Can Vertical Farming Keep This Company Around for Another 165 Years?

How vertical farming will change the face of agriculture as we know it, and why agriculture companies should invest now.

As the effects of climate change come barreling toward us, are generic corporate sustainability initiatives enough to keep agriculture companies from being pummeled by the winds of disruption? The effects of climate change may lead to an almost 17% decrease in total crop value in the near term without some sort of intervention. [1] As the demand for local food increases, states like California are losing 50,000 acres of farmland every year resulting in greater need to ship or import from other parts of the world. [2] All this multiplied by the fact that the world population is expected to reach 9 Billion by 2050 meaning we’ll need 70 greater food production to meet demand. [3]

One 165-year-old agriculture company has a plan to combat the effects climate change has on the company while working to mitigate the effect the company has on the environment.  But is it enough?

Generic Corporate Sustainability Approach

Dole is one of the largest producers of fruits and vegetables in the world, and arguably the most recognizable brand in the produce industry. Currently, Dole’s approach consists of making improvements to 3 focus areas: water conservation, carbon reduction, and soil degradation. [4]

Water Management. The company has taken efforts to improve water conservation by improving irrigation systems and measuring the impact of their water footprint.  Their bananas in Costa Rica currently have a water footprint of zero because they are rain-fed, but they make no mention of their more local US crops like winter lettuce. [5]

Carbon Reduction. They’ve made a few efforts to reduce their carbon footprint by using trains instead of trucks, using less fertilizer, and training truck drivers in ways to improve fuel conservation. [6] Unfortunately they don’t have initiatives to produce or use more local food sources reducing the distance food needs to travel.

Soil Conservation. They have employed techniques to reduce soil erosion and productivity loss by reducing tillage using GPS guided tillers, rotating crops, and using data to confirm sustainability of soil over time. [7]

Are Dole’s current sustainability efforts enough to keep it around for another 165 years? Though their plan is one of the more comprehensive plans of those in the food industry, they need to be thinking about true innovation. These incremental improvement aren’t going to cut it since production needs to drastically improve with increasingly limited resources.

Could Vertical Farming be the Silver Bullet?

One critical piece missing from Dole’s plan is a marked investment in the future rather than simply incremental improvement. I’d argue that “Vertical Farming” is that piece. With arable land being finite at 11% of the current land area, production needs to be at least doubled in the next 30-40 years. [8] Vertical farming “is a system of commercial farming whereby plants, animals, fungi and other life forms are cultivated for food, fuel, fibre or other products or services by artificially stacking them vertically above each other” (see Figure 1 below). [9] Essentially, an artificial farm can be created indoors where the environment can be completely controlled from outside contaminants, disease, pesticides, and adverse weather all while using non-agricultural land.

Vertical farming can lead to a number of benefits because of its flexibility. One benefit is decreased CO2 emissions because you can locate these farms in or close to urban areas. One study showed that farming in “peri-urban” areas can cut CO2 emission in half! [10] Bower Farms, a new venture-backed vertical farming startup in New York, claims that it uses 95% less water than traditional agriculture and is 100 times more productive on the size of land. [11] This doesn’t even account for the transportation benefit since its farm is only 8 miles from NYC. A study done in Europe showed even more promising outcomes saying that its 37-floor farm was 512 time more productive than traditional agriculture. [12]

The initial outcomes of these tests show how promising this solution might be, but the big question is can it be profitable? For a company like Dole whose production and performance is okay at the moment, what’s the rush on investing in crazy ideas like this?

Who better than the Dole agriculture experts to invest in and start developing this technology. Can Dole be on the cutting edge? Or is it stuck in mire of 165 years of traditional agriculture?

 

[1] Arnaud Costinot, Dave Donaldson, and Cory Smith, “Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World,” Journal of Political Economy 124, no. 1 (February 2016): 205-248.

[2] Renata Brillinger, Jeanne Merrill, and Kathryn Lyddan, “Triple Harvest: Farmland conservation for climate protection, smart growth and food security in California,” California Climate and Agriculture Network (Februaary 2013) p. 5

[3] Food and Agriculture Organization of the United Nations, “How to Feed the World in 2050,” High-level Expert Forum, Rome, October 12-13, 2009. p. 2

[4] Dole Food Company, “Sustainability,” http://dolecrs.com/sustainability/, accessed October 2017.

[5] Dole Food Company, “Water Footprint Assessment Bananas and Pineapples,” May 2011.

[6] Dole Food Company, “Carbon Footprint Reduction,” http://dolecrs.com/sustainability/carbon-footprint/reduction/, accessed October 2017.

[7] Dole Food Company, “Soil Conservation,” http://dolecrs.com/sustainability/soil-conservation/soil-conservation-in-dole-agricultural-practices/, accessed October 2017.

