Finally?
From Fast Company, February 27:
Climate change might make growing produce indoors a necessity. But despite taking in more than a billion dollars in venture capital investment, most companies in the industry seem to be withering, unable to turn a profit on lettuce.
When workers arrived at Fifth Season, an indoor farm in the former steel town of Braddock, Pennsylvania, on a cloudy Friday morning last October, they expected it would be a normal day.
The farm, which had opened two years earlier, seemed to be running smoothly, growing tens of thousands of pounds of lettuce per year inside a robot-filled 60,000-square-foot warehouse. The brand was selling salad kits—like a taco-themed version with the company’s baby romaine, plus guacamole, tortilla strips, and cheese—in more than 1,200 stores, including Whole Foods and Kroger. Earlier in the year, the company had said that it projected a 600% growth in sales in 2022. The branding was updated in October, and new packages were rolling out in stores. Solar panels and a new microgrid had recently been installed at the building. A larger farm was being planned for Columbus, Ohio.
But the workday never started. “The CEO came in and said, ‘Justin, we gotta talk,’” says Justin Stricker, who had worked as a maintenance technician at the startup since it launched. “He said, ‘Don’t let anyone set up. We’re going to have a big meeting.’ I thought I was getting fired. The whole entire place was just done.” The managers announced that the company was closing immediately. After shutting down the electrical equipment and draining water lines, the plants were left to die. Stricker and dozens of others were left scrambling to find new jobs.
Fifth Season’s failure is only the most dramatic signal of a reckoning taking place in what’s known as the vertical farming sector. AppHarvest, which runs high-tech greenhouses in Appalachia growing tomatoes and greens, said in a recent quarterly report that it had “substantial doubt about our ability to continue as a going concern” unless it could raise more money; the company is currently being sued by investors who argue that it misled them about its viability. AeroFarms, an early pioneer in the space, pulled out of a proposed SPAC deal last year. In the company’s May 2021 investor presentation, AeroFarms, which was founded in 2004, estimated just $4 million in 2021 EBITDA-adjusted revenue—and $39 million in losses.
The litany continues: Agricool, a French company growing greens in recycled shipping containers, went into receivership in January. Infarm, a vertical farming company based in Berlin, recently announced that it was laying off more than half of its workforce—500 workers. IronOx, which built a complex robotic system to run its indoor farms, laid off nearly half of its staff.
If these tremors in the vertical farming industry seem unsettling, what’s to come could well be worse. As of the beginning of December 2022, $1.7 billion had been invested in indoor growers, more than any other part of ag tech. Investors have been drawn to the idea of “disrupting” a 10,000-year-old industry; when the Vision Fund first invested in Plenty, SoftBank CEO Masayoshi Son said that the company would “remake the current food system.” Controlled indoor agriculture is also seen as a way to respond to climate change. And, of course, investors expect to make money.
Nearly 20 years after the first vertical farm opened, with capital drying up like heads of romaine under an unrelenting California heat wave, one now has to wonder two things: Is it even possible to compete with the economics of outdoor farming? And how did investors think that they could find Silicon Valley-style returns in . . . lettuce?....
....MUCH MORE, they go deep.
Way back in 2020 we were seeing stuff like:
Now the Farmers Are Going Public Via SPACs
Not just any farmers though. This one plans to have the world's largest greenhouse.
And EBITDA by 2025.
When you are forecasting five years out it's probably a good idea to factor in the small but not zero chance of the Chinese Tomato Blight ravaging the world's vines.
(I made up the name for the blight, I have no idea what ails tomato plants)....
Followed by:
ICYMI: Indoor Farming Company AppHarvest Came Public Via SPAC (APPH)
Please excuse the delay on this post, we don't do much with IPO's and especially don't do much with SPACS, shell companies, blind pools or whatever they are being called now. S-1 filings are worth a look for the amount of information they disclose but that's about as far as our interest extends.
Which led to:
Indoor Farmer AppHarvest Plunges After Farm Delays (APPH)
For whatever reason, ZeroHedge chooses to go with "Martha Stewart-Backed" in their headline. I mean, it's true, she's an investor but unless the Tyler Durdens (for they are multiple) hate Martha Stewart I'm not sure why they put her up front.
"US vertical farming group AeroFarms joins unicorn club, strikes SPAC deal to go public"
Now is the time we juxtapose.
I was idly flipping through back issues of Vertical Farm Daily and stopped at this headline:
at the same time this from AgFunder dropped out of one of the feedreaders...
Which, by now you know the drill, led to
Not So SPACtacular Indoor Farming: "AeroFarms & Spring Valley terminate $1.2bn SPAC deal"
And:
Jamie Powell, Winston Churchill, and Anthony Downs On A Variant Of Semantic Satiation
Indoor Farming: "AppHarvest’s Spac forecasts go splat"
Always indoor grown fruit jam tomorrow, never indoor grown fruit jam today:
"For Today's SPACs, 2024 Will Be The BEST YEAR EVER"
Good grief, a quarter of our readers could be dead by that time.
(more if the nukes start flying)
See also:
Black Knight: "It's just a flesh wound!"
- Black Knight: "I am invincible!
- King Arthur: "You're a loony!"
Black Knight: "The Black Knights always triumph!"
There are a few dozen more but rather than list them, quick kudos to former FT Alfalfaville scribe Jamie Powell for his dubiosity (and a tip d'chapeau to current FT Alfalfavillain Bryce Elder for the "Alfalfaville" moniker) and finally a guy who could have helped the VC's avoid a lot of pain:
Vaclav Smil: "How Much Energy Does It Take to Grow a Tomato?"
