Saturday, August 15, 2020

"Pricey Greens From Indoor Farms Are Thriving in the Covid Era "

From Bloomberg Businessweek:

"Novel farming," which turns out lucrative lettuces and herbs, isn't hurt by shortages of water or migrant workers. It's seeing a massive jump in demand.
By Saturday, March 14, even before Mayor Bill de Blasio announced the shutdown of all in-restaurant dining in New York City the next night, Viraj Puri, chief executive officer of the Brooklyn, N.Y.-based indoor urban farming company Gotham Greens, found his business had essentially changed overnight.

His major restaurant customers were suspending all orders “until further notice,” while the grocers, including Whole Foods Market, FreshDirect, and other major chains were doing the opposite, asking for huge increases in product and extra deliveries of the company’s locally grown greens and herbs. (Puri declined to share the food service-retail split for his business, but he says restaurants are the smaller piece.) “My phone was buzzing off the hook from the largest supermarkets, saying can you run extra trucks,” he says. Gotham was ready—it had just opened three facilities in Baltimore, Chicago, and Providence and had another opening in Denver in May, almost tripling its production capacity. In the immediate days after the pandemic declaration, the company increased planting by more than 20%. “For me, it’s seed as much as you can,” says Jenn Frymark, a managing partner who also serves as the company’s “chief greenhouse officer.”

Unlike typical field operations, with separate planting and harvesting seasons, Gotham Greens runs continual, year-round seasons in its hydroponic, urban greenhouses, often built on the sites of now defunct industrial businesses, including a former Bethlehem Steel Corp. plant in Baltimore and an old toy factory in Queens, N.Y. It focuses on such greens as butterhead lettuce, basil, and, especially since the many food-borne illness outbreaks that have come out of West Coast production, romaine lettuce. Packaged in chic 4.5-ounce plastic clamshells, the salad basics can go for more than twice the price of their direct competitors, which explains why Puri is so singularly focused on the greens market, at least for now.

His greenhouses are huge technological steps forward from their forebears. Engineers can adjust factors such as humidity and temperature to simulate the ideal conditions for any part of the growing cycle at any time. They are, Puri says, “very coddled plants.” The company says that thanks to such factors as shorter growing cycles and precisely applied recirculating irrigation, its yields are 35 times higher per acre than those of a conventional farm—and use about 95% less water.

When major farms around the country saw their food service business disappear almost overnight, many were left dumping produce and plowing it under while it was still in the fields. Puri says that Gotham, while it did donate some product that would have headed to food service, didn’t dump anything. Some of its customers, such as restaurant distributor Baldor Specialty Foods Inc. and lunch chain Just Salad, kept buying product but sold it retail.

Gotham is hardly alone in its quest to retool American agriculture to be closer to consumers, more high-tech, and less reliant on the dwindling resources that are making conventional farming ever more challenging, such as water and migrant labor. While a number of its competitors have folded in the face of such challenges as scaling up and using new technology while selling expensive products, Gotham is expanding its reach to new regions. Overall, the “novel farming” industry, which can include everything from giant vertical farms near cities to distributed farms that grow produce right in supermarket aisles, raised $945 million in 2019, a 46% jump from 2018, according to agricultural researcher and investor AgFunder Inc.

Even with the growth of indoor farming, 90%-plus of leafy greens and vegetables still come from California, says Roland Fumasi, a senior analyst specializing in fruit, vegetables, and floriculture at Rabobank, and the epidemic has highlighted the potential disruptions of a very long supply chain. In March the shock spread to cold storage, trucking, and other parts of the normal way of doing food business, giving companies such as Gotham, with significantly fewer miles in its supply chain, a big advantage.

Meanwhile, other indoor growers are expanding beyond the lucrative basils and lettuces. Hamilton, Ohio-based 80 Acres Farms is growing tomatoes in its multilevel vertical farms. New York-based Bowery Farming Inc., which says it’s more than 100 times more productive than typical field agriculture, has grown kohlrabi, tubers, and vine crops, though not commercially. Both companies say the pandemic led to massive jumps in demand for their products at retail. For Gotham, that’s meant an increase in revenue of more than 50% since March. Edinburgh’s Intelligent Growth Solutions Ltd., which builds and sells highly automated vertical farm towers and stations to operators, produces equipment that can grow root crops, such as carrots, turnips, radishes, potatoes, and spring onions, as well as leafy greens. Inquiries have “at least doubled” since the beginning of the pandemic, says CEO David Farquhar, and they’re coming from all over the world....