25 Jan 2018
This year’s Indoor Ag-Con Asia, hosted in Singapore, was filled with idea’s, innovators and enthusiasts alike — all eager to hear new promises and perils of indoor farms and vertical farming from around the world. For a fairly nascent industry, there was a strange aura that made it difficult to separate the inspiring success stories and potential from the soul crushing, science based reality this sector faces as it continues to grow. While financial and operational challenges are clear, there were also a number of interesting patterns throughout the two day event — all likely to shape the industry in 2018 and beyond.
1. There is no silver bullet system… yet
As most enthusiasts and operators in the industry would expect, there was no grand showing of a fully viable, scalable and profitable solution for a vertical farm this year at Indoor Ag-Con Asia. With so many different growing systems, ranging from high performing hydroponics to scaleable aquaponics, the silver bullet still remains elusive for the best performing and most versatile crop cultivation system.
While many of the notable presentations covered the pros and cons of certain growing systems, none were clearly comparable in the cultivation of the same crops or products. And further industry comparisons become even more difficult as many of the turn-key solution companies keep proprietary aspects of their system, well, proprietary.
As disappointing as that may seem for the event, there were a diverse range of applications for new crop varieties grown indoors. Companies and research groups continue to push the frontier of plant recipes and techniques in their growing system using new lights, better controls and more meaningful data.
2. Governments are finally taking notice
It seems fitting that Singapore was chosen to be the venue for this years Indoor Ag Con Asia event. Since 2015, the Singaporean government has publicly pursued a ‘a new smart agriculture future’ with significant policy and private sector activity as a result. New small scale ventures as well as large corporate forays into the world of indoor Ag are receiving both support and increased scrutiny to produce food efficiently without compromising its quality and safety.
“We are committed to creating a robust food and agricultural sector of the future”.
This year, Singapore’s Minister of State, Koh Poh Koon, gave the opening keynote to the event. He described the Singapore government’s stance as
“Committed to creating a robust food and agricultural sector of the future”. Singapore is a clear example of a country with fast moving policies intended to accommodate and possibly foster indoor agriculture.
However, the Netherlands also had a large presence at the event, sharing their respective successes and challenges in the first morning of presentations. Additionally, other government representatives were in attendance, ranging from countries around the world like Israel and Malaysia. Many of them hoping to learn about new technologies to better upgrade the efficiency of their respective countries traditional agricultural sectors.
But for urban planners and zoning commissions, big questions remain in how to fit the binary of classifying these farms as industrial or truly agricultural if marketed as ‘organic’.
3. Consistency is key
Among all aspects of indoor agriculture, consistency remains a critical benefit and continued challenge in using these systems. The quality of plants produced in indoor agricultural operations was one aspect, almost religiously touted throughout the event. Advancements in better environmental controls for air, light, water and plant nutrition are helping farmers ensure a more reliable look and taste for growing a variety of produce.
However, quantity and price continue to be clear challenges for systems that operationally still have many hiccups. Though most presenters shared success in better forecasts and reliability for the quantity of crops produced in their system, there were shared concerns in the difficulty to scale quickly and meet consumer or wholesale demands in time. Setting up new precision growing systems take some time to test and fine tune, complicating a clear picture of quantity and price.
4. Microbiome and nano technologies are making new headway
Aside from the core operating technologies of indoor farms like LEDs, sensors and growing beds, new technologies also made an appearance. Like many technologies in this sector, the benefits focused on growing more with less, in an attempt to reduce crop loss from disease, minimize the water required, and improve crop quality and health.
Presentations highlighting recent advancements in genomic extraction offer new opportunities for farms. Microbiome analysis is one example of one method to better cultivate healthy plant ecosystems from the molecular and bacterial level. Instead of introducing synthetic solutions, companies like Metabiome, highlighted their success in optimizing natural mycorrhizae ecosystems.
Other technologies, like nanotechnologies, were showcased in one successful application to inoculate fish with the equivalent of ‘flu shots’, to prevent the spread of bacterial and fungal diseases common in aquaponic systems. And this seems to be just the start in use cases for nanotech among these indoor systems.
5. Artificial Intelligence comes big and small
One feature that was alluded to in almost all presentations throughout the event were new opportunities for automation and the insinuation of artificial intelligence (AI). While many indoor farms have started to build systems to reduce labor costs, there is still a critical need for farming operators in quality and process management of the plants.
