool their facilities to provide consumers and retailers with consistency and quality year-round, while still local. The most conscious farms now work to capture and report these numbers to convince consumers that locally grown is, in fact, a more environmentally friendly choice.

Example:  Farms such as Gotham Greens, Area 2 Farms and NatureSweet are choosing to become B-Corps.  

(Certified B Corporations are social enterprises verified by B Lab, a nonprofit organization. B Lab certifies companies based on how they create value for non-shareholding stakeholders, such as their employees, the local community, and the environment. Once a firm crosses a certain performance threshold on these dimensions, it makes amendments to its corporate charter to incorporate the interests of all stakeholders into the fiduciary duties of directors and officers. These steps demonstrate that a firm is following a fundamentally different governance philosophy than a traditional shareholder-centered corporation.)

Where locally grown produce really shines is in delivering fresh products, especially when consumers want seasonally and geographically appropriate options. This may also be where farmers ultimately produce the most sustainable options, as seasonally appropriate crops require the least amount of manipulation to the growing climate as well as the lowest capital investment. The only question(s) remaining with this locally grown option is whether the farmer has access to the land needed to produce enough of these crops to support their farming business and the mortgage on the land, while still providing their family with a reasonable lifestyle. 

The desire to produce more locally, while investing in technology, is also where we have seen the biggest changes in how and where farms get financing. Historically, farmers used traditional lending sources such as banks, state-sponsored programs or owner financing to purchase land and needed equipment. These investments were considered safe and conservative based on using the farmland and a farmer’s home as collateral.  

But new and innovative farming concepts seldom qualify for traditional financing. They are considered more risky due few unproven profit models and much greater need for capital per acre of farmable land. Due to this risk, farms that use greenhouses or indoor farm designs have had to look to new financing options. This includes angel, private equity and venture capital financing options where risk and opportunity are measured differently than traditional outlets.

So what qualifies as locally grown? 

The 2008 Farm Bill* defined local food as food grown and transported fewer than 400 miles or within the same state. This obviously means something different depending on the state of the country you live in.  

If, for example, you live in Texas, locally grown could mean the food travels 600-700 miles. Yet someone who lives in Vermont could have food that travels no further than 200 miles in state or 400 miles including surrounding states. Regardless, farms focused on providing locally grown food must look at size and scale much differently than traditional farms targeting conventional produce markets and retailers.

*The farm bill is an omnibus, multiyear law that governs an array of agricultural and food programs. It provides an opportunity for policymakers to comprehensively and periodically address agricultural and food issues.

Where can you find locally grown produce?

Consumers who look for locally grown products are also likely to shop differently than your average grocery store shopper. Farmers markets played a major role in the initial local food movements. The popularity of farmers markets gave farmers direct access to their consumers, allowing them to control messaging and branding, while developing relationships with buyers. 

This led to developing other direct-to-consumer sales channels that have increased access for farmers and consumers. You can’t underestimate consumers’ appreciation for the opportunity to interact with local producers and learn more about their food’s origin.  

Photos courtesy of Area 2 Farms

Next up is specialty retailers and restaurants. Both recognized the demand for locally sourced products and incorporated them into menus and other packaged goods. Grocery stores also added special sections dedicated to local products.

And here is where the story might be changing: Consumers who prioritize locally grown and seasonal produce are often willing and able to pay a premium for products. These  consumers value health, the environment and experience. They normally have more disposable income and can afford to purchase food for reasons other than convenience, calories and protein. 

I will never claim to be an expert on the economy, but the media in general wants you to believe that our economy is struggling due to inflation. According to Statista, the economy was down about 10% in 2022 and will probably be down again slightly in 2023. 

According to “Yale Insights,” inflation (or even the perception of inflation) changes how consumers value the items they shop for. Many consumers become more critical of their purchases. They look for sales, “trade down” for generic brands and seek best prices. They also change where they shop, looking for discounts from retailers they perceive as cheaper, or forgo certain purchases entirely. 

Does this mean that all consumers who once valued locally grown produce are gone? 

No. It simply suggests that, as the economy changes, the accessible market for a premium-priced product will likely change. It may be limited to those who can afford the purchase or still value the product(s) over other items they regularly consume.

Getting back to the original question(s) in this article’s title, is “locally grown” a fad or a trend that is alive or dead? 

Based on everything we see from the USDA and other organizations that talk about farming trends, I say locally grown is alive and well.  

However, it also represents values that are difficult to scale or market easily to the general shopping public and retailers that offer options to price-conscious shoppers. This will create problems for many farms that used “locally grown” as a key reason to attract investment dollars from private equity firms looking to invest in a company, operate them or manage them for a short period of time, and then sell the entity or its shares after showing profitable and scalable growth.  

Farms that took this type of capital will likely outgrow the local market and move into that of the average “Walmart” shopper. Walmart and retailers similar to them focus on providing low prices and value to middle America. These are the same shoppers who have been losing disposable income over the past two years due to inflation.   

So the question then is not, is locally grown dead or alive? The question is, how do you build a profitable farm that is sized and financed appropriately to service discerning consumers who want products that might cost more to grow but meet the values that are important to them in their food choices?

We all know brands with products and services that represent quality. But have you ever been the person responsible for selling quality? For earning the premium price associated with producing quality products?  

Since my first job in 1996, every company I worked for, represented or owned believed they had the highest quality product in their market or class. However, I now realize that believing you have the best (even if it is true) does not mean you can convince your customer or that your customer values quality in the same way.

What does quality mean?

Dictionary definition: The standard of something as measured against other things of a similar kind; the degree of excellence of something.

Other definitions often depend on what quality represents. If you talk about a product, quality normally represents specific features. If you talk about a service, quality normally represents something that consistently meets customers’ needs. If you talk about a process, quality represents the ability to always meet specifications.

What is the problem with selling quality?

The issue with quality is that it is often subjective and based on feelings or marketing. Seldom is quality determined by objective facts. Personally, I consider quality as something that demonstrates reliability. In other words, quality is a function of performance measured over time.

Selling quality in controlled environment agriculture (CEA)

In today’s world of commercial horticulture, I struggle with the term “quality.” It seems everyone has best-in-class products and the highest quality. The situation is comical.  

Let’s break down two scenarios to determine how quality is defined. The first one focuses on consumer purchasing habits and the second on business purchasing habits and decisions.

First, let’s look at fresh produce sales and use greenhouse tomatoes as an example. Over the past few months, numerous articles have highlighted the competitive nature of the European greenhouse grown tomato industry.  

In August, the Spanish industry magazine Mecardo published this article: The Spanish tomato resists Moroccan and Dutch competition by betting on proximity and exclusivity. The piece discusses the challenges the Spanish greenhouse tomato industry faces in competing with Moroccan-grown produce. It states that Morocco has now displaced Spain and the Netherlands as the number one exporter of tomatoes to the United Kingdom. The conclusion is that Spain is losing the battle on price and that it should avoid competing on price and focus on quality, reliability, and service.  

What I find humorous is that if you are based in the Netherlands, you likely say the EXACT same things about Spanish tomatoes. The argument seems to be that if you cannot compete on price, you must have a better-quality tomato, especially in a consumer category where taste and flavor are highly subjective.  

(I acknowledge that you can measure certain qualities in tomatoes such as brix, aesthetics, size and shelf life. The question remains as to whether those qualities outweigh price when this article also states that tomato consumption is decreasing. “The sector is concerned about the decrease in tomato consumption that is occurring both in Spain and in the EU, which has fallen by 13% in volume and 2% in value in the 2021/22 campaign, according to the latest data collected by Fepex. Tomato consumption in Spanish homes has gone from 13 kilos per person in 2021 to 11.9 kilos in 2022.”)

For the second example, let’s use LED grow lights. This one is more challenging because the technology promises long-lasting reliability, but most commercial installations have not existed long enough to prove or test the reliability claims. 

Unlike other technologies in the commercial horticulture space, we have a third-party agency, Design Light Consortium, that collects performance data. Unfortunately, the agency does not always make internal unbiased testing data available.

LED grow lights have metrics we can measure and test, such as output (umols/s), efficacy (umols/joule) and spectrum. This ensures buyers get what they paid for, at least out of the box. However, this is where quality becomes a test of reliability over time. 

Anyone investing in a retrofit lighting system calculates a return on investment. The estimation compares the running hours the greenhouse uses per year against the difference in energy used at a given price per kwh. This determines the years needed to earn back the investment. If the product fails to perform at the same specification over the years, the initial return on investment becomes null and void.  

Much like the tomato discussion, the final component is price. A question that many debate today is, can the cheapest product on the market also deliver on quality claims? Even for someone deeply invested in understanding this technology, this gets confusing. 

What can be said is that the components used to build the light determines the product’s longevity. Cheaper components are less likely to deliver consistency over time. This is to be expected.

So back to the original question, what does quality mean?

You tell me. What is clear is that, in most cases, quality is more subjective than objective. Even when you can measure quality, you have to consider consumers’ interest in different levels of qualities for given products in certain sectors. Consumers continue to show they will forgo high-quality products in favor of good-quality products at a more reasonable price. This makes selling quality products a challenge.

Over the years, I have made three incorrect assumptions about quality. First, as a young sales person, I assumed that “quality” meant my product was better than competitors. And while I am fortunate enough to have only worked with high-quality products, these qualities did not always translate into a difference the customer valued.  

Second, I assumed everyone valued quality the same way I did. Personally, I always buy the best product that lasts the longest or performs better than comparable products. In other words, I only want to buy something one time. It took me years to realize that not everyone values quality and that good enough at the right price point often wins out.  

Finally, and probably most importantly, people pay premium prices for quality. This one confused me because people are complicated. Many of my customers drive the nicest cars and invest in the best homes. But when it comes to their business, they do not value every component required to operate in the same way. 

And who does? We pick and choose what’s important to us, what we can afford, and what we value. Plus, we continuously change our minds depending on the factors we face at that moment.

Ultimately, quality products need to align with the perceived value that customers derive from them. If companies cannot communicate and/or demonstrate the value proposition of their products, they will not achieve their desired premium pricing.  

If you are burdened with selling quality, my thoughts are with you. After 26 years of selling, my advice to you is simple:  

First, make sure the product you sell has multiple features that represent the qualities your clients want. Second, constantly listen to your customers and relay new information back to your company. Be transparent and truthful with your customers. They will value this as a premium service, which should never be overlooked.  

And, finally, I hope you are successful. If we have a chance at being environmentally sustainable, we need products to last longer. We cannot continue to live in a throw-away world.

Urban Ag News looks to hear from you.

This article is first because I firmly believe labor is the biggest challenge we face today, as well as for the next 10 years in controlled environment agriculture (CEA), and in commercial horticulture and general production agriculture.

Victor Loaiza Mejia posted the following on LinkedIn on August 10, 2023: 

“I disagree with your assessment of the lack of ‘grower or production leadership’. Traditionally the greenhouse industry has had a legacy program (like Ivy League College) that benefited growers that come from outside the NAFTA countries. The local younger generation of growers and operators need opportunities to grow into these positions. They need mentoring and support.

“My vision of protected agriculture is more regional (USA, Canada, Mexico) than only thinking about the USA. As you mentioned in the article, the growing surface has decreased in the US but has increased in Mexico for example. The oldest greenhouse companies operating in the US and Canada are now some of the largest tomato marketers in the USA, purchasing greenhouse produce in Mexico at a very large scale, without really having ‘skin in the game.’ I see this as a big entry barrier for new companies based in the USA.

