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3/31/2021 9 Reasons Why Vertical Farms Fail - Upstart University
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Watch the full panel discussion here >>
https://university.upstartfarmers.com/blog/9-reasons-why-vertical-farms-fail 2/31
3/31/2021 9 Reasons Why Vertical Farms Fail - Upstart University
After all, the whole reason you’re building a vertical farm is to grow crops closer
to market and meet the demand for fresher food. If demand doesn’t exist, then
Poof! There goes your business feasibility.
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On the other hand, imagine that you do have fantastic demand for local food.
That advantage is often eclipsed by the inability for local farmers to start farms
in or around where people actually live. Several obstacles stand in the way of
urban farmers when tradition soil-based farming is impossible because of…
… high cost of land.
… poor soil quality.
129 … inherent risk of uncontrollable factors.
Amplifying these disadvantages of urban farmers are the facts that unlike giant
established and well-funded farms, the little guys can’t always a ord the levels
of insurance, permits, and “Plan Bs” to protect themselves from that risk.
Vertical farmers, however, have the unique ability to sideline these constraints
by leveraging high density growing technology and taking control of their
growing environment.
That said, just because the technology and techniques exist to grow food
anywhere, the aspiring vertical farmer still has many questions to answer in
order to get the location recipe just right.
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Although we’ve said this for years, it’s worth repeating once more:
If you can’t sell it, you shouldn’t grow it.
Whether you win or lose in your commercial farming venture comes down to
being able to sell your produce, not just grow it.