Despite its increasing popularity and booming investments, reaching more than US$3.66 billion last year, the vertical farming industry was shocked by the series of high-profile bankruptcies this 2022. Experts pointed out two possible factors that could have triggered the industry’s negative growth.
Like other agricultural activities, power is essential to run indoor vertical farms. A global Controlled Environment Agriculture (CEA) report released in 2021 stated that indoor vertical farms consume seven times more energy than their traditional greenhouse counterparts.
Henry Gordon-Smith, CEO of an agriculture technology firm, stated that the disparity between the high energy demand of farms and their income makes it difficult for them to achieve sustainable growth amidst the volatile energy prices.
The surge of power prices due to the global energy crisis this 2022 further aggravated the indoor vertical farm industry’s problem with production efficiency. This crisis prompted many companies to lay off workers or reduce farming operations. Some companies even closed permanently after getting bankrupt.
Gordon-Smith said that the other major factor that negatively affected the indoor farming industry is misplaced hype. While experts agree on the limitations of indoor vertical farming, exaggeration and dishonest marketing triggered an unprecedented surge of unprepared people venturing into the industry. Experts believe that the misplaced hype led to the rise of many indoor vertical farms across the world, without proper planning and due diligence.
Despite the losses, industry experts still believe that the indoor vertical farming industry can achieve sustainability through collaboration and benchmarking.