“The opportunity for small greenhouse companies is to resist the push to buy the newest closed greenhouse and buy only the necessary technology and develop their local market. Creating Cooperatives style of relationships with other small growers might be beneficial.”

Well, Victor, yes. That’s really all I have to say. Yes, I agree. I should have and could have selected my words better, while also providing more details behind my statement. If I would have, you would have seen that we are saying almost the same thing.

Now that we officially agree, let’s break this conversation down into the realities that drive the factors you highlight.

Where did the head growers, production managers, and vice presidents of operations come from in the U.S. controlled environment agriculture industry?  

The U.S. greenhouse vegetable industry started in the early to mid 1980s. (The Canadian greenhouse industry started a few years prior, and the Mexican greenhouse industry began about 10 years later.) Initially, the industry was almost 100% focused on growing tomatoes. Much of the industry was built off importing not only Dutch greenhouse technology, but also Dutch growers who were equipped with the training and knowledge needed to operate this new technology.  

As years went on, the U.S. continued to attract growers from the Netherlands, as well as nearby areas such as the United Kingdom and Belgium, which also had well-established glasshouse industries. Many of these early immigrants were well experienced with some education. They were young males eager to make their mark on a new industry in a new world thought of as “the land of opportunity.”

Now these same individuals have been in our small industry for 30-40 years. They are getting close to retirement, but many still work. This is an important part of Victor’s criticism and if you compare it with the graph below, you see why they have aggressively held on to positions of power.  

The industry does not have enough companies that can pay them the money they want or to promote others into key positions, while protecting their own careers and those of their friends. (Nothing new here. This occurs in all industries. Normally, industries have more companies and the impact is not so drastic.)

What about the other skilled labor needed to profitably operate a greenhouse vegetable facility?

Greenhouses require lots of skilled labor to operate successfully, especially when the operations are anywhere from 10-200 acres. You need IPM managers, labor managers, assistant growers, junior growers, packhouse managers, logistics managers and more. The list goes on and on. 

So where did these people come from? In many or most cases, Mexico. In the 1990s, the largest vegetable greenhouses in the U.S. were in southwestern Texas and southeastern Arizona — a short drive from the U.S.-Mexico border. This attracted young, educated Mexican (again mainly) men to jobs that paid well, provided year-round employment (not always the case in agriculture) and opportunities to work in a highly technical field that showed promise for advancement.

Now fast forward 30 years. These guys are ready and prepared to take over, but there are not enough opportunities for everyone to be in charge. This also means that as new companies open, we have a lack of ongoing opportunities to attract talent and give individuals chances to grow and develop the skills needed to run smaller or more niche organizations.

A change in politics. A change in opportunities. H-2A.

Simultaneously, we have seen a shift in our ability to bring labor into the United States. U.S.-based agriculture businesses rely heavily on worker visa programs to bring in groups of individuals to work jobs not often desired by locally available workers. The H-2A program allows U.S. employers or U.S. agents who meet specific regulatory requirements to bring foreign nationals to the United States to fill temporary agricultural jobs. (The word “temporary” is key!)  But, this program and our attitude toward migrant workers has shifted significantly over the past 30 years.  

According to the USDA, “Hired farmworkers make up less than 1 percent of all U.S. wage and salary workers, but they play an essential role in U.S. agriculture. According to data from the 2017 Census of Agriculture, wages and salaries plus contract labor costs represented just 12 percent of production expenses for all farms, but 43 percent for greenhouse and nursery operations and 39 percent for fruit and tree nut operations.”

The tightening of our southern border means that we rely on the H-2A program more than ever.  According to a July 2023 article in NPR, “The number of guest worker visas issued each year has more than quadrupled over the past decade. But the program is rife with labor rights violations, and farmers who have come to depend on it don’t love it, either.”

As I stated before, U.S.-based greenhouse producers are competing directly with Canadian greenhouse growers, as well as Mexican greenhouse producers, for consumers’ wallets in produce aisles across the United States. This means, as the American portion of the greenhouse-grown industry, we need to be conscious of all costs (of which labor is a significant portion). It is safe to say that we have learned and can confirm that locally available labor is not as efficient as the labor we get through worker visa programs. 

Why is local labor not as efficient as our immigrant workforce?

I will not even attempt to answer this question. But, what I can report is that through interviews with major greenhouse tomato growing operations, it is estimated that you need 3-4 times the amount of local labor as you do immigrant, migrant or visa workers. (This number seems true regardless of pay and benefits, based on information we received from the recently announced bankrupt company AppHarvest.) 

Conversations with on-site labor managers makes me believe that one main reason this perception exists is because this talent pool is seen as an unskilled labor force. Labor managers all agree that is far from the truth. The truth is, many of these individuals are skilled based on experience gained at other farms. These skills make them eager to be employed based on “production output,” as they recognize that their production compensation will far out pace any hourly rate that they might be paid.

According to USDA statistics from October 2022, the H2A program has expanded since 2005. But has it expanded enough to keep up with the demand? Especially the demand of the controlled environment agriculture sector?  

Even if we could keep up with demand in the greenhouse (or vertical farm), these programs do not allow us to address the issue of finding talented operational managers with experience to run the facility based on the current glass ceilings that appear to be in place.

So questions around labor, management and leadership remain for the U.S.-based controlled environment agriculture industry. From finding the experienced staff needed to operate an efficient greenhouse to providing the most talented in that group the opportunity to advance and excel. 

And Victor, my response to your comment remains “yes.” Now my question back to you is, how will you and your contemporaries lead our industry in change?

Urban Ag News would love to hear from you.  Please let us know your thoughts and comments.

The U.S. controlled environment agriculture (CEA) industry received lots of publicity over the past 10 years. From interviews on CNBC to articles in Forbes, investors and the general business community found interest in an industry that seemed new despite the fact that it was anything but.  

(If you are interested in the definition of and more information on the controlled environment agriculture and the indoor ag tech industry, please click here.)  

This new interest led to substantial capital invested into greenhouses, vertical farms, and other companies supporting the commercial ag-tech and horticulture industry. All this “noise” made it hard to discern what was real, hype or fabricated by overly creative (yet inspiring) pitch decks.

From this point forward, we must focus on a reset of known information. One that clarifies the reality of our U.S.-based commercial food producing horticulture market. This reset must take into account the benefits of all the money invested between 2017-2022 that led to building new farms.  

More importantly, it must encourage people, investors and business innovators to continue focusing on the benefits (mostly to growers or farmers) of our small but still-growing controlled environment agriculture industry.  

Note: The following information mentions ornamental and cannabis production because these segments contribute to our industry. However, they are not often included in the definition of controlled environment agriculture, indoor ag or vertical farming.

Industry Realities

Let us start with a handful of observations that you are free to comment on below.  We will do our best to respond as quickly as possible.

1) The cannabis industry began its path to legalization in 1996 when California legalized medical marijuana. Since then, 40 states followed California in legalizing medicinal use. But the real industry boom began in 2012 when Colorado and Washington legalized recreational use of cannabis.  

As of June 2023, 23 states have legalized adult cannabis use. This rapid growth impacted all commercial horticulture because growing cannabis uses the same inputs as all other crops. As such, the industry saw a drastic uptick in the sale of greenhouses, horticulture equipment, irrigation equipment, horticultural lighting and crop consumables (i.e., fertilizers, substrates and pest management products). 

The industry also saw massive expansion of companies providing wholesale supply, as well as new horticultural tech companies growing quickly with higher-than-normal profit margins.

• Overly high profit margins on the supply side were due to extremely high profits made by cannabis farmers. This happened because of a few key issues that we likely will not see again. The first was rapid farm expansion due to a race to be first in the market. Second is the semi-legal or illegal status of many farms, which always leads to high profits. And, finally, an emerging market was learning how to be commercial. Early-stage investors saw get-rich opportunities and spent almost anything to move their project to the front of the line. 
• The total acreage of legal cannabis production in the U.S. is small compared to commercial ornamental and food crops. In 2021, the average size of a commercial cannabis production operation was 33,900 ft squared (or about ¾ of an acre.)
• As more states legalize cannabis production, the increased volume of legally available weed continues to drive down the price per pound. As this price decreases, ag-tech equipment and supply companies also feel the pinch as operators become more aware of what they’re buying. (I am sure this makes perfect sense to anyone involved in agriculture. A perishable product’s price drops as availability increases.)

2) U.S. interest in vertical farming exploded in the mid-2000s. This was due in part to investment in and formation of Aerofarms in 2004; Dickson Despommier’s 2008 lectures and 2010 book; and numerous inspirational articles, architectural images, and stories from countries concerned with food safety and security. (See the Japan earthquake and tsunami of 2011.)

• All this (plus much more) inspired entrepreneurs, engineers, and technologists with little to no commercial agriculture experience to create business concepts and then pitch them to investors.
• Many of these pitch decks were based on successful Silicon Valley start-up business models that, to date, have struggled in the commercial horticulture and agriculture spaces.
• The investor market was blindly hungry for these ideas. The timing was perfect. At the same time, macroeconomic and political discussions were happening around the world. In 2004, the term “ESG” (environmental, social and corporate governance) was coined and used in a joint initiative led by the United Nations and 20 financial institutions. This report was titled “Who Cares Wins.” The financial industry believed investing in companies that embodied this strategy would win. After all, it would create resilient companies that contribute to sustainable developments, while strengthening the position of the stakeholder and bank. Not long after this, we started hearing thought leaders ask, “How are we going to feed 10 billion people by 2050?”  

3) The Netherlands Increased marketing and the promotion of venlo-style, Dutch-designed glass greenhouses as a proven and safe investment for growing select fresh produce. This coupled with early semi-automated leafy green production systems and unique placement of rooftop greenhouses (see Gotham Greens/Whole Foods partnership in 2013), plus the early failures of multiple vertical farms, led to the next round of investments.

• The Dutch horticulture industry was initially left out of the big spending.  While they have a long history in horticulture production, the new concepts, crops and money were focused on growing in a unique way. By 2015-2017, the Dutch industry knew they had to be more involved and worked together to improve their market position and awareness. By 2020, leading Dutch companies and Wageningen University Research (WUR) published a report comparing four cultivation methods. Using their interpretation of Sustainable Development Goals (SDGs as defined by the United Nations), it was determined (and then heavily marketed) that “high-tech greenhouses with soilless cultivation, where recirculation of drain water is obligatory, substantially contribute to achieving SDGs.” Read the full WUR 2021 report here.
• Many of these systems did not live up to their marketing claims. Companies did not have the experience to work with or provide guidance on localized issues such as crops, weather (not climate), labor and after-sales service.
• It takes many years to develop crop expertise in each system and for a labor team to come together and operate a growing system that produces the highest possible yields. When done at commercial scales, no proven technologies allow a farm to shortcut these realities.

4) Controlled environment agriculture went “public” and investment firms stepped up with BIG capital. This sparked big interest and even bigger promises from companies looking to get a piece of the money pie. From greenhouse operators such as AppHarvest and Local Bounti, to supply companies such as Scotts Miracle-Gro (owner of Hawthorne Gardening Company) and Hydrofarm, to investment firms such as Equilibrium Capital, COFRA Holdings and Cox Enterprises, the dollars invested in the industry raised to levels never seen before. We all know that when significant dollars get injected into a market, it often leads to “boom” level interest.  (See David Chen’s 2021 comments.)

• Many people are responsible for making this happen. From traditional banks facilitating the IPO to recognizable investors to famous personalities, these large investments and public offerings did not happen because a couple farmers decided to take their proven farm public. They happened because of good old-fashioned capitalism and marketing. They happened because people can be inspired by good storytellers. They happened because the financial markets were ripe for such a move.