Yet Improvements in one technique of AI, called computer vision, are bolstering new applications for anomaly detection and harvest quality in indoor systems. However, there is still a steep learning curve for computers to successfully utilize AI in practice.
While manual automation is one goal for indoor farms, Blackbox automation (e.g. where to plant and when) offers another incredible opportunity to reduce the complexity farmers face mixing and matching different systems, lights and crop varieties. With so many variables involved in operating an indoor farm, computational assistance and automated planning will likely reduce many farmer headaches — and create shared opportunities — in the very near future.
6. Growing lettuce and big data
While most presentations focused on the quality of production inside indoor growing facilities, there was also a great deal of interest in a fairly new byproduct of these farms — data. Big data.
Much of the focus in the industry has centered around basic viability of growing certain crops like leafy greens and tomatoes. But new improvements in sensor and IoT tech is shifting focus toward actionable insights from the farm data collected. Ramy Sanad from the sensor and controls company Autogrow, described in his presentation how having data isn’t enough, it needs to a priority to “make data meaningful” for the farmer. And for some in the industry, these data could be a priceless byproduct.
Some presentations did disclose “plant recipes” or the specific environmental factors required to grow healthy lettuce and leafy greens. But conversations primarily stayed away from any data or metrics to more profitable commercial plants like strawberries.
While many indoor facilities struggle to profitably sell their product in the market, it is possible that their crop data could be even more valuable for other farmers and companies alike — that is, if they are willing to sell it for the right price.
7. The new frontier of online delivery
Aside from the long list of technical difficulties involved in indoor growing systems, reaching a reliable market also remains elusive for many small to medium scale indoor growers.
Despite the high quality output of indoor farms, meeting demand at scale and in time seems to deter many wholesalers and 3rd party distributors from long term partnerships. However, online food delivery services in countries like the United States, Singapore and China seem to offer a new frontier of opportunities connecting farmer directly to the consumer.
As Robert Chen, President and CEO of AEssense, noted in his presentation, growing food close to online food distribution centers can help cut costs in storage and delivery. This allows the grower and the distributer to pass savings down to consumers — making their products more competitive in the market.
8. Diversifying factory farms to the niche
Presenters repeatedly recognized the need for farms to better define their value proposition as cleaner, better, more nutritious products, etc. However, some speakers at Indoor Ag-Con suggested widening the scope of indoor ag products to secondary and even non-edible crops.
Cannabis is an example, but rarely mentioned throughout the entire event in Singapore for obvious legal reasons. But it isn’t the only high value, non-edible crop that can be grown well inside. Nishida Shin, of Japan’s Nihon Advanced Agri highlighted recent success in organic food coloring from plants cultivated inside a plant factory.
The rising demand for specialized ‘organic’ products used in or around food production seems to also provide new opportunities for profitability in the sector. While the same benefits for growing food inside apply, these secondary commercial products, like natural food coloring, can be better controlled for their quality, while sold at an even higher premium in these niche markets — speeding up ROI for the facility capex costs.
9. Pain Point obscurity
In addition to unclear comparisons between systems growing similar crops, it was also challenging to ascertain specific pain points. Product feedback is critical for these systems, especially the turnkey solutions. While most of these companies work closely with their customer/farmers to improve systems, their proprietary nature prevents startups from building novel solutions, sharing feedback from customers or focus groups, or collectively improving system optimizations based on shared experiences.
Indoor Ag is an industry still early in its development, yet it remains riddled with gaps in efficiency and operational pain points. Also, obscurity helps to protect the existing IP of turn key product systems and companies, it prevents tinkering improvements and solutions for the industry as a whole.
Though each system is different in requirements for operation and management, seeding and harvesting both remain major labor hurdles for indoor agriculture operations with fairly apparent pain points.
10. ROI is still a curse word
For many indoor farmers starting to operate facilities in this space, the term ROI still seems to conjure speculation and deep anxiety for farmers and investor alike. On the one hand, these numbers are critical to truly assess the viability of indoor agricultural operations. On the other hand, ROI forecasts are subject to change drastically (for better or worse) based on crop health, facility size, development of disruptive and scalable technologies, and market demand.
At the conference presenters of larger facilities seemed to suggest an ROI ranging between 3 to 5 years, while others in the industry continue to suggest a more conservative range of 5 – 7 years. Again, both of these estimates continue to depend on the size of the facility and the market they are growing for (and actively selling to). To date, there is still no highly profitable large scale prototype.
Courtney: Urban AG News