[8] Chirantan Banerjee and Lucie Adenaeuer. “Up, Up and Away! The Economics of Vertical Farming.” Journal of Agricultural Studies [Online], 2.1 (2014): p. 41

[9] Chirantan Banerjee and Lucie Adenaeuer. “Up, Up and Away! The Economics of Vertical Farming.” Journal of Agricultural Studies [Online], 2.1 (2014): p. 42-43

[10] Alison Rothwell, Brad Ridoutt, Girija Page, and William Bellotti, “Environmental performance of local food: trade-offs and implications for climate resilience in a developed city,” Journal of Cleaner Production, Volume 114, 2016, Pages 420-430

[11] Bowery Farming, “Why Bowery,” http://boweryfarming.com/why-bowery, accessed October 2017

[12] Chirantan Banerjee and Lucie Adenaeuer. “Up, Up and Away! The Economics of Vertical Farming.” Journal of Agricultural Studies [Online], 2.1 (2014): p. 44

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5 thoughts on “Can Vertical Farming Keep This Company Around for Another 165 Years?

  1. As we’ve seen in a number of our cases, companies must be on the forefront of innovation and disruption regardless of their current standing. Aqualisa revolutionized the shower industry even though they were comfortable, and Dole must do the same for farming. Without knowledge of the technical aspects of this approach, my primary caveat is whether we are overlooking issues with the process of vertical farming. Are there changes in the airflow, sunlight, or carbon dioxide in an artificial indoor environment that we need to worry about? How pricey are the electricity bills at these farms? Are all crops amenable to this process? It certainly sounds promising, though I imagine everyone would be jumping on the train if this were an infallible plan. Disrupt, but first run a pilot to see how it goes.

  2. I enjoyed reading this post as it was a thoughtful and innovative solution to a very pressing problem. While I do not feel that vertical farming really addresses the core issue of climate change, I agree that it is seemingly a more efficient means to grow agriculture. I appreciated that the article cited a 95% decrease in water usage and transportation costs, but I would love to see a price breakdown on electricity and infrastructure required as those would appear to be higher costs. On a total basis, is the cost of vertical farming feasible and profitable for companies? In addition, is the quality of food that companies are able to grow the same? As the article states vertical farming stops pesticides, diseases, and other crop ailments so I would assume that vertical farming has the potential to produce even higher quality agriculture. However, as we’ve seen with Indigo, consumers can be dubious of new agricultural technology and customer education can be pricey and time-consuming for companies. Your article has me convinced that vertical farming holds a lot of promise, but I am looking forward to seeing this technology develop and answer some of these open questions.

  3. I’m a huge proponent of indoor farming for many of the well thought out reasons mentioned above such as a controlled growing environment unaffected by climate change and decreased carbon emissions due to proximity of the customer base. However, I think an even more effective agricultural innovation than vertical farming to hedge against climate change is underground farming. To me, the latter is superior for a few reasons. First, underground farming takes up even less real estate since it leverages underground space that would otherwise be left unused. Secondly, underground farms can be located right beneath urban centers, making the food source a few hundred feet of its customer base. Last but perhaps more important, underground farms can be grown more sustainably than vertical farms. One underground farm, Growing Underground, in London, uses hydroponics, a system whereby plants can be grown without soil, using low-energy LED lights instead. Furthermore, a technologically advanced irrigation system allows the water that is needed to grow the plants to be treated on-site and recirculated, recycling and conserving water in the process.

    Source: http://www.independent.co.uk/Business/indyventure/growing-underground-london-farm-food-waste-first-food-miles-a7562151.html

  4. I believe that companies like Bower Farms, in the wake of this change should collect and subsequently provide more robust data about their CO2 emissions through the Carbon Disclosure Project. This would require farmers to carefully track and disclose their carbon emissions. Some companies like Chevron have seen significant cost savings. Even further, this would create a more data driven approach for how they can reduce their carbon levels.

    https://www.chevron.com/corporate-responsibility/climate-change/greenhouse-gas-management

  5. So interesting! I’ve only ever heard about indoor farming, but it appears that vertical farming takes it to a new level. You bring up a great point that to make farming sustainable in the long term in a profitable way, there needs to be a single company spearheading the process. Dole seems to be the perfect candidate with as you mentioned, their corporate sustainability policies and position as a market leader. It was particularly effective that their policies lined up perfectly with the value proposition of vertical farming, to manage water, reduce carbon, and conserve soil.

    Thinking into the future, I have two major concerns that would put the process into question, or that Dole should be concerned about if they go about to implement. One would be the variable costs associated with production, as it doesn’t seem to me that vertical farming would be able to scaleable in the way normal farming is. Especially for costs related to electricity given the lack of natural sunlight and the vertical nature of the “floors”, I imagine there to be incremental units of electricity expended per floor, thus reducing the economies of scale. The second would be the lack of infrastructure for processing the food produced. It’s not only enough that the farm to be located closer to cities, but that the food post production be as well. I believe once Dole can solve these problems, they will have the power to create a disruptive type of more sustainable farming.

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