5) Cheap, abundant capital along with over-promising suppliers and so-called expert consultants chasing dollars led to a boom-industry mentality.

• Interest rates in the 2010s through the early 2020’s were at historical lows.  
• There was (and is) lots of cash available looking for annual returns of 10-15%. (In other words, lots of rich people were and are looking for passive income.)
• The pandemic helped the situation due to significant amounts of capital injected into the economy. From retail cannabis sales to garden centers to grocery stores, this cash created a boom for everyone in the supply chain that supported these markets.

A brief history of CEA fresh produce production and greenhouse tomato example

In 2005, UC Berkeley professors Roberta Cook and Linda Calvin published a paper titled, Greenhouse Tomatoes Change the Dynamics of the North American Fresh Tomato Industry. For purposes of this discussion, we will use this paper as a foundation to define industry growth. Reason being, many of the largest investments went into companies that were farms based on assumptions gained from years of CEA industry data. 

The reality of this data is that prior to 2010, most of it was based on producing greenhouse tomatoes. Historically, this was a high cap-ex industry with low profit margins that relied on careful cost control, operational excellence, high yields and old-fashioned luck.  

The above paper also correctly defines the market as a North American one since the product produced in these facilities competes directly with their field-grown competitors for sales and shelf space. It also stated that U.S.-based greenhouses will be forced to compete with products grown in Canada and Mexico.  

All this remains true today (regardless of crops grown). In 2003, about 1,630 acres of greenhouse tomatoes were grown in the U.S. Twenty years later, our data shows a 20-30% drop in this figure. What changed during this time is the number of crops grown at a larger scale. The addition of more peppers, cucumbers, strawberries, leafy greens, and culinary herbs means that the greenhouse production area has increased to about 2,150 acres.  

This means that even with all the money spent over the past decade, our production area only increased about 20-30%. It is also important to note that we are not considering the metric tons produced on these acres. Yield improvements of about 20-40% (depending on crop) have been seen over the past 20 years.  

The take home message should be, Americans are consuming more tomatoes.  American retailers are just importing more and more of them each year.  Even the ones we grow in a greenhouse.

Greenhouse Grower recently released an article showing their account of the largest greenhouse vegetable growers. While we think this is a good start, our data shows their information is slightly understated, somewhat incorrect and easy to misinterpret.

We estimate that the USA CEA production area by acres is +/- 2200 acres.  We are excluding vertical farms due to lack of data.  And we do not count structures that do not have 4 walls, a door and some means of mechanically managing the environment.  This means we do not count hoop houses, but we acknowledge there are many successful farmers using hoop houses to profitably produce crops across the USA.

Why all this matters

For companies such as Urban Ag News, we are built on the hopes that our U.S.-based controlled environment agriculture industry is sustainable and capable of continued growth. Our data indicates that we still have work to do before we can be considered an independent industry. (We depend on the global commercial horticulture industry, including the ornamental and cannabis industries, to be viable.)  

Additionally, the data shows that ag-tech investments face fundamental problems. (See Agfunder Report  and state of CEA investments in this article in Produce Blue Book as well as one can download this Pitchbook Report.) To understand these problems, consider Professor Michael Porter’s work on competitive strategy. He states that for an investment to be justified, you need a big enough market — and the portion of that market you can access is where you make your profits. So, for instance, if you produce ag technology only suitable for a small area of production, it is unlikely that you will gain a profitable return.

Remember how in 2003 the data showed 1,630 acres of greenhouse tomato production in the U.S.?. In 2022, only about 1,250 acres of tomatoes were produced in greenhouses. In 2003, four large greenhouse operators controlled 67% of the production acres. In 2022, eight large greenhouse operators controlled 80% of the production acres. 

There is significant dependence on a few clients who control most of the acreage for ag-tech companies focused on the U.S. market. This means new ag-tech companies must be accepted by nearly all the commercial greenhouses to be viable.  

If the technology targets leafy greens and culinary herbs, then it is important to realize that the 2023 industry is even smaller (just under 400 acres). In addition, the leafy greens industry is further challenged by the fact that most players use different production methods, making it harder to find similarities among farms.

All of this means that true ag-tech companies must be ready and willing to explore new geographies that have similar existing markets, target new crops, or focus on more general technology. The easiest are Mexico and Canada in terms of travel. The hardest is Europe. But do not expect them to accept new ideas quickly, as there are just as many local companies competing for business.  

The same competitive strategy applies to greenhouse operators and producers as well.  The market is highly competitive and as the data shows, much of that competition is coming from Mexico, Canada or the open field.  Greenhouse businesses must be solving a clearly identifiable problem while providing a value proposition (ie product) that is clearly “better, faster or cheaper” than the product that is already existing on the market.

Successful companies need capital, time, people and patience. Dutch companies invest heavily to access U.S. markets. Same goes for horticulture companies from Mexico, Canada, Israel, Spain, China, Sri Lanka and any other areas that can produce horticulture technology, supply, consumables and (yes) fresh produce.

We Must Know to Grow

While some might read this article and see it all as doom and gloom, we do not. As stated earlier,  we see it as important information to know and understand, so we can accept a reset. Our industry still has tremendous upside.  

For the industry to reach its potential, we must understand the following before we can grow:

1) With rising interest rates and increased company failures being announced, investment dollars are harder to come by. We must keep those dollars working and staying in the U.S. (or in your local economy or at least with companies investing in your local industry or economy.)

• If we believe in local, we need to encourage growth within the U.S. (You could make the same argument for any other country and companies looking to build their industry.)
• We know that many of the dollars invested were sent overseas because in excess of 250 acres of greenhouses were built in the U.S. by Dutch greenhouse builders from 2020-2023.
• The more dollars we keep local, the more this money can be used to develop research, education, data and technology that solves problems specific to growing in a local market.

2) We must increase the number of American-led companies “growing” or operating successful commercial horticulture businesses. The current lack of grower or production leadership shows that we do not have the expertise to run these facilities. Keeping dollars in the U.S. should promote the opportunities and education needed to get interested people into the right positions. If we do not do this, then we must change our current political position on immigration and start making it easier to bring in talent from other countries.

• We also need to be honest on our access to labor. It is among the largest costs for any company. Regardless of opinions on tech, we need access to labor in a way that keeps us competitive.

3) Currently, the cost of running U.S. CEA businesses is high because:

• Scalability has not been demonstrated for vertical farms.
• Growers are regional segregated from one another. So supporting businesses have a hard time servicing them as cost-effectively as condensed markets such as the Netherlands or Leamington, Canada.
• Labor costs are high. Local people do not want the jobs and struggle performing the work as effectively as individuals from countries such as Mexico working on visa programs. Unfortunately, visa programs are difficult to navigate, costly and politically unpopular.
• Distribution costs are high and often opaque to the grower depending on the size, scale and distribution or customer relationships the farm has built.

Once we overcome these obstacles, we can and will have a thriving industry. After all, we will still have the same problems we faced when people became excited about our industry. 

Traditional farms will continue to be impacted by changing climate patterns and extreme weather events. Fresh produce with little to no pesticides will continue to be sought after by consumers. And we will still need to protect our fresh water sources from nitrogen runoff and agriculture (as well as industrial) contamination. 

More about the authors:

Chris Higgins is the chief editor at Urban Ag News as well as the President of Hort Americas.  He has been active in the commercial horticulture industry since 1996 and has been focused on controlled environment agriculture since January 2004.

Nathan Farner is the General Manager at Hort Americas. Nathan built his career on helping companies with merger integrations, information technology implementations, business process optimization, and data governance.

All information in this article is property of Urban Ag News, Chris Higgins and Nathan Farner.  Any reproduction of this information can only be done with written permission.

Notes:  If there is a significant amount of interest in further facts and figures not covered in this article (like more information on legal cannabis market or production area of vertical farms) we will be happy to prepare follow up articles.  Please comment on what you want to learn below.

Thoughts of a businessman just trying to figure it out, while not messing up.

“Isn’t it pretty to think so?” – The Sun Also Rises, Ernest Hemingway

In a previous article, I posed the question, Who Should Lead The Environmental Movement? In this follow up-piece, I want to explain why I struggle seeing myself or any other small, medium or large business owners being leaders or role models in this movement. 

You see, I believe most of us start or go into business for similar reasons. We also evaluate success in similar ways. And while I don’t think this stops business people and entrepreneurs from trying to be as sustainable as possible, I believe we should not be the ones leading the environmental charge. However, businesses in agriculture or horticulture must still keep the environment in mind with every decision because we rely on access to natural resources for our success, regardless of the facility we farm in.

Sustainability is based on a simple principle: Everything that we need for our survival and well-being depends, either directly or indirectly, on our natural environment. To pursue sustainability is to create and maintain the conditions under which humans and nature can exist in productive harmony to support present and future generations. – United States Environmental Protection Agency 

Why did I start my business?

I started my business because I was tired of working for someone else. It’s really that simple.  And like most entrepreneurs, I was not (nor am I) independently wealthy. So I obviously needed my idea to make money. I also had to add value to an industry I was experienced in and ensure that value was great enough to monetarily reward me for the effort and energy I put into my business.

All businesses share certain characteristics. Making money might be the factor that binds each one together. And whether you own or manage a business, you do what’s needed to turn a profit (while acting within the law and a certain set of ethics). I would go one step further and state that businesses don’t have a choice other than to focus on profit. After all, banks, investors and vendors demand profit (at some time), or they create a situation where a business struggles to exist or continue to operate. (See current state of the CEA Industry.)

The Realities of Running a Business of Any Size

1. First and foremost, it exists to turn a profit. 
2. Owners or managers are beholden to banks, lenders, shareholders and investors.
3. Owners have to consider the realities of attracting and retaining good employees in a competitive market place.
4. Most businesses (especially agricultural/horticulture) operate within the limits of tight profit margins. Managing cost drives many operational decisions.
5. Selling less from one year to the next is not normally an option.
6. Business people are not inherently bad people. Capitalism is not an inherently bad system. Both at times can force bad decisions to be made on behalf of a group of people.
7. For many business people, success is measured by one’s ability to accumulate wealth.

As a small business owner, I feel these pressures even though I have patient investors and business partners who believe in our vision and want sustainable growth. My business is also traditionally financed, meaning we rely on our own money or loans from the bank to operate. If we are to grow, both require that we turn a profit, as the bank won’t loan to us or we won’t have funds to grow if we’re not profitable.

I also have great employees who have dreams, which cost money. These range from something as basic as buying their kids new clothes or taking the family on an annual vacation to bigger dreams such as buying their first home or saving for a well-deserved retirement. So assuming business owners truly value their employees, they must achieve profit to retain them. If we fail, they will leave for opportunities elsewhere.

We must also take into account the reasons people start businesses. Businesses exist to fill a market need in return for a monetary reward. For most of us, this is seen in our mission and vision statements. 

Here are a few examples from leaders in the controlled environment agriculture and food industry:

First, I admire these companies for publishing their mission statements (which came directly from their websites). Yet how many times do you see the word “environment” mentioned? For those that use the word “sustainable,” how do they define it? A business can be sustainable by definition and not environmentally friendly at the same time.  

I am well aware of the impact my companies have on the environment, and that our vision and mission don’t mention the environment until you get much deeper into the business plan. The environment is part of our decision-making process, but it is not the primary driving factor (although I might want it to be).

Hort Americas Mission and Vision: 

Our Vision: To become North America’s leading commercial horticultural supplier of innovative goods and technical services.

Our Mission: To link the global manufacturers and providers of horticultural goods, services and technologies with the North American greenhouse grower/distributor community timely, efficiently and effectively. 

