Why do urban vertical farms go bankrupt?
If we evaluate current production costs, their largest share in the case of a vertical farm, 67%, accounts for labor, and 32% for electricity. Whereas in traditional farming, 59% of the costs are water, 36% – labor, and only 3% – electricity.
By EastFruit
19 Dec 22
Excerpt:
One of the main reasons for the bankruptcy of vertical farms around the world was a lack of knowledge, said Jacopo Monzini, Senior Natural Resources Management Officer at the FAO Investment Centre, summing up the results of the global study on urban farming, carried out as part of a joint FAO and EBRD project at the online conference “Vertical Farms: Development Strategies, Business Models and Risks”.
The study identified more than 800 sector participants in 95 countries, including 205 large and medium-sized farming companies, 218 technology and resource providers, and more than 50 investors. Various types of urban farms were studied, with an emphasis on the commercial side of vertical farming. As a result, a set of recommendations was devised for the countries of the Caucasus, Central Asia, and Eastern Europe, with which FAO and the EBRD are working.
According to Jacopo Monzini, those willing to equip a vertical farm should, firstly, be aware that the technologies and approaches used in vertical farming are rather specific and are still being finalized. In addition, there are no universal technologies. The full presentation of the expert is available at the link.
“For example, if you start growing a crop in a vertical farm, you will not be able to replace it later without significant investment (we are talking about commercial cultivation volumes), since the technologies are tailored to a specific crop. That is, if the crop does not live up to your expectations, you will most likely have to go bankrupt, as its replacement will require new, large investments,” he said.
Jacopo Monzini stressed that knowledge is of key importance, and it is not enough to simply buy technology.
Read also: There is still little knowledge in the world on the arrangement of vertical farms – Kateryna Poberezhna (video)
“It is very important that you have experts – primarily, an agronomist who understands what, how, and why is happening. In addition, you should have employees trained to know all the features of vertical farming. Since such training is not yet done at the academic level, you will have to teach them yourself, and this is a big problem,” he said.
