Enoch Ashley’s Analysis of The Indoor AG Industry
September 2017 Volume 1
Following a summer of explosive growth, many investors, engineers, and farmers are asking themselves “What is next?” in the indoor ag industry. There is a predicted 31.6% compound annual growth rate for the vertical farming market for 2017-2025. Although there has been much speculation about the long-term industry growth, it is fitting to first look at what exactly unfolded during the summer of 2017, and why so many industry professionals are acknowledging that the momentum is irreversible.
Domestic Trends (US)
The story dominating most headlines was the massive $200 million investment into the commercial indoor farming startup, Plenty backed by the SoftBank Vision Fund and Amazon Founder, Jeff Bezos among others. Bezo’s investments didn’t stop with Plenty after Amazon purchased Whole foods for $13.7 billion. This is consistent with Bezo’s strategy of streamlining the monopolization of retail marketplaces in the United States by consolidating the supply chain infrastructure from indoor farms directly to the grocery stores to bring unbeatable prices to the market. This was made evident by Amazon reducing Whole Food’s prices by 43% on its first day. Food retailers and meal kit companies such as Blue Apron are expected to continue downsizing in response to Bezo’s aggressive entrance into a industry. Blue Apron’s fledgling IPO saw a stock drop of 12% after Amazon filed for a trademark application for meal kits. On the East Coast in Brooklyn, Kimbal Musk, brother of Elon Musk raised over $5 million seed funding for Square Roots, the Brooklyn-based indoor farmer training program and container farm.
The indoor agricultural revolution continued to make waves around the world beyond the United States. China, recently approved new types of genetically modified corn to be imported into the country. This marks a major cultural shift as the population is slowly accepting these technologies to address their food needs of their growing population. This trend is expected to thrust investment funding into the Asian superpower as indoor agricultural is looked upon as a viable solution. The middle East felt shockwaves after the UAE banned much of the produce grown in their neighboring countries. Former US National Security Council Director for N. Africa and the Arabian Peninsula, and now consultant for Middle East governments, David Scott, commented, “In the event of a global food crisis, those kinds of locations would be just as likely to stop the export of food as any other.” South Korea is now building a $10 billion agriculture city in Egypt. The countries investing in indoor agriculture now are not just being sustainable, but are making defensive investments as the water wars continue to ravage the Middle East.
The Forbes Agtech summit in Salinas, California highlighted major trends in the agricultural industry. Computer vision startups utilizing machine learning and artificial intelligence are experiencing impressive funding rounds that automate the historically haphazard process of diagnosing plant health. Consumers have an insatiable desire for transparency after the recent exposure of fraudulent practices of business’ accredited as being USDA certified as Organic.