What does it mean to be a successful business person?

Oxford defines successful as “having achieved popularity, profit, or distinction.” I think most of us agree with this definition. While being challenged, the American Dream still drives the definition of “making it,” which mostly centers around financial measurements such as annual salary, financial freedoms, fewer hours worked, having a family, driving a nicer car, owning a bigger home and traveling more. Depending on where you live, “making it” may also include independent wealth and or fame.

This is no different for business people and entrepreneurs. In fact, we are more likely to be focused on “money” than others. In many ways, we have to be. Turning a profit makes our lives easier or less stressful. 

Because we prioritize profit, we also heavily focus on costs. It feels like we are pre-programmed to spend less on mundane items in our business processes, even if that means ignoring potential environmental impacts. Here is an example:

Greenhouse tomatoes make up the largest segment of any crop grown in a controlled environment, as determined by the production area dedicated to one crop.

Most growers need something that attaches the vine to the twine to support upright crop growth. Although plastics create environmental issues, it’s often used even though biorational or biodegradable products are available. Below are some real numbers to show the difference in product costs. Which would you choose?

Mid-2022 pricing provided by Hort Americas. Discounts are available to growers ordering bulk quantities. These discounts can sometimes make the differences even greater than shown in this example.

Choosing the plastic option does not make you a bad person. It simply shows you’re concerned with managing your costs because your immediate need is to turn a profit. It means you are a manager who is concerned with avoiding costs that make you non-competitive at the farmers market or in the produce aisle. In the end, your choice makes you normal.

Capitalism is winning around the world, according to the Fraser Institute Economic Freedom Report.

We must be willing to accept that the world is driven by capitalism. In many ways, this is not a bad thing. Countries that adopt capitalism pursue more economic freedoms and enjoy better socio-economic outcomes. But this in itself outlines problems because the focus is on achieving socio-economic outcomes.  

So if businesses are built for profit and governments govern so that we achieve better socio-economic outcomes, at what point do we prioritize the environment? The simple answer is, after people and profit (for many businesses, sustainability is broadly guided by the 3 P’s — People, Planet, Profit). 

I believe this is why we look to businesses and technology to solve our problems. Think about it, what are some of the most popular solutions to solving climate change?

• Transportation: Switch from gas-powered transportation to electric.
• Agriculture: Switch from cattle to a meat substitute cultured in a lab.
• Electricity: Switch from coal to clean energy alternatives stored in new battery technology.
• Fashion: Switch from virgin materials to reclaimed or recycled materials with cool labels and logos.
• Consumer packaging: Switch from virgin plastics to bio-based alternatives.

While as business leaders, each of these examples is something we should consider, I find it odd that you rarely hear sustainably-driven companies encouraging customers to “consume less” or “change individual habits.” Why? Changing consumer habits would likely lead to a larger environmental impact than creating a new product or business. Plus, consuming less is not good for our economy or businesses.

Finally, let’s consider discussing the definition of success. In current American culture, successful business founders and owners are often seen as celebrities, icons and role models.  Remember that politicians desire socio-economic growth under their watch because this means they stay in office. This encourages governments to elevate business to an elite status, allowing them to dictate or influence the way laws are written. Cities and states then court businesses, offering them incentives to come to their community and invest to increase the economic prosperity of those living there.  

And again, we are right back to profit. Without profit or prosperity, these communities would not offer incentives. Young people would not be interested in modeling their lives after business owners, and the government would ultimately care less about their opinions.

What does it mean to be sustainable?

The environment is everything that isn’t me. – Albert Einstein

So where does this leave us? A realist might suggest this presents us with multiple conflicts of interest. I believe these conflicts are best illustrated by asking a series of questions that I struggle to answer. So I will not pretend that I can provide answers for them.

1. How can businesses make the right choices for the planet if the market’s competitive nature does not afford this opportunity? 
2. How can a business continue to grow indefinitely and in an environmentally sustainable fashion, regardless of the product it makes or the services it offers, if the planet has finite natural resources? 
3. How can a business be truly sustainable if it relies on access to cheap or artificially inexpensive natural raw materials to be successful?  
4. How does a business appease investors, financiers and employees over time while focusing on environmental sustainability?
5. Do we need to select which parts of our businesses we make sustainable? And just outwardly agree that our businesses cannot be completely sustainable?

Answering these general questions always leaves me with a series of even more difficult questions. For example, how does technology save us from climate change when it leads to increased manufacturing and continued dependence on energy consuming of technologies? How do business owners change when they operate in an increasingly competitive global market? Why is preserving the environment the responsibility of businesses?  

But, the most difficult internal question for me to tackle is this:

If I am truly concerned about our planet’s health and the people who come after us, do I need to redefine what it means to build a successful business? 

I think the answer to this question is most definitely yes. This means identifying alternative  sources of funding, as well as ways to compensate employees and produce value. This may also mean we should no longer be concerned with profit. (Note, I said “may.”)

So now ask yourself, with all the realities of being a small or “big” business person, are we (as business owners) the right people to lead the environmental movement? And furthermore, are we the right people and vehicles to tackle social and legislative problems? After all, are we not part of the same people who profit from and created the system?

I loved to be proved wrong. Please email me any comments or questions regarding this article.

Chris Higgins is the founder of Urban Ag News, as well as President and co-Owner of Hort Americas, LLC. Message him here.

Recent company failures and layoffs will likely have people second guessing their commitment to the agtech movement and possibly controlled environment agriculture (CEA).

The past 15 years of my career have seen a rollercoaster of interest in my chosen industry. In the 2000s, the Canadians and Mexicans drove investments as they rapidly expanded to give U.S. consumers year-round access to greenhouse-grown tomatoes.

Then, starting between 2010-2015, vertical farmers and greenhouse leafy greens producers again jumped at the opportunity to rapidly scale new ideas as consumers demanded locally grown options. Also, investors (flush with cheap capital) enabled rapid development of new start-ups.  

The years 2000-2021 were also a very good time to be a cannabis grower as laws changed and investors took interest and advantage of legislative changes by quickly setting up growing facilities that spared no cost.  

And finally, from 2020-2022, ornamental growers benefited from a seismic shift in consumer activity as people stayed home (from work and vacations). They focused on beautifying their home spaces and discovered new interests in gardening and landscaping.

With all this activity, one fact is certain: Business people from all industries tried to join the excitement. They deployed capital and that capital inspired engineers. Those engineers then looked for (and continue looking for) opportunities to solve problems. 

Yet like all business cycles, opportunities shrink, people lose their jobs and investors lose money. This often occurs because much of the hype is not real or capable of creating a solid foundation for growth. 

Some of this is also driven by people not understanding our industry (which is nothing new), its problems and the amount of money existing industry players can afford to pay for creative solutions to their problems. 

Yet, just like other cycles, outside interest in our industry has created some amazing companies. Some of them will go on to be widely successful. Others will fail — but necessarily because of their ip, products or services. What they offered will be picked up by new investors and relaunched with different degrees of success. And many of these successes will fill industry needs, including in natural resource conservation, labor management and energy management.

Now, many of you know me. You also know that I am friends with a number of people who created and operated both the “innovative” farms and advanced agtech companies. Many are quick to point out their failures due to the layoffs, poor stock performance and door closures. As a result, this leads you to ask me questions such as, “Why are these farms and companies closing?” 

I wish I could give a simple answer. But as with most issues that matter, the real answers are not simple, and the simple answers fail to address the real problems. 

Why are doors closing?

In general, most farm failures and issues can be summarized under operational issues. Some forget that regardless of the technology used, these businesses are still farms. Farms that must operate and compete in a market with notoriously low profit margins and cutthroat competition.  Operational excellence and a conservative fiscal focus are not necessarily issues that can be solved by technology. (Technology can assist experienced managers, but it can not provide managers experience.)  

Operational factors such as labor, efficiency and quality are all areas that technology can help improve. But in the wrong hands or at the wrong price, technology can also create bigger problems by increasing burn rate in new businesses and putting considerable pressure on new ideas. 

In other words, AI is already used in our industry. The degree to which we use it is now being explored. But, AI itself will not solve the issues farmers deal with on a daily basis. In fact, used improperly, the additional cost of AI may cause certain farms to fail much faster because it can increase costs with no positive offsets.

What does this mean for our industry?

Failures are a part of business. Nearly 1 in 5 U.S. businesses fail within the first year, according to the latest data from the U.S. Bureau of Labor Statistics. And while these businesses fail for a variety of reasons, the top reason startups go under is due to misreading market demand — a mistake found in 42% of cases.  

I think this is especially true in the world of modern commercial horticulture and agriculture.  These are mature markets which (as stated before and cannot be stated enough) historically operate on razor-thin margins. Many underestimate how farmers learned to do so much with so little. They also underestimate how hard it is to sell produce, get shelf space and maintain that market position.  

Most importantly, however, people don’t understand the real scale that even “family” farms operate at. Agriculture is one of the world’s oldest industries. It has seen new trends, innovated and adapted to change for centuries. A few failures in the world of agtech will not have a major impact on the industry.

Looking for agtech? Watch for their pitfalls and know what questions to ask.

• Which systems are proven to be compatible with new tech?
• Which crops are the tech proven on and in what climate conditions?
• How much does the new tech cost to implement?
  • Know the internal labor cost vs savings, as well as potential cost.

So many new ideas and technologies

As I left Greentech in Amsterdam this past summer, a valued customer told me, “There is so much cool stuff in there. Too bad I cannot afford any of it.” This is such a true statement.  

Tradeshows and industry fairs are filled with all the newest tech and gadgets — some proven and many unproven. Manufacturers and vendors search for farms to buy their technology, so they can prove it on a commercial scale. This can lead to dangerous scenarios for both farms and factories. Tech providers can assume that every farm operates the same as their client(s). As a result, farms can sacrifice valuable production space to a technology that does not provide the equal amount of value to each partner (depending on the contractual agreements).

This has led some tech companies to build their own farms. It’s also where I believe the biggest problems occur.  Investors back inventors to build farms to prove out their tech. Many of these business models then expect the farm to turn a profit after developing and deploying their proprietary technology —  but this is not as easy as it seems. Not only is rolling out and developing technology an expensive process, it’s highly unlikely that one farm can cover these costs by selling crops that have historically low profit margins.  

For those taking capital from investors, remember not all capital is the same and it all comes with expectations.

For those looking to invest in farms, remember not everything can be solved with technology. Farming is filled with thousands of examples of technology that all produces the “same products” profitably and successfully.

The reality is, Agtech, AI and robotics in commercial horticulture and agriculture are here to stay. A few failed start-ups will not change this. What remains to be seen is, which companies will win the race to dominate the future of agriculture? What we know for sure is, at least 20% of the new companies formed over the past 2-5 years are destined for failure. 

Conclusion: AI and robotics have a role in the future of CEA.
Both are already being used in farms at multiple levels.
The truth is that the future has not been defined yet.

Ever wonder what’s the difference between a good grower and a great grower?

I recently made a post on Linkedin that brought out some amazing comments from professional growers. It also highlighted the fact that those new to our industry do not understand the terminology we commonly use. In fact, most of these terms mean something completely different to professionals from other industries looking to join the world of controlled environment agriculture. (Don’t know exactly what controlled environment agriculture means? Follow this link.)

In Controlled Environment Agriculture (CEA), we used the term “grower” instead of “farmer.”  The difference between a grower and a farmer is minimal. Growers in controlled environment agriculture facilities often have more tools at their fingertips to control temperature (air temp and root zone temp), humidity, light, CO2, air flow, nutrients, water and oxygen. Farmers (depending on the crops) don’t have the ability to control or manipulate the climate. They can (at times) control irrigation, but they mostly respond to variables outside of their control rather than attempting to predictively manage variables in order to achieve the best outcome.. 

