Is urban farming economically feasible or is it a recipe for a financial failure?

Can urban farming be economically sustainable by only producing food (see GrowX model)? If yes, what does it take to succeed? Is it about increasing scale of production? Full automatisation? Further cutting energy costs? Can all those savings compensate for high prices of the real estate in the cities? And if yes, does it make sense to integrate large scale food factories into city neighbourhoods? Or do they rather belong to the outskirts and industrial areas. If yes, what about the social ambitions of bringing food production back to the cities?

Perhaps subsidies and incomes from other services (e.g. workshops, giving tours, company events) are after all essential elements of the business model of a successful urban greenhouse? If yes, what payable services can an urban farm generate? Can it really have a meaningful social/ecological impact? Does it positively impact prices of real estate in its proximity? Is it possible to calculate and charge for those services? If yes, how and who should pay?

Wageningen University & Research asked Jan Willem van der Schans, senior researcher at Wageningen Economic Research about it.

In my PhD thesis, I focused on what the first advocates of free trade, John Locke and Hugo Grotius, meant by the word ‘free’. At that time the Catholic church regulated international trade; the English, Dutch, Spanish and Portuguese fought wars about international trade routes.

"Economists need to rethink what free trade means and what its benefits are."

Locke stated that free doesn’t mean ‘free’ of competition, but it refers to being ‘free of unilateral domination’. This also means that basic needs like water and soil are to be protected from international exchanges, as it cannot be conceptualised that people will give up these without being forced to. Today we have again redefined ‘free trade’; to grow roses we go to Africa and use the local population’s water– so free trade has nowadays become completely unlimited. Economists need to rethink what free trade means and what its benefits are.

New balance
Getting back to food production, I’m talking about basic necessities: free trade is for the realm of the extras – bananas, coffee, et cetera, while the basic necessities should be locally provided. So this is a model where a city or family are self-serving in terms of basic needs, and this is the model which is developing in urban agriculture; it’s about being resilient for basic needs, finding a new balance between grow your own and international trade. Urban agriculture is about what’s feasible – what makes sense – not about what’s possible. So if it makes sense for a city to grow salad products instead of importing them, then that’s OK: it’s resilient, and it has a better quality.

Gardener or farmer
I’ve been working on urban agriculture for the last 10 years. In Rotterdam when we started, we looked at the allotments and how they are managed. Over half of these are worked by people with an ethnic background other than Dutch, and 100% of them use the gardens to grow food. For the municipality, these allotments are zoned as recreational however in these allotments the use is 100% farming; they grow the local herbs and vegetables they cannot buy in the Dutch supermarkets.

So, when are you a farmer? The basic ‘thought’ is: if it doesn’t provide your basic income, you’re a gardener. But if I look at Europe from an economist’s view, many of the farmers in many countries would then be also ‘gardeners’. Without subsidies they would not be earning a living wage.

Social inclusion
At Wageningen, we are socially inclusive about urban agriculture – even herbs on a balcony are included; anything that contributes to food security and food resilience. In the situation where many farmers have no successors, urban small-holdings can be perceived as breeding grounds: locals learn how to grow food in their garden, move to the Westland greenhouses and learn the trade, and then move on to become farmers themselves.

In Malmo, in Sweden, their policy is to welcome refugees and select those with an agricultural background and offer them training to be employed in the sector. They see urban food growing as a source of human capital.

Tastier strawberries
When vertical farming came along people said: what we have is already good, why do we need these? Dutch farmers are a little conservative, so that is a pitfall. But now, people become more aware of changes in fertiliser availability, energy dynamics, et cetera. By making agriculture more circular, we create places which not only produce, but also that sequester the carbon in the ground and are space efficient. Another point is that the quality is better: fruits like strawberries in vertical urban farms can be kept on the plant longer before harvesting so they are tastier! We have to pick the right high-value products.

Circular streams
People in the US predict that from the 15% currently grown indoors, within 5 years this will be 80% - mainly horizontal. This is driven by climate change. They also predict that ultra-short supply chains will develop: wholesalers will no longer collect produce at the farm; they grow it in their own vertical farm. I’m an economist – so this is about economic dynamics.

"Urban agriculture will become part of our urban metabolism; with a circular flow of waste streams."

Urban agriculture should become more circular and use waste streams, water and sewage from the city to grow food. In Rotterdam there’s a great example where special mushrooms grow on coffee waste. Urban agriculture will become part of our urban metabolism; with a circular flow of waste streams.

Source: WUR