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How much does vertical farming cost?

Indoor food production has long-been cited as the ideal way to help feed an ever-growing population.

Currently, vertical farming is increasingly being seen as the way forward to produce higher volumes of better-quality crops all year round, bring food production closer to customers, and into urban areas.

For leafy produce growers, a move to vertical farming can massively reduce the reliance on conventional farming methods – which are affected by the weather – and ensure consistent, quality crops to keep customers happy.

The key, of course, is to ensure the vertical farming costs and business case stacks up. In recent years, this is why people have increasingly sought out the expertise of our team at CambridgeHOK.

This in-depth article will try to explain how and why we help – including detailed insights into:

  • Vertical farming start-up costs
  • Why indoor farming is taking off
  • The realistic profits achievable
  • Why the industry’s future is bright

Should you require more information – or if you’d benefit from more advice, please call 01430 449440 for an informal discussion.

Are vertical farming start-up costs expensive?

There’s no hiding away from the fact that the upfront capital required to design and establish a vertical farm is substantial.

However, the potential long-term future growth and profits offered by being at the forefront of this developing market is making it an attractive proposition for those with funds to invest.

To date, high-profile investors like Jeff Bezos (Amazon) and Eric Schmidt (Google) have invested heavily in this fast-developing technology – and have been joined by various global Private Equity firms.

Our team at CambridgeHOK has been fielding an increasing number of enquiries from both growers and potential investors, and as such we have even been able to connect parties with a view to forming a vertical farming partnership.

Whilst vertical farming start-up costs are high, the long-term benefits are increasingly being recognised and appreciated by everyone involved in the food supply chain – including retailers.

Thankfully, technological advances and new innovations are continually helping to reduce capital costs and ongoing overheads.

In the long term, this will make indoor vertical farming an attractive investment for any existing grower who wants to adopt a successful strategy for increasing the volume of their high-quality product.

At present, vertical farming costs are probably between three to five times more expensive when compared to conventional outdoor farming. Here at CambridgeHOK, we believe there are three basic levels for vertical farming*:

Level 1

Up to 500sqm – costing from around £1,000 per sqm: A vertical farm which is more reliant on manual labour for watering and harvesting rather than technology.

Level 2

500sqm to 2,000sqm – costing from around £1,500 per sqm: A warehouse style vertical farm which requires manual labour for sowing and harvesting. Watering and cultivation are automated to create a ready-to-eat product.

Level 3

2,000sqm to 10,000m2 or more - costing from around £3,000 per sqm: A fully-automated vertical farm (with more stacks) which uses the latest technology to automatically seed, feed and harvest the produce. Minimal man-power is required and all produce will be clean and ready to eat.

It is in this bracket where the need to adopt automation to reduce operational costs and manage the logistics become essential. As a result, the Capex of automation is commensurate with the handling capacity it needs to deliver. You do not buy a high-cost car and only use it for 20 minutes a day, so there is always a trade-off between Capex and Opex and ROI in this level 3.

*PLEASE NOTE: All the above vertical farming costs are provided for guide purposes only. The exact price of a project varies depending on several factors – including size, location, available energy source and final design. Costs can reduce on larger projects because of economies of scale.

For a full consultation and tailored quote, please call 01430 449440 – we’ll be happy to discuss your best vertical farming options.

Why is vertical farming taking off?

By the year 2050, it’s estimated that global food production will need to increase by around 70 per cent in developed countries to keep up with current consumption trends.

In the UK, nearly half of the food we consume is imported. Almost 75 per cent of our available agricultural land is also already utilised.

If the UK fails to adopt new growing techniques, achieving the 70 per cent uplift could prove extremely difficult without destroying greenbelt land to turn it into new farmland.

Combine increased climate variability with rising land prices – and a rural workforce which is becoming older and smaller in numbers – and it’s easy to see why new methods of food production are attracting significant funds for research, development and investment.

Growers who see high-value crops put at risk because of adverse and unpredictable weather variations (rainfall, light, wind etc) are also beginning to appreciate that the switch to vertical farming can remove the uncertainty posed by nature.

For this reason, vertical farming is seen as an ideal solution for countries in the Middle East (who must combat excessive heat) and the Nordic region (who suffer from lack of light), providing constant and controlled growing conditions all year round.

What profit can a vertical farm achieve?

Having recognised that global food production must increase to improve domestic food security, vertical farming is attracting widespread interest from individual investors and Private Equity firms who are now willing to take a long-term view.

According to predictions made by some of the industry’s leading economists, the profit margins achievable from fresh produce could pay for the initial investment in seven years.

Historically, this type of investment would not have held much appeal because returns are often delivered outside the traditional 5-year holding period.

However, some larger funds have recognised the potential returns on offer and have lengthened this period to 10-15 years due to the long-term yields available.

At CambridgeHOK, we believe this sustainable profitability is one of the main reasons why indoor farming interest has surged in recent years. As a result, growers are now producing thousands of vertically-farmed products which are cleaner, better quality, profitable – and competitively priced for consumers.

What does the future hold for indoor farming?

Obviously, the decision whether to make the vertical faming switch depends on many different factors – including location, product type, human resources, potential profit levels and access to investment capital.

Whilst new hydroponic growing techniques will never completely replace all traditional methods, the fact they’re now being used as a way to complement them is a massive step forward for the agricultural industry.

Of course, to make vertical farming an economically viable way to grow crops, it’s important to keep a tight control on water and energy costs – whilst minimising carbon production.

At CambridgeHOK, we specialise in helping growers exchange the residual heat they generate so it can be used to power the surrounding environment.

With the right climate control system and energy centre in place, it is possible to capture excess light and power so it can be reused, reducing hydroponic growing costs and making it much more financially viable.

All of the indoor growing experts here at CambridgeHOK passionately believe that vertical farming’s ability to increase production and minimise land use is of massive value to society.

In recent years, we have been delighted to assist with the planning, design and build of a number of new facilities – including a high-profile vertical farm in the heart of London.

As the global demand for food continues to rise, we have no doubt this controlled environment agriculture will present a unique opportunity because of its ability to grow higher-quality food which is sustainable and profitable.

Discover more about vertical farming

To learn whether vertical farming could be right for you, please email info@cambridgehok.co.uk or call 01430 449440 – for an informal discussion.

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