Many of you know that while I am the owner, regular content contributor and chief editor of Urban Ag News, I am also the owner of Hort Americas. Hort Americas is a wholesale supply company focused on providing products and services to growers and operators of traditional farms, greenhouses and vertical farms. As a company, we have expertise in a few specific areas, including photon management (i.e., supplemental lighting with grow lights and light intensity management with shade paint), rootzone management (i.e., substrates and growing media such as rockwool, coir and peat moss) and nutrient management (i.e., traditional and organic fertilizers). And as someone who is often responsible for selling then helping growers successfully implement new technology, it is easy to understand how some people believe that one product can make the difference in their crop. BUT, after working with some great growers, I quickly learned what separates them from their peers.

What is the difference between a good grower and a great grower?

Great growers understand one key concept that seems fairly simple (and it is). They understand how to keep their crop balanced. They know that a healthy, balanced crop gives them the ability to direct plants’ energy where it’s needed and when it’s needed to strengthen the crop at the right times. The result is consistent, high-quality yields that give management and sales teams the confidence to gain sales by promising then delivering uniformity and reliability.

So what does a balanced crop mean?

Coming from the ornamental greenhouse industry, I did not hear the term “balance” until I took a job at Grodan and moved to the greenhouse vegetable side of the industry. I first heard about balance when traveling with crop consultants in the early 2000s. Most of our visits at that time were to greenhouse tomato producers. I learned so much so quickly while listening to their conversations about improving yield or solving problems. They referred to balance when discussing crop management strategies that create trade-offs between vegetative growth (leaves and roots) and generative growth (flowers and fruits). They described crops in balance as most productive and while they might not always achieve the highest yields, they do always produce the most consistent yields.

How do my closest grower friends define a balanced crop?

Since I am fortunate enough to communicate with some of the world’s best controlled environment agriculture growers, I thought it would be cool to share with Urban Ag News readers how they look at and define a balanced crop.

Leafy green grower/specialist: A balanced crop is when the plant has a good combination of vegetative to generative growth. In lettuce, this means a good root development identified by healthy white roots, leaves with some starch accumulation patches and glossy leaf appearance. Proper leaf development has determined the length and width of the leaves and firm crisp texture.

Grower with experience in leafy greens and vine crops: Consider that healthy “roots, shoots and fruits” are the foundation of a balanced crop. If any of the three look unhealthy or abnormal, the crop is out of balance. Understanding what healthy roots, shoots and fruits looks like allows the grower to know the parameters needed to steer the crop in a way that provides the highest percentage of sellable crop that fits the production schedule.

Ex-grower and greenhouse/hydroponic consultant: A balanced crop is dependent on what crop you are speaking about. It can be defined in many ways, but there are two factors that drive the questions a grower asks before making cultivation decisions. (For this example, the crop is tomatoes.)

• Balance between crop health vs profit
  • Do we add more potassium, which creates more flower production but also weakens the plant’s vegetative state?
  • Or do we take a more balanced approach, which will keep the plant vigorous and vegetative while producing less fruits? Is the reduction in fruit (i.e., loss of sales) worth having a more robust plant that is less susceptible to pests?
• Balance between yield vs flavor
  • Do we turn up heat to ripen fruits faster and know that this results in less sugars in fruit (lower brix count)?  Or do we grow the plant a bit slower (less profit) and focus on flavor and quality?
  • Do we keep the  lower leaves on the crop or do we take them off?  Keeping them on provides shading to the fruits, which slows the ripening process and produces higher brix content (i.e., flavor) but sacrifices speed, which is profit?

All growers want two outcomes — highest yields and best quality.  All greenhouse owners (who for the smaller farms are many times the grower as well) want the highest yields, the best quality and most profits. This might be what separates the good from the great. The best growers and the best business people understand that you cannot always have it all. They and their staff realize the need to make choices along the way that impact profit, quality and yield. They understand what’s important to their business and, more importantly, what’s important to their customers. Trust me when I say, taste is not always the most important factor.

Want to learn more about the commercial controlled environment agriculture industry?  Email us your questions. We will work within our professional network to get you answers. We want to give special thanks to Ramon Melon (AppHarvest), Bob Hoffman (Soli Organics) and Serge Boon (Boon Consulting) for being great friends and helping me with this content. 

Chris Higgins is the founder of Urban Ag News, as well as President and Co-Owner of Hort Americas, LLC. Message him here.

Urban Ag News is extremely grateful that Michael Del Ciancio of DC Farms based in Ruthven Ontario, Canada, has agreed to discuss his thoughts on new ag-tech trends with us.  A third- generation farmer, Michael grew up working on the family fruit and vegetable farm with his father and grandfather. After completing his Bachelor’s degree in Horticulture at University of Guelph, Mike went on to work in music marketing for a brief period managing a metal band in the Toronto area. Eventually Michael returned home to put his wide array of skills to use at DC Farms.

DC Farms is still a family-owned business that has been operated by Ernie and Mary Del Ciancio since 1972. Originally founded as a 22-acre fruit and vegetable farm, DC Farms converted to greenhouse Roma tomato production in 1995. In 2012, DC Farms introduced mini cucumbers in addition to the Roma tomatoes. In 2020, DC Farms switched from mini cucumbers to mini eggplant; still growing the Roma tomatoes.  All of DC Farms products are sold and marketed by Mucci Farms. 

We feel his experiences, the experiences of his family and the size of his marketing partners puts Michael in a very uniquely qualified position to share his thoughts and ideas around how ag-tech will  change the shape of the industry going forward.

Chris Higgins (CH):  The controlled environment agriculture industry (which includes greenhouse production and vertical farming) has been receiving a lot of attention over the past few years.  The industry is being positioned to lead the next major tech revolution in agriculture.  As a multi-generational, family-run commercial greenhouse grower, what areas do you see controlled environment agriculture having the biggest impact?  And what do you think needs to happen before those changes can occur?  

Michael Del Ciancio (MDC): Agriculture has definitely shifted over the years.  Traditional field farming is obviously still a necessary option, and will always have a place on peoples’ plates. However, a shift to other forms of food production is necessary as society shifts with the times.  For a few brief years in my early 20s I lived in Toronto, which is Canada’s biggest city.  Now I go back maybe once every few years for concerts and to visit friends.  Every time I drive in on the highway, I’m in shock at how much it has changed, how many massive skyscrapers have populated the downtown core, and I wonder who is living in all these buildings.

The world is growing. It is estimated that within two to three decades the world’s population will hit nine billion people.  (And then drastically decline, but that’s a conversation for another time).

Counter to the above example, driving around my home towns of Kingsville and Leamington, an area which is essentially the greenhouse mecca of Canada and possibly North America, I see acres upon acres of greenhouses being built. I can’t help but wonder, who is eating all these vegetables.  It’s quite simple–people need to eat, and we need people to grow the food for people to eat. The comparison doesn’t stop there however. Skyscrapers are common practice in major cities because quite simply you can fit more bodies on less square footage of land.  The same applies to greenhouse acreage. Approximately one acre of peppers or cucumbers is equal to 20 acres of field-grown.  I see that as the biggest impact. The sheer fact that we will be able to grow more food on less land.  It’s a beautiful thing to be well prepared to feed your own country.

Now, I don’t work on the sales side of things, but one would hope that this should keep marketers and retailers in check while still being profitable for farmers and help keep the price of food at least mildly stable, due to the geographic location being much closer which aids in everything from better shelf life, to a lower carbon footprint affecting the grocery store shelves.

Another area I believe needs focus is the proper governance in areas where these farms will be constructed.   The adjacent communities should understand how modern day agriculture grows safe food, with far less pesticides, and as I stated earlier, with far less square footage. At the same time, the greenhouse itself can be a challenge.  There is an adjustment that takes place when farmland gets covered in 24-foot high glass structures.  With proper communication, and the right leadership, problematic issues can be avoided, and a plethora of great opportunities can be found for many.

One opportunity that stands out is the start of making farming appealing to the younger generation through technology.  I can count on one hand the amount of times in my life met someone under the age of 20 who said “I want to grow up and be a farmer.”  The simple fact is the tradition of generational farms where knowledge and passion are handed down from generation to generation is dying.  Also, modern living has glamourized white collar work, which has driven would-be farmers to live in the aforementioned skyscrapers.  With advancements in tech across the entire industry, and AI in the growing specifically, I believe it’s only a matter of time before young people see a golden opportunity.  A push to educate the youth at a young age, and change the stigma associated with farming will help grow this movement at the grass roots. 

CH:  WOW!  There is a lot to unpack in there.  We might have to split this into two articles.

(I want to know more about your thoughts on the social and environmental impact of nine billion people, but I will save that for the second article.)  Lets focus first on your environmental, social and corporate governance (ESG) comment.  I have spoken to many ag-tech investors interested in controlled environment agriculture that see it as an ESG investment as well. Which do you feel is true, new ag-technology (products and services) are allowing greenhouse growers to be ESG compliant or greenhouse growers have always always operated with a focus on the environment and proper stewardship?  Can you give us specific examples to support your answer.  

MDC: Interesting question, my opinion is solely based on my vast experiences being an operator of a family farm for many years. I acknowledge that I may be missing some fundamental points that could alter my stance.  Although I can agree on paper that ESG seems like a beautiful thing and all businesses should make it a focus, I’m quite skeptical that it produces the impact that we want to believe.  Giving a score to a company based on a few selected focal points, on issues that are very much complex, is no easy task, and can very easily be manipulated.  I’ve had enough experiences witnessing new government regulations being put into place as well as speaking with investors to know that much of this seems like marketing and profit generation under the veil of Mother Earth’s preservation.    

All that being said, I do believe the majority of farm businesses are compliant whether intentional or not.  For instance; for years, we have been heating our crops with a hot water heating system, and recapturing CO2 off the boiler to prevent it from entering the atmosphere and putting it right back into the plants to absorb it to aid in photosynthesis.  Installing farm specific grow systems for more uniform irrigation and the ability for water leachate recycling systems to ensure we are creating a closed-loop system with no water leaving the farm or polluting the waterways.  Installing energy curtains to prevent heat loss and drastically lowering gas consumption.

These are just a few major examples of how our industry is attempting to do our part. What makes it so great is that not only are they “green” they are also great business decisions financially.  It’s a win-win and I believe our industry is continuing down this path with artificial intelligence (AI) for example, helping fine tune operations and create more efficient growth.  LED lights allow for much less hydroelectric and gas consumption, and increases production locally which then cuts down the carbon footprint from needing more trucking.

To summarize, I fully agree with the concept of sustainable business/farming, and am excited about the future and where it leads.  However, I don’t agree that more convoluted manipulated regulation (which is silently killing family farms across America) is the proper way to go about it.  We live in a world of convenience and doing this to appease investors makes me extremely uncomfortable.  We are talking about food and land here, the essentials of survival. This is not widgets. We all need to be very careful about how we proceed. Putting all the onus on the hard working farmers who typically care more about the land then most is going to have drastic consequences for all of us in the not-to-distant future.  It already has. 

CH:  The next question is what skills do they need to enter into the space and be successful quickly.  Are “growing” skills needed?  Or will AI handle that and is it more important for them to have skills in coding, physics, biology etc.?

MDC:  Entry into the greenhouse world can come in a wide variety of ways.  Sure, the love of plants is probably the most ideal. However, there are other skill sets that can transfer well into a career in growing.

