CLIMATE CHANGE AND AGRICULTURE
Over half of the world population lives in cities, and this figure is projected to rise to two-thirds in by the middle of this century. The rise in urbanization has distanced people food sources, increasing the length of the food supply chain. More consumers are become farther away food supplies, raising concerns around agriculture’s impact on climate change,, in particular:
- Transportation: food supply chains are lengthening, increasing the number of food-miles, and hence, transportation emissions.
- Water consumption: centrally, mass-produced agriculture exacerbates water consumption in communities near the beginning of the supply chain.
- Preservatives and chemicals: for food to survive in a lengthened supply chain, preservatives are used, which can harm the environment.
Not only does mass-agriculture have a negative impact on climate change, climate change also has a negative impact on agriculture productivity. Rising temperatures, rainfall volatility, and pollution complicate agriculture production (see Figure 1).
Figure 1. Agriculture and Climate Change Negative Cycle1
Plenty, a San Francisco based company aims to combat agriculture’s impact on climate change. They are testing hydroponic, indoor, vertical farming techniques that will allow for more urban food production. They are largely focused on producing fruits and vegetables whose perishability suffers from a long food supply chain. Plenty’s solutions combat the above three problems in the following ways:
- Transportation: Plenty shortens the food supply chain by producing food in cities where it will be consumed, reducing the need for food transportation.
- Water consumption: hydroponic farms recycle water used in the production system; they use >90% less water than traditional agriculture.
- Preservatives and chemicals: Plenty’s model brings food production closer to food consumption, eliminating the need to use preservatives.
Figure 2. One of Plenty’s Vertical Farm Growing Systems
Hydroponic vertical farming an urban food supply solution has been around for less than two decades, leaving a lot of room for innovation and optimization of growing systems. Plenty’s goal in the next two years is to test, refine, and optimize growing systems to make urban vertical farming viable and economical. To compete with organic, local, and other premium produce products, Plenty is focusing on:
- Product Innovation: Plenty is working to create tasty products that can command a price premium.
- Business Viability: Plenty has a lofty goal of building a vertical farm near every large city in the world. To do this, they need to prove out vertical farming’s financial sustainability. They’re striving for high fixed asset utilization and lowered variable costs. To control costs for a multi-farm network, Plenty is working to create economies of scale by creating relationships with suppliers and customers that can be leveraged across a network of farms.
Medium-Term / Long-Term
In the medium and long-term, Plenty wants to build a vertical farm near every large city with at least 1 million residents. Plenty’s goal is to find urban real estate just outside of large cities near food distribution networks to reduce required transit miles.
OTHER AREAS OF FOCUS
Consumers are less familiar with the concept of food being grown in an indoor warehouse compared to other forms of agriculture (Table 1). Even if Plenty succeeds in proving out the concept from a production innovation and cost efficiency standpoint, they will still need to generate consumer demand for their products. As a key innovator in this space, I recommend they take a leading role in educating the general population (especially in urban areas) about the benefits of vertical farming. For example, Plenty could do a roadshow to educate key potential future customers (e.g., Whole Foods) on the environmental and health benefits of vertical farming.
Table 1. Consumer Perceptions by Production System
Plenty’s ambitious goal of bringing vertical farmed produce to urban areas could address many environmental concerns. However, several questions still remain.
- Viability: is the vertical farming model a viable business? Can their production become efficient enough to offset the high costs of urban real estate and high-tech hydroponic assets?
- Share: can the vertical farming model truly compete with other forms of agriculture that benefit from economies of scale?
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 “Urbanization and Development: Emerging Futures,” 2016, UN Habitat, https://unhabitat.org/wp-content/uploads/2014/03/WCR-%20Full-Report-2016.pdf, accessed November 2017.
 Gokran, Samir, Thyagaraj S. Kuthambalayan, “Analysis of challenges inhibiting the reduction of waste in food supply chain,” August 24, 2017, Journal of Cleaner Production.
 “Agriculture and Climate Change,” European Environment Agency, https://www.eea.europa.eu/signals/signals-2015/articles/agriculture-and-climate-change, accessed November 2017.
 Wong, Joyce and Ryan Schuchard, “Adapting to Climate Change: A Guide for the Food, Beverage, and Agriculture Industry” Business for Social Responsibility, https://www.bsr.org/reports/BSR_Climate_Adaptation_Issue_Brief_Food_Bev_Ag2.pdf, accessed November 2017.
 The number of miles food travels from its origin to the end consumer.
 Plenty Inc. 2017. http://plenty.ag, accessed November 2017.
 Plenty Inc. “Press.” https://www.plenty.ag/press/, accessed November 2017.
 Roberts, David, “This company wants to build a giant indoor farm next to every major city in the world,” Vox News, November 8, 2017, https://www.vox.com/energy-and-environment/2017/11/8/16611710/vertical-farms, accessed November 2017.
 Coyle, Bradford and Brenna Ellison, “Will Consumers Find Vertically Farmed Produce ‘Out of Reach’?” Agriculture and Applied Economics Association, 2017, https://ageconsearch.umn.edu/bitstream/253382/2/cmsarticle_567.pdf, accessed November 2017.