"It's all about the consumer price. Ask yourself, can consumers pay the price you need to charge for your business case to work?," says Gonneke Gros Gerkema with Grodan, as a response to what challenges vertical farmers face in the supply chain.
On 21 April, the community Indoor Farming NL, GreenTech, and Farm Tech Society organized an event in the World Horti Center. The panel's topic was: Learn from the icons of indoor farming. Joining the panel were Guz van der Feltz as panel leader, Ellis Janssen (Signify), Susanne Mosmans (Future Crops), Gonneke Gros Gerkema (Grodan), and Jan Westra (Priva).
Gus van der Feltz and Gonneke Gros Gerkema
EU is missing out on organic pricing
Adding onto that, Susanne pointed out that in the EU, it's a different case when it comes to product pricing. The US can charge a higher price as vertical farming products are certified organic. This gives European vertical farms a huge setback they have to overcome yet.
"We have to communicate the benefits of vertical farming to consumers in order for them to realize that imported products should be replaced by locally produced ones. It starts with the consumer, and we have a long way to go. We should educate the consumer as well as the retailer and customer to open that door of opportunities."
Ellis Janssen noted that the government could help stimulate innovation and rapid adaption to the issue addressed above as Singapore does with their set SDGs. It stimulated companies and organizations to kick off projects and start regulations. There are many regulations behind it that the government can stimulate and hamper the industrialization of the sector.
"Once there's government support into vertical farming research, the technology resulting from it can be sold off globally, which is a stimulus for the entire sector," Jan Westra added.
The don'ts when starting a vertical farm
Jan Westra, Strategic Business developer at Priva, talked us through the elements that cannot be overseen when starting your own farm. Therefore, it's most important to check the following elements first: Check your market, what's there, and what can you offer. Secondly, don't overstaff. Have your staff in line with the works in order to line up for growth. Be cautious as rapid growth can lead to failure, meaning that you'll have to do everything over again.
Thirdly, decide whether you're going to be a tech company or a grower. There seems to be a lot of overlap in the industry, which results in companies losing their actual focus. Mostly, don't reinvent the wheel. Do your research on what's already out there that can complement your production. In order to be less vulnerable, work together. Lastly, what's on the local diet. Don't bring products that are not included in the local cuisine. Do market research to figure out what product you can add to the market.
The big question: a greenhouse or vertical farm?
According to Gonneke, the climate zone is very crucial when deciding whether to build a greenhouse or vertical farm. Certain climates don't allow to produce low cost in greenhouses as they might need lots of heating or cooling.
Secondly, depending on the crop that's going to be produced, a price can be set. "If greenhouse production of certain crops is much cheaper, it's a no-brainer. However, added value crops that can be sold at a higher price will show that vertical farms would be the best option."
Adding onto that, said Ellis, "The level of labor and automation plays a huge role in the decision-making process as well. If there's (affordable) labor available, both options would be possible. However, when there's a high level of automation, vertical farming would be most suitable."
Judith van Heck and Frans Zwinkels
How can you build a business case with this current energy carousel we're living in?
Luckily, everybody is in the same boat, Susanne pointed out. However, we should look at renewable energy. Unfortunately, being more sustainable doesn't always mean it's cheaper.
"100% green power is even more expensive, which makes it quite contradictory really. All in all, energy consumption should be reduced in the first place, and we can. It's challenging business-case-wise, but I am sure we can make it as it's still possible," she added.
Gonneke elaborated on that by saying, "As in other industries, government subsidies could really help innovate in this. For instance, looking into residual heat from other industries that greenhouses and indoor farms could use to heat their operations."
The horti ladies: Gonneke Gros Gerkema, Marjan Welvaarts, Susanne Mosmans and Ellis Janssen
What difficulties do you come across when starting a new project?
At times, there's a lack of knowledge on the growing side and on the market. "Whenever we're starting a new project, we're discussing all the options for farmers. We'd ask them what crop they want to grow and where they can add value to the market. Cost-wise it has to make sense for them. As well as capital, where are they retrieving that from? We need to make sure that the business case works as a whole so that they can get some proper ROI," says Ellis Janssen.
Ideally, farmers should start small and scale up later on, as she explains. It, however, really depends on the farmer's wishes.