An engineer’s mind brings complex problem solving skills and logic, which is an asset as there are so many moving parts to a greenhouse operation.  Someone with a fine arts or photography background brings the ability to pick up on visual details within the crop itself through scouting, disease, and growth fine tuning. With AI and tech gaining a stronger presence in greenhouses by the day, of course, a tech and coding background would be tremendously valuable.

CH:  It sounds like you are looking for renaissance minds?  

MDC: As a rising tide lifts all boats.  Having the ability to capitalize on past, current and future data points could be very powerful.  AI, in theory, should make medium (skilled) growers good, and good growers great.   With or without AI, being a grower in a large greenhouse operation brings with it a tremendous amount of responsibility.

If you’re looking to be a grower, it’s best to start with something that gets you in the crop like scouting or maintenance work. Even if you are not directly involved with growing, it is crucial to be in the greenhouse to see the day-to-day operations and get a basic understanding of the flow and environment.  The exposure will help train your mind to recognize patterns in plant growth and environmental conditions throughout the year. It will also show you how this fast paced industry works at different levels, and how there is a physically demanding side to it that can’t be ignored. 

I truly feel that this industry is primed for fresh blood, as I stated earlier farming is not typically framed as a sexy industry for the youth.  If you want to find a middle ground of office work and physical work, this industry may be for you.

It can be challenging at times no doubt about it, but the payoff of working around plants, constant innovation, beautiful weather all the time, diverse people, and the simple fact you are creating food for the world are just some aspects of the career that can create an extremely fulfilling life.  If you can make it in this industry, dealing with the fast pace of a highly perishable item, with highly sensitive plants, unpredictable weather patterns and highly ambitious companies, then you can make it in any industry, and there is a certain power in knowing that that makes you feel empowered. 

CH: I think it’s safe to say that Heraclitus was and will always be right,  “The Only Constant in Life Is Change.”  Our industry is in the middle of what feels like a cataclysmic shift to many of us.  Many of us are hoping these changes will lead to improvements in the quality of food we produce, the quality of life we create as well as improve our ability to steward the environment we so greatly depend on.  Thank you Micheal for taking the time to share your thoughts and insights from a third generation farmer who has earned the right to have an opinion.

To learn more about Michael Del Ciancio and DC Farms, click here.

To learn more about Environment, Sustainability and Governance (ESG), click here.

To learn more about Chris Higgins, click here.

The best in the industry know that no one item determines successful plant production. Instead, they look to the 9 Cardinal Parameters of Plant Science: 

Light

Learn more with Dr Ricardo Hernandez and the Farmer Tyler:  https://urbanagnews.com/blog/light-quality-with-farmer-tyler-and-dr-ricardo-hernandez/

Temperature

Learn more with Dr Cheiri Kubota:  https://urbanagnews.com/blog/news/back-to-basics-plant-responses-to-temperature-by-dr-chieri-kubota/

Wind (Air Flow)

Learn more with Dr AJ Both: https://urbanagnews.com/blog/prevent-tipburn-on-greenhouse-lettuce/

Humidity

Learn more with Dr Nadia Sabeh https://urbanagnews.com/blog/news/humidity-control-in-greenhouses-and-other-indoor-plant-environments/

CO2

Learn more from a leading crop consultant: https://urbanagnews.com/blog/exclusives/the-benefits-of-supplemental-co2-are-worth-the-cost/

Root-Zone Temperature

Learn more from a leading grower:  https://urbanagnews.com/blog/exclusives/what-are-the-5-must-dos-for-growing-a-quality-greenhouse-lettuce-crop/

Nutrients

Learn more from Dr Dan Gillespie: https://urbanagnews.com/blog/news/effects-of-low-nutrient-solution-ph-on-hydroponic-leafy-greens/

Water

Learn more from Dr. Paul Fisher:  https://urbanagnews.com/blog/education/new-video-on-interpreting-your-irrigation-water-quality/

Oxygen

Learn more from leading crop consultant:  https://urbanagnews.com/blog/exclusives/irrigation-de-mistified/

Professionals know that anyone who says you can have success on your farm by overly manipulating one of these variables is full of you know what. Each one works together. So if you manipulate one, you must address them all.

For more educational information on this topic:

Mastering CEA Technology: https://youtu.be/Hbcjs3OMPZg

Controlled Environment Agriculture (CEA) is an advanced and intensive form of hydroponically-based agriculture where plants grow within a controlled environment to optimize horticultural practices.

CEA techniques are not simpler than older systems for growing plants. Indeed, they demand sound knowledge of chemistry, horticulture, engineering, plant physiology, plant pathology, computers and entomology. A wide range of skills as well as a natural inclination to attend to details are necessary for a person to operate a successful CEA production in either a research or commercial setting.

Importance

Today’s consumers increasingly demand a diet that includes fresh, high-quality vegetables free of pesticides and other agricultural chemicals. Local production is also a major factor when fresh vegetables are purchased. In many regions of the United States and the world, climate makes it impossible to meet this need year-round with only local produce. Produce imported into the United States may be from other regions of the country (California, Florida, and Texas are major exporting states) and from other countries (primarily Mexico, Netherlands, and Israel).

When fresh produce is transported great distances there can be a significant loss of quality. Furthermore, energy requirements for transport can be significant. Local production in CEA facilities can also require significant energy inputs for heating, venting, and possibly supplemental lighting. Studies have suggested the (non-solar) energy required to grow and transport fresh produce at least 1000 miles is equivalent to the energy required for local production within CEA facilities in cold and cloudy climates such as the Northeast and upper Midwest.

Transportation relies on liquid fuels, the price of which is predicted to rise faster than the general inflation rate. Production in CEA facilities relies on electricity and natural gas, the prices of which are predicted to rise no faster than inflation. These factors suggest CEA production of fresh vegetables can become a significantly greater component of commercial agriculture in the coming decades.

Benefits to Consumers

Well-managed, local CEA operations can provide fresh produce (as well as flowers or pharmaceutical plants) of high quality and free of agriculture chemicals. Furthermore, CEA facilities can be closed in terms of discharging liquids either to surface or ground waters. CEA facilities can also be located in urbanized areas, thus not requiring the conversion of open or agricultural land to greenhouses. CEA facilities add to local tax bases and bring net income to a community.

Benefits to Agriculture

Certain sectors of the agricultural industry face increasingly difficult economic outlooks. This is especially true of the dairy industry. Diversification is one means to improve the economic stability of small farmers and CEA is an option to diversify. Furthermore, many family farms can not be divided among two or more children wishing to remain in agriculture. Adding a robust CEA facility provides the opportunity for more than one child to remain.

Benefits to Utilities

The two most important environmental variables for growing plants are temperature and light. Both parameters must be controlled to be uniform from one location to another in a greenhouse, and consistent from day to day. The only method available to achieve consistency is to use supplemental lighting. Where the climate is cloudy, electricity needed yearly for suitable lighting can be as much as one hundred kilowatt-hours per square foot of lighted area. This load is primarily during off-peak hours and can be interrupted for short periods. These features should make CEA electricity loads highly attractive to many local utilities.

A Brief History of CEA

CEA, or Controlled Environment Agriculture is a combination of horticultural and engineering techniques that optimize crop production, crop quality, and production efficiency (Albright, 1990). Dalrymple (1973) found the earliest known CEA production in recorded history was mandated by the Roman Emperor, Tiberius Caesar (between 14 – 37 A.D.). Caesar’s doctor told him he needed a cucumber a day for good health. So, movable plant beds were placed outside during favorable weather, and brought indoors during unfavorable weather. During winter, on sunny days, the beds were covered with a frame glazed with transparent stone (mica) and brought outdoors.

Greenhouse production of food (again cucumbers) is next recorded in 1597. In the 1500’s lantern covers were placed over small areas of ground and used to force vegetables. By 1670 greenhouse structures similar to those used today were described. These early European greenhouses utilized wood frames with either glass or oiled paper (Dalrymple, 1973).

In the United States, greenhouses were present near the time of the American Revolution. This included George Washington’s conservatory at Mount Vernon, which was built in 1780. The heat source for early American greenhouses was usually from heat produced by the decomposition of manure (Dalrymple, 1973). By 1900, most greenhouse heat came from heated-water systems. Efficient boilers and improved heating systems were developed by the turn of the 20th century (Langhans, 1990). However, a critical component to year-round success was still missing.

In 1887, growers in the United States were advised in The American Florist to refrain from growing tomatoes in greenhouses until April, because “You can’t make sunshine” (Starr, 1887). Making “sunshine” had become possible with the invention of the incandescent lamp by Thomas Edison in 1879, but widespread use of electric lamps did not occur until the early 1900’s after many small power plants and generators were in place (World Book Encyclopedia, 1997).

The first scientific experimentation on the influence of supplemental light on a greenhouse crop was performed at Cornell University by Liberty Hyde Bailey in 1889 (Dalrymple, 1973; Bailey, 1891). The practice was termed “Electro-culture”, and was documented as significantly improving crop production, but was not considered economically feasible for food production. Even today, only crops with relatively high monetary value (e.g., spinach, raspberries, tomato, specialty lettuce crops) can justify the additional production cost from the use of supplemental electric light. In the 1960’s, work at the ARS Phyto-Engineering Laboratory, USDA in Beltsville, MD showed significant increases in lettuce, tomato and cucumber seedling growth through the use of plant growth chambers (Krizek, 1968).

From the mid 1980’s through the late 1990’s, NASA conducted plant growth chamber research in the Kennedy Space Center Biomass Production Chamber, providing state of the art levels of environmental control and monitoring of food crop production in this Martian Base prototype facility. Plant research in the NASA Biomass Production Chamber has provided evidence that the nutritive value of food crops can be as good or better than field grown crops (Wheeler et al, 1996; Wheeler et al, 1997). Other researchers have noted the increased nutritional benefits of CEA crops (McKeehen et al, 1996; Mitchell et al., 1996; Nielson et al., 1995; Johnson, 2000).

In 1999, the Cornell University CEA Program broke ground on the first commercial scale CEA prototype lettuce production facility in Ithaca, New York. The facility has a production capacity of 1245 heads of high-quality lettuce per day. The prototype facility represents the transition stage from CEA Research to commercial scale production.

Cornell CEA today

Cornell’s current CEA collaborations are housed in the Horticulture Section of the School of Integrative Plant Science in the College of Agriculture and Life Sciences, under the leadership of Neil Mattson. One major effort has been the formation of GLASE—the Greenhouse Lighting and Systems Engineering Consortium

The GLASE Consortium was established in 2017 by Cornell University and Rensselaer Polytechnic Institute, and is supported by the New York State Energy Research and Development Authority (NYSERDA) and by industry partners. GLASE develops advanced greenhouse lighting and control systems tailored to the needs of specific greenhouse and indoors cultivated crops. The consortium’s work extends to all areas of the CEA lighting environment, integrating advances in LED light engineering, carbon dioxide enrichment, and lighting control systems.

The public-private collaboration merges leading-edge academic research with the marketplace expertise of industry practitioners. GLASE partners are CEA growers, horticulturists, produce buyers, plant physiologists, lighting manufacturers, and agriculture engineers—all committed to pioneering and commercializing breakthrough greenhouse technology.

For more information on controlled environment agriculture you can post questions below or contact Professor Neil Mattson or Erico Mattos at Cornell University.

__________

Before we get started, let’s set some ground rules for this article. 

1. I want to believe that everyone wants to do what’s right for the planet as long as they think their business can afford it, so we will not focus on energy efficiency and its impact on sustainability. 

