Last month, the Indoor Agtech Innovation Summit was held in New York. It showcased technologies and companies associated with “controlled environment agriculture,” or CEA, which includes everything from greenhouses that still use sunlight to “vertical farms” completely independent of the outside environment. The CEA sector has attracted many investments motivated by several factors: the impacts of climate change on outdoor agriculture, the growing interest in regional food autonomy and the ability to provide an extremely fresh product to consumers. This article features three companies representing the diverse range of cultivation systems that fall under the Controlled Environment category, along with an associated marketing platform.
small leaf farms
Little Leaf Farms is an example of the high-tech end of the greenhouse segment which is a controlled environment with significant automation but still uses sunlight supplemented with artificial lighting. Little Leaf Farms is the #1 brand in the US for CEA-grown packaged salads (40% of this submarket that is part of the larger $13 billion leafy greens market), and their model demonstrated its profitability. The company was founded in 2015 by Paul Sellew, a “serial entrepreneur” with a BS in horticulture from Cornell University who was previously involved in developing greenhouse tomato production on the East Coast. Little Leaf Farms recently raised $300 million to fund further expansion towards a goal of 100 acres under glass by 2026. Their goal is locally grown baby lettuce with year-round availability and high quality in terms of flavor and freshness. In the future, they also plan to grow herbs and spinach. Because they grow the culture indoors and use a fully automated “hands free” system, they don’t need to triple wash their final product or use chlorine-based sanitizers to ensure food safety. .
Little Leaf Farms is not a technology company as such, but rather see themselves as technology integrators following the lead of the well-established and sophisticated European greenhouse industry. They are the general contractor for their own new sites and prefer to build in a “peri-urban” environment where land prices are more reasonable and air quality is better. Their operations are hydroponic (no soil) and they get most of their water by collecting greenhouse runoff which is then UV sterilized. They use additional lighting and CO2 supplementation, which means they increase the level of this gas in the greenhouse to allow the plants to grow faster – for example 20-25 days from planting to harvest. The system is sufficiently protected to have minimal problems with plant pests, and biological control has been sufficient to control occasional insects such as thrips. Their seed genetics come from a separate breeding company. The Little Leaf Farms-branded packaged lettuce product is currently offered at 2,500 stores in the northeastern United States, where they command a slight premium over outdoor-grown options. They are able to reduce their “shrinkage”, or loss of stock, with their retail partners due to their 24-hour lead time from greenhouse to grocery store, which also helps reduce product loss. due to deterioration. They also have sales through online delivery platforms and in restaurants.
Freight Farms is an example of indoor vertical farming, but on a scale designed to be operated by small business owners supplying local markets. The company is based in Boston and has 50 to 60 employees. Their stated goal is to “democratize the food supply” and their motto is “Move Farms, Not Food”. Their design is based on standard stainless steel shipping containers they purchase from Chinese manufacturers with specific design features to accommodate their growing architecture and control system. These units allow turnkey operation by their “farmer” clients who are offered a two-day “farm camp” to learn how to operate the unit. There is also online support once they are up and running. Inside the container there is a nursery and four 26’x7.3′ walls to give the container 13,000 “growing sites” in total. The production of one container is equivalent to three acres of conventionally grown field lettuce. CTO Jake Felser says the system costs around $150,000 and the payback period is in the range of two to three years with typical lettuce production levels and sales at $3/head. Containers can be operated anywhere there is access to electricity, with internet connectivity desirable but not completely required.
Freight Farms’ production system is fully hydroponic, with the controller managing nutrient and water delivery, but total water consumption is extremely low (~5 gallons/week). Other aspects of the grow environment are also fully automated, including controlled lighting, heating, cooling, and dehumidification. Most of the physical steps in the cultivation process are done by hand, although an automated seeder can be purchased from another vendor. Operators are requested to use gloves and coats when entering the unit. Depending on how the crop is marketed, a HAACP program may be required. For now, Freight Farms units are primarily used for leafy greens, herbs and some root vegetables, but some customers are exploring strawberries, hops, gourds and cannabis. Other cultivation options are theoretically possible. Some schools and universities use this system for educational purposes and to provide on-campus dining facilities. Currently, there are more than 500 such units in 38 countries and 48 US states and territories.
Netled is a Finland-based company that has developed a large-scale automated vertical farming system with a focus on energy efficiency. It is marketed under the Vera® technology name. Its motto is “high tech, deep roots, green goes vertical”. The system is being marketed to commercial growers, including an initial North American installation in Calgary, Canada. Units start at 100 square meters, but the full economy of scale is achieved around 2000. A Swedish grower called Oh My Greens has a 2,400 square meter Netled grow system, and larger units are possible depending on customer needs and business case. There are different levels of automation which can include seeding, transplanting, adjusting spacing during growth and harvesting. There are also commercially available automation options for wrapping, palletizing, and wrapping. The plants are grown in mobile “gutters” each containing 45 plants (these are pressure washed and sanitized between uses). Fertilizer and water distribution for this system is a variation of the nutrient film technique which is a hybrid of hydroponic methods and active substrates. This allows for an irrigation cycle that saves water, helps aerate the roots and reduces the cost of dehumidification. It also supports a community of beneficial bacteria. There are few pest problems with this closed system, and the root pathogen Pythium is removed by ozonation and UV treatment of the circulating water.
CEO Niko Kivioja points out that the Vera® system is unique in that it integrates heating, cooling and dehumidification systems, so the total energy is reduced to around 1/3 of that used in a standard greenhouse and also a little weaker. than that required for some other vertical farming systems. The Vera® system uses CO2 supplementation with a liquefied source in quantities adapted to the appropriate light intensity. This can result in a yield increase of up to 50%. In terms of future cultivation options, Netled is following various projects such as growing tree seedlings using artificial day length extension to speed up development. Protein crops are also being widely tested and could become options in about five years. Fodder crops are also interesting, especially since supplies are already limited in Europe due to the Ukrainian conflict.
Produce grown in CEA systems reaches consumers through a variety of channels ranging from local specialty stores to national grocery chains to restaurants. One route is to shop online with home delivery. A company called FreshDirect was represented at the Indoor Ag Tech meeting by its director of merchandising, Scott Crawford. The company currently serves the Northeastern United States. Its state-of-the-art 600,000 square foot distribution center in the Bronx has 38 different temperature zones that allow it to keep produce and other perishables at ideal temperatures. Their wait time is also generally shorter than that of the normal retail grocery distribution chain due to their shortened supply chain. On the one hand, online marketing puts products at a disadvantage because many consumers want to see and touch them before making their choice. However, once a consumer has a positive freshness and taste experience, they can become quite loyal to recognizable brands from CEA facilities. The relationship between FreshDirect and its suppliers is also positive in that the producer can get short-term projections of demand based on items already sold. This has major benefits in terms of food waste all the way to the consumer’s fridge (customer specifies a 2 hour delivery window so they don’t leave it outside). The online aspect of this channel offers greater potential for communicating the benefits of CEA, but FreshDirect customers do not seem to have a negative perception of the idea of indoor production since quality is their main driver and a secondary driver is the concept of local/regional production.