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Keeping City Kitchens Stocked Through Urban Farming

Keeping City Kitchens Stocked Through Urban Farming

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Produced in partnership with Bloomberg Media Group

In Brief

  • Nearly 70% of the world’s population will live in cities by 2050 as rapid urbanisation continues around the world, especially in Asia and Africa.
  • As urbanisation puts pressure on the world’s food suppliers, new technologies including artificial intelligence, the Internet of Things and data analytics are enabling urban farmers to meet demand.
  • The capital-intensive nature of urban farming makes the adoption of new technology challenging and often puts profit out of reach.
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The first thing Katie Morich does upon arriving for work is change into a clean uniform. After donning a hairnet and cleaning her hands with sanitiser, the 26-year-old reports to a computer that analyses reams of data using proprietary software that tells her and her fellow farmers what to do.

Katie works at an indoor farm run by the start-up Bowery Farming. Located in an industrial park in New Jersey, the farm uses automation, data analytics, vertically stacked crops and a year-round growing season to optimise growing conditions. The result — a farm that generates 100 times more produce per square foot than conventional farms1.

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Bowery Farming’s vertical farm in Kearny, New Jersey. Photo: DON EMMERT/AFP via Getty Images

Urban farms like Bowery Farming hold vast potential in alleviating the pressures of rapid urbanisation, which is forecasted to add 2.5 billion people to urban areas by 2050. Close to 90% of this increase will occur in Asia and Africa2, stressing existing food supply chains in these regions.

Together with a rapidly growing urban middle-class that demands safer, fresher, and more nutritious food, urban farms will play an increasingly important role in meeting the world’s evolving dietary needs, according to the Asia Food Challenge (AFC) Report, jointly published by PwC, Rabobank and Temasek.

“Asia will have 24 of the world’s 30 largest cities in the near future, so existing business models need to adapt to reflect these demographical changes,” said Anuj Maheshwari, Managing Director, Agribusiness at Temasek. “Automation, better genetics and better production in controlled environment farming – such as vertical urban farms – can shrink the supply chain whereby we are producing food in cleaner environments closer to consumers.”

Beyond boasting higher production yields, urban farming can also help overcome common supply chain challenges, such as reducing excessive wastage caused by poor storage infrastructure and improving food safety and traceability for consumers. Today, urban farms are already responsible for 15-20% of the world’s food supply3, and will play a greater role as technology advances and urbanisation continues.

The Future of Urban Farming

In Singapore, Sustenir Agriculture is showing the world what is possible with indoor farming. The startup uses controlled-environment agriculture to grow non-native cold-weather crops including kale, arugula and strawberries. Their proprietary artificial intelligence and LED lighting systems enables them to boost productivity, as well as emphasise the taste profile of vegetables.

There are so many factors outdoors that makes it difficult to optimise how the plant is growing. Bringing it indoors allows complete control. Collecting big data from a controlled environment lets us pinpoint exactly where the diminishing returns are – from nutrients in the water all the way down to how much energy we’re using with the LED lights. This allows us to grow our products as efficiently as possible.

 

Benjamin Swan, Co-Founder and CEO of Sustenir.

Sustenir’s indoor farm produces around 11 tons of kale per year on less than 50 square metres of space, and double that yield on other leafy greens like lettuce. The farm’s highly controlled environment also grows crops quicker, with less water and one-twelfth the carbon footprint than imported produce.

“The rate in which productivity increases outdoors is very linear with the conversion of land to critical mass,” Benjamin added. “In contrast, by stacking produce indoors, each floor generates 177 times more yield than a traditional farm. That factor is perpetual based on the number of floors we occupy, so five floors within a standard building could see 885 times more yield compared to the same space occupied by a traditional farm.”

“There are so many factors outdoors that makes it difficult to optimise how the plant is growing,” said Benjamin Swan, Co-Founder and CEO of Sustenir. “Bringing it indoors allows complete control. Collecting big data from a controlled environment lets us pinpoint exactly where the diminishing returns are – from nutrients in the water all the way down to how much energy we’re using with the LED lights. This allows us to grow our products as efficiently as possible.”

Across the Pacific, Bowery Farming is also deploying technology to control every aspect of the growing process. The proprietary software at the indoor farm where Katie works is transforming farming from a reactive practise into predictive science. Called the Bowery Operating System, it enables farmers to make important decisions preemptively, such as how much to water each plant, the intensity of light required and when to harvest.

“Through a proprietary sensor and control network that we developed, we take in millions of data points in real time,” Irvin Fain, CEO of Bowery Farming, said at the Asia Pacific Agri-Food Innovation Week in Singapore. “We also have a plant vision system that takes photos of our crops and runs those photos through deep learning algorithms that we developed so we can understand what’s happening with a plant today and predict what will happen in future. We can then suggest tweaks and changes to the environment around our crops in real-time.”

The Challenges of Urban Farming

However, the capital-intensive nature of urban farms can be a deterrent for entrepreneurs. While it costs around US$280,000 to start a small-scale, low-tech vertical farm that uses first-generation environment management technologies, the cost of doing so with second-generation data management technologies can surpass US$15 million4. This often puts profitability out of reach. Only around 30% of plant factories in Japan – home to nearly half of Asia’s plant factories5 – are profitable6

Today, urban farms are already responsible for 15-20% of the world’s food supply, and will play a greater role as technology advances and urbanisation continues.

Sustenir’s LED lighting system in its urban farm in Hong Kong. Photo: Sustenir Agriculture

 

The environmental impact is another challenge. While some reports suggest that indoor farms have drastically lower carbon footprints compared to traditional farms, others suggest the difference may be minimal7 due to indoor farms’ greater utilisation of electricity to power artificial lighting. Either way, it will take time for a clear consensus to emerge.

Yet, the most successful indoor farms have already proven the model can be profitable, according to the AFC Report, creating greater incentive for investors to finance them. Innovation in areas such as lighting continues to drive down operating costs and increase profitability8. Between 2015 to 2018, the cost of LED lighting dropped by half, while its efficacy more than doubled9. LED energy efficiency is also expected to increase another 70% over the next decade10.

 

Opportunities for Innovation

Investors, technology players and agri-food companies have ample opportunity to advance urban farming through innovation11. The prize for making the right investments is significant: The global indoor farming market is forecast grow at a compound annual growth rate of 5.4% to reach $171.1 billion by 2026, up from $106.6 billion in 201712.

“Entrepreneurs and investors are beginning to recognise that urban farming can provide attractive investment returns while meeting the world’s changing food requirements,” Anuj added. “We remain optimistic that young entrepreneurs and businesses will see the need to act and create successful business models. We've already seen certain aspects of that happening in the market.”

As a long term investor rooted in Asia, Temasek is committed to working alongside its portfolio companies and partners across the agri-food ecosystem - to build a better, smarter and more sustainable world.

Temasek is an investor in Bowery Farming and Sustenir Agriculture.

 

 

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