2. In this article I will not post the name of suppliers or the price of the lights. The price of the light will definitely impact people’s decisions and will vary widely based on the volume of lights being purchased and the supplier providing it. 

3. This article is not about light quality or light spectrum. To look for information on spectrum please read this article: Why I Still Believe in Red/Blue LED Grow Lights

4. This article is written with commercial greenhouse produce growers in mind, but we do include a model which shows high output led grow lights running for long hours per day which could imply a greenhouse cannabis crop. 

5. We are fully aware that when you change the amount of energy going into the light as well as the type of electric light (HPS vs LED) one is using, it will have an impact on the climate in the growing/production area. Factors like heat and relative humidity would need to be taken into consideration if one was taking a holistic approach to energy savings on the farm. 

6. All lights have different output (measured in PPF.) In this article we are going to make the assumption that a grower is using the same amount of fixtures per acre regardless of output. For simplicity we are also going to assume that the grower is running the lights for the same amount of time. We are fully aware that this will have an impact on the potential yield of the crop. 

7. All greenhouses can require a different amount of lights per acre to achieve the target light intensities. I am using an average of the amount of lights per acre. Height of the greenhouse, width of the bays, placement of walkways, crop layout, crop density, as well as many other variables will impact the exact number of lights per acre. 

__________

There is a growing amount of discussion around the environmental sustainability of a greenhouse or a vertical farm. Much of this discussion is being driven by two or three big energy hogs inside these production facilities. This includes the grow lights and climate management equipment like heaters and cooling units. 

We all know that LED grow lights are more efficient than the older HPS lights that growers have used for decades, but do we know just exactly how to measure that? And do we understand how that will have a direct impact on not only energy savings but the operational cost at the farm? For those growing in a greenhouse, understanding these numbers during dark winter months can have a huge impact on electricity bills.

3 FOCUS POINTS 

1. Start by understanding the amount of light you need.
Urban Ag News recommends going to websites like Suntracker or the ESRI DLI maps site. These websites allow anyone to determine the historical DLI monthly averages for their individual locations. For this example I am going to use the area where my grandparents farm is located in southwestern Michigan. As one can see this is an area of the United States that has very dark winters. 

2. Work with a trusted advisor or extension specialist to determine the amount of hours your crop needs to grow consistently year round. Remember not all crops have the same light requirements and some crops have very specific photoperiods which can determine the amount of hours one can light their crops. Use all of this information to see when you will need supplemental light and how much light you will need to supplement with. 

For this example I am going to use 1 acre of greenhouse tomatoes in a glass greenhouse located in southwestern Michigan.

3. Now let’s calculate how much it’s going to cost you to run the grow lights for the estimated hours you and your advisor determined were needed per year to get the desired yields. 

• a) To provide a baseline, we started with traditional 1000w HPS lights which are highlighted in yellow. 
• b) Then we chose six different LED grow light fixtures. Because the light spectrum has an impact on how efficiently the lights run, we chose three broad spectrum fixtures and three that are red and blue only. 
• c) Since HPS is the baseline, the final column labeled “savings” shows how much the total savings per year one would achieve when replacing traditional HPS with the latest LED grow light technology. 
• d) We made a few important assumptions in this example. First, the cost per kwh is around the USA national average of $0.09/kwh. Second, the same amount of grow lights would be used even though there would be some relative differences in umols/m²/s measurements for two of the samples. We decided not to change them because that would have an impact on uniformity (the even spread of the light over one’s entire crop) and associated capital cost not addressed in this article.

IMPORTANT NOTES! 
It’s important to remember the 7 assumptions made at the beginning of this article and that lights are not equal. This chart only compares ppf (output) and w (watts). We elected to account for the difference in output by changing the amount of hours we estimated you would need to run the lights. Another way to look at this would be to remember the Golden Rule of Light in which 1% increase in light is equal to 1% increase in yield. 

Running these simple calculations will show you why you need to look at energy efficient lighting and in general the importance of researching energy efficient equipment in general. What these calculations do not show is the quality of some fixtures over others. Buyers must always be aware of the value of warranties, ease of returns, durability and quality of product plus accuracy of your vendor to create detailed information on the best way to use and install fixtures. We understand that this topic is intimidating for most, but this is a major purchase for your farm. Make sure to take the time to learn the math and do your homework before purchasing. 

Diving into these calculations will also highlight how much energy will be required to grow a wide variety of crops consistently with uniformed yields year round in climates with low light. Hopefully in articles to come we can discuss what this means for our environment and how we might develop additional ways to lower that ecological footprint. 

For help in calculating the energy efficiency of grow lights you are considering, please email us and we will connect you with professionals capable of helping you make an informed decision.

Chris Higgins is the founder of Urban Ag News, as well as General Manager and co-Owner of Hort Americas, LLC a wholesale supply company focused on all aspects of the horticultural industries. With over 20 years of commercial horticulture industry experience, Chris is dedicated to the horticulture and niche agriculture industries and is inspired by the current opportunities for continued innovation in the field of controlled environment agriculture. Message him here.

Remember: It is possible to operate a successful and profitable hydroponic farm in a hoop house, a greenhouse, vertical farm or even outside in parts of the world.

There are only three primary reasons a grower or a farmer should invest in technology. Yet if you listen to anyone in the industry selling specific technologies, you’ll hear hundreds of reasons.  

The fact is, most growers  should forgo investing in technologies and save their money. As you go through this article, keep in mind that the reasons a commercial greenhouse or vertical farm should invest in technology are no different than other businesses (big or small) making similar investments.

You likely started your business for a variety of reasons. One was probably to make a profit. Make money for yourself and hopefully provide a good living for those who work for you.  If this wasn’t the case, you would have started a different legal entity — maybe a not-for-profit, a charity or a church.  (And even then, I would argue you must still consider profit as part of your plan.)  

It’s becoming more common for farming companies to invest in building new technology specific to their individual needs which might be the “need” to attract investors.  It’s easy to wonder if these businesses are farming companies or technology companies.  We will not tackle this topic in this article, but stay tuned as we hope to figure out how to address it in the near future.

3 Reasons to invest in technology:

1. Technology should be used to increase profits
2. Technology can be used to free up time
3. Technology can be used to grow your business

1. Technology should be used to increase profits

The primary reason you should invest in technology is to help your business make more money by reducing operating costs, increasing productivity speed, or improving consistency or reliability (in the eyes of your customers). New technology investments should be compatible with your current technology and enhance your team’s skills. If you don’t consider these two items, you might find yourself investing in additional resources for integration and educating your staff.

Technology investments should also be somewhat proven and future proof. The latest and greatest gadget isn’t always needed. Instead, focus on tools, equipment or services that make you deliver a product better or faster. For example, let’s look at cameras vs. sensors. Camera vision is a new and exciting technology that many in the commercial horticulture industry are excited about, but its value versus investment cost have yet to be proven. Whereas adding relatively inexpensive sensors in your greenhouse easily provides you with additional data that allows for informed growing decisions proven to increase yield, greatly surpassing the sensor cost itself.

Take your time in making investments too. Calculate your expected return on investment (ROI.)  Do your homework and understand how long it will take to pay off your investment. Do not simply rely on the sales person or supplier to provide you their ROI calculations. Remember the industry and your bank agree that a ROI of 3-5 years is definitely something worth considering. 

In addition, understand the risk associated with your investment (there’s always risk). This alone should not keep you from making the investment. But when you do your homework, you often become more comfortable with the risk. You calculate any potential problems and better understand how the technology works based on how it’s sold or prescribed.

Example:  

2. Technology can be used to free up time

Time is your most valuable resource — protect it. Time is not a commodity (something of low value). Whether you desire more time with your family, to spend more time on your hobby or passion, or to grow your business, they all require your most precious resource. Investments in the right technology should allow you to gain time by helping you and your team do more of what makes your organization money.  This means the technology allows you or your team to perform a task better, to grow a product more consistently or to extend the seasons in which your products can grow.

 “Time is what we want most, but what we use worst.”

– William Penn, English Author

Full disclosure from author:  This is a weak point of mine.  While I keep adding technology to my business, I also keep creating more work for myself!  I think this is common for small business owners and many business managers that love what they do. I have taken the position that if the investment in technology allows me to do more work while growing my business, it is worth it.

Be careful of hidden costs behind services or training that keeps you or your team from using this new technology for as many hours of the work week as possible.

3. Technology can be used to grow your business

“If you are not growing, you are dying.” While there are times that I hate this phrase, it always seems to be true.  As businesses, our costs keep growing. Our shareholders, stakeholders or partners’ desires always increase.  Our employees’ needs and wants always expand.  And customer demands always seem to change (based on our competition’s desire to replace us. The only way to deal with these pressures is by planning for future growth. Technology can help you do this.  

To determine what you need to grow, start by focusing on the weakest parts of your business. This means being honest with yourself. (If you lie to yourself about this, you are only hurting yourself.)  If these weaknesses are an important part of your business, determine how technology could improve your flaws. If you determine that they are not worth investing in, figure out how to eliminate them from your operation, as they will only keep bringing you down.

Author recommendation:  

Run the reports below. Use these to find weaknesses in your business. (If you cannot run these reports, start collecting the data to run these reports to learn more about your business.) 

• General business operations information: annual sales, value of production, gross growing area and net usable growing area, number of full time employee and value of owned and leased capital.
• Income statement: Sales, detailed expenses, gross income, and net income.
• Monthly or Quarterly sales by product by customer
• Cost analysis: costs per-square-foot, costs per-unit sales, and cost per-unit value produced in major expense categories (labor, supplies, facility, inventory, etc.)

Improving your business should enhance the customer’s experience or create more intrinsic value. Investmenting to make “investors” content is a double-edged sword, but taking these steps can help you avoid risks associated with new technology. Remember, failures happen, but your goals are to make a profit, add value to your “community,” protect your “environment” and keep growing the business. 

So back to the original statement, “Remember, it is possible to operate a successful hydroponic farm in a hoop house, a greenhouse or a vertical farm.” All of these types of farms can be successful and profitable. You just need to know how to properly use the appropriate technology that allows each of these types of farms to scale correctly by understanding the relationships between yield and capex and opex per square foot, meter, acre or hectare.

Chris Higgins is the founder of Urban Ag News, as well as General Manager and co-Owner of Hort Americas, LLC a wholesale supply company focused on all aspects of the horticultural industries. With over 20 years of commercial horticulture industry experience, Chris is dedicated to the horticulture and niche agriculture industries and is inspired by the current opportunities for continued innovation in the field of controlled environment agriculture. Message him here.

Simple answer, those with the most passion and perseverance.

As the controlled environment agriculture industry we spend a significant amount of time discussing how we are going to improve our communities, the environment, the farming experience and the quality of food we eat. By themselves these are major commitments. Together they are an enormous commitment. This got me thinking about a simple question, “who should be the leaders of this proposed revolution?” In this post I am going to discuss how we can learn from another industry that is historically conservative as well as providing three focal points I think we should concentrate on.

To find an answer, I started to think about other interests in my life. For those that know me well you know that I love being outside. (For those that don’t know me, hold on you are about to get some insight.) I started to think about my interest in fly fishing and I started to pay close attention to the challenges this niche industry is also experiencing.

In order to explain this better, let me “paint” a picture for you. Rarely, once a year (if I am lucky), I get to travel to one of my favorite places with one no more than two people on a remote saltwater flat. A saltwater flat is any area of shallow water with a relatively even bottom. You can find flats in freshwater, but for me I dream of a remote quiet flat with no people and no access to technology. The most iconic place nearest me are the excotic sands of the Bahamas. (See opening photo.) I am not necessarily there to “catch” a fish, I am more there to capture the experience. The beautiful and hopefully untouched and unpolluted gin clear ocean water provides me a feeling that has been unmatched in my travel. The colors of amazing sunset or dramatic sunrise (to me) are more valuable than the finest piece of art. The wildlife exist in a volume that one never gets a chance to experience in the majority of the USA. The pinnacle, if I am lucky, the chance to get to walk up on a tailing fish. I then have a choice, I can choose to simply watch or I can choose to grab my fly rod, a hook wrapped in some twine and feathers and then play a game of trickery with a very formidable competitor. Either way, my the perfect day has been had.

For those of us who live in the United States, one place you can still have this amazing outdoor experience of chasing a tailing fish is Florida. Luckily for me I have family in Florida, but the experience in Florida is getting more difficult to come by. The opportunity to capitalize on agriculture, tourism and other business has put the Florida coast in the state of constant development. With development you have increased pollution and a growing amount of people putting pressure on a limited resource. Development also means more and more fishermen, many of whom do not share my values of protecting the resource and the surrounding environment which if done correctly allows the many generations still to come the opportunity to enjoy this highly unique experience. Let me be clear, I do not believe in limiting access regardless of whether I disagree with their opinions. I think we should all have access to our nation’s natural resources regardless of one’s financial or political position. So what’s the difference between me and those other outdoorsmen and outdoorswomen? What’s their focus? Normally its land as many fish as possible, kill as many fish as the law will allow (because most everyone I meet does follow the local regulations), get a photo, share on Instagram and think nothing of the trail of trash and destruction they leave behind. It is now a fact that this approach is not sustainable if we want everyone to continue to have access.

Now let’s remember that there is a complete, complex industry that makes money off trying to provide me with this experience– airlines that get me there, the hotels that keep me there, the guides that take me there or retailers that sell me all the necessities I “must have” to be there. These companies and the individuals they employ need these shared resources to continue to make a living, pay taxes and support their families.

And this is where the talk gets oddly political. Not all of those heavily invested in making these experiences possible agree on the best way of protecting these resources.Heck, not all of those individuals even agree that these resources need to be protected.

This leads me back to the basic question, “who’s responsible” for protecting these precious resources?

I started digging deeper into the outdoors industry to see what was actually happening. For those not interested in outdoor activities, it is easy to think that hunters and fishermen/women only really care about going into the wilderness to kill stuff. I realized quickly that within the industry there is a clear difference between a hunter, a fisherman and an outdoorsman. And it’s interesting to see that more and more the outdoorsmen/women who are leading the fight to protect the environments are the same ones that not only cherish it but use it to make a living. They are changing the narrative by encouraging people not to be focused on killing as many fish as they can catch. They are building platforms like Captains for Clean Waters that allow your voice to support science-based solutions and empower your dollar to fight for water quality and hold elected officials accountable. They are better educating themselves by creating entities like Bone and Tarpon Trust to support fisheries through collecting data by using science-based methods supported through collaborations with institutes and governments.

Most importantly I noticed that these individuals are also by far the most passionate about their careers, their hobbies and the natural resources. They are motivated because they see the importance of making change now. They are political, but not in the way you would think (I am still trying to figure this one out so I will hold off on additional comments.) They are motivated by money (this is their living), but the money is not directly derived from the actions they are taking to create change. They have convinced their industries biggest personalities to take a stance while promoting science backed solutions in their most popular venues (tv shows, podcasts, movies and retailers.) Most interesting to me they have convinced these personalities to do this even though it might go against the beliefs of their typical customer base. They realize that offending their customer base is not as important as protecting the resources that allow them to actually have a client base.

Now let’s get back to one of my earlier questions, “who should be the leaders of these changes in our industry?” I think we can learn from other industries by saying, that those whom are most passionate should be our leaders and we as an industry need to find ways to work together to give those passionate individuals a platform that will help to attract new talent to our industry and better educate those individuals interested in our industry or the consumer eating the produce we so proudly grow.

We need to remember that we don’t need to solve every problem, because that’s not realistic. We need to know that if we all work to solve small manageable problems, collectively we will solve big problems. We need to remember that it’s important to encourage those individuals tackling these problems as they will be the ones that create opportunities for all of us.

So what problems can we solve as the controlled environment agriculture industry?

1. Education: The environmental impact that occurs as farmers feed the world. 

We have all read, watched or heard the statistics on how “bad” traditional farming is for the environment. I for one think it’s unfair to put this all on the farmer, even if the facts support much of the rhetoric. It’s unfair because of economics. Traditional farmers do an amazing job of providing “us” with inexpensive food options because that’s what “we” as the consumer have asked them to grow. This creates a big problem for many farmers I know who spend a significant amount of time contemplating how to best steward their land while producing enough yield to pay the bills. We are asking much of these individuals and their relatively small family business.

REMEMBER:  FARMING IS A BUSINESS.

This is our opportunity to support voices that educate. We need to encourage voices that can show or present positive environmental outcomes for the future of farming. One which allows the farmers to become excited for their future and that of their families. For certain crops and in certain geographies, controlled environment agriculture practices can allow farmers solutions to problems like nitrogen run-off, high pesticide usage and inefficient water use. This technology will also allow the farm to become more labor efficient while extending their selling seasons. Success will be based on how well we take the science based data coming out of universities like Wageningen, Ohio State and North Carolina State and then turn it into something that the farming community, local government and ultimately the consumer can use to change the way they grow and purchase food.

Warning:  Our industry needs to be careful that we don’t over promise while at the same time focus on the positive impact we can make while not creating other possibly larger problems.

2. The Platform: Rebuilding of blighted rural and urban communities.

Not historically an “ag” or “hort” conversation, community development is becoming a popular part of many new ventures’ pitch decks. It’s obvious that local politicians in certain areas are interested in this concept, but the reality of controlled environment agriculture (CEA) businesses creating many jobs with good salaries is still yet to be proven.

The current interest, global attention and spotlight may well mean it’s our best opportunity at creating a platform with real stakeholders financially committed to helping us drive opportunity forward.

In order to do this, we will need to open up and think like a community. We will need to:

• Create platforms that support developing an industry within an industry.
• We will need to educate innovators with the problems that truly need to be solved.
• We will need to think about how we work together to build up a variety of businesses that have the same focus and shared missions.
• We will need to think creatively about what business makes sense in what settings.
• We will need to think about investing in our industry to create ways of educating the next generation of workers and leaders.
• We will need to lobby to get the support of both the financial and political communities.
• We will need to focus.

Most importantly we need to understand it’s not our businesses that will alone strengthen the community; it’s the creation of opportunities that lift up families giving them the economic means to further their education, improve their diets, become property owners and invest in their own futures.

“Today, our very survival depends on our ability to stay awake, to adjust to new ideas, to remain vigilant and to face the challenge of change.”
– Martin Luther King.

3. Changing the Narrative: Health and wellness of individuals in our communities.

For most, the food we eat becomes the center of our social universe.  Think about it.  Where do people gather when they visit your house?  The kitchen.  When you think about some of your best memories what is one of the things you remember?  The food and drink you enjoyed.  When you need to feel at home, what do you turn to?  Comfort food.

That’s why for me, this is a no brainer.  We grow fresh produce.  We create the fuel people put in their bodies.  We have an opportunity to be part of the memories the consumer makes.  We need to be proud of this.  We need to motivate consumers by educating them to understand why fresh produce is an important component of creating a long healthy happy life filled with good memories surrounded by family, friends and happiness.  

We need to promote diets high in fresh vegetables and produce which means challenging the animal protein industry for space on plates.  We need to work with chefs to make sure our product is the centerpiece and not a side dish.  We need to promote these diets as fashionable and desirable.  Not encouraging the stereotypes of meatless diets, but the benefits and enjoyment that comes from a plant based lifestyle with animal proteins as the side dish.  We need to look at our own homes and look at the dollars we are spending on our plates.  We need to ensure that we are supporting those that support us.

Finally, the exact solutions will not be provided by one person.  My colleagues and I continue to work to do what we can to play a small role in improving the environment around us.  But, for us to ultimately succeed we will need to identify multiple individuals that have grit, then support them and their passion to solve specific problems.  Join me in starting this journey and remember its most important to start now as its only getting harder and harder to protect what we love.

One of the questions that I get most frequently is, “Which hydroponic system is the best?”

I am fairly sure that my standard answer of, “it all depends” annoys most of the people I am speaking to.  From suppliers to growers and from researchers to hobbyists there is always a desire to know and understand which system is the best.

So why do I answer, “it all depends”?

Whether we are talking about nutrient film technique (NFT), deep water culture (DWC), drip irrigation systems, aeroponics systems, ebb and flow systems, or any other system we should agree that these are all just variations of irrigation systems.

Buffer capacity means security.  Buffer capacity means you can leave for a day without fear of losing the crop.

Next let’s talk about the systems suppliers and their sales representatives.  Suppliers of hydroponic systems will all tell you why theirs is better, but the conversation should really revolve around what factors cause their systems to fail.  Every system has a weakness.  Your crop, your budget, your facility and your geographic location will likely quickly highlight these weaknesses. 

So, how do you determine what system is best for you?

Here are the things you should know, think about and research thoroughly before you invest.

1. What crop are you going to grow?  If you are planning to grow tomatoes, it’s very unlikely that you will want to invest in a nft system or a dwc system.  The needs of your crop will help direct you into the right direction.  Likewise, a closed loop drip irrigation system is unlikely to be the answer for lettuce production.
   
2. Know your budget.  Your budget will play a major role in this decision making process.  Do not only think about the upfront costs of the system.  Make sure to include the operational and labor costs associated with running the system 7 days a week 365 days per year.
   
3. Know your environment.  Each crop type will respond to these 9 environmental variables (see diagram below) in different ways.  As a grower your ability to manage these variables will be a primary indicator of your ability to achieve your target yields.  The irrigation systems primary function is to help you control the 4 variables surrounding the root zone (see diagram below and focus on root zone temp, nutrients, water and oxygen.) Your geographic location and crop will determine which of these variables are most important. 
   
4. Truly understand the design.  In the recent Urban Ag News article, “Important Tips For Designing A Hydroponic Production Facility” I discussed the importance of buffer capacity.  Buffer capacity in your irrigation system plays some very important roles.  First, it will help you manage your nutrients.  Second, it will help your crop deal with variations in temperature. Third and most importantly, it will be a primary indicator of how much time you can spend away from your farm.
   
5. Figure out your maintenance and spare parts plan.  Irrigation systems break.  Irrigation systems get clogged.  Irrigation systems need to be serviced and fixed.  Make sure you understand everything from how to access the most vulnerable and weak parts of the system to how long it will take you to get replacement parts and what parts you should plan to carry in case of an emergency.  Think about redundancy!

Labor is KEY! Consider every aspect of labor.  From the education requirements of running the labor, to the amount of labor needed to operate and maintain the system to the importance of labor needed to check on the system on a regular basis.
Budget • Scale • Access

Which brings me back to where we started.  Which hydroponic system is the best?  It truly all depends.  All we know for sure is that if a supplier tells you, “you can grow every crop in our system”, be concerned.  It might be true, but I can almost guarantee you that you cannot grow every crop profitably in their system.  If a supplier struggles to help you clearly understand and answer the questions posed in this article, look for a new supplier.  There are plenty that will. 

Finally, focus on building a professional network with experience in the commercial hydroponics industries.  Ask lots of questions and understand the full benefits and limitations of any system you choose. 

Final hint: Aquaponics growers use one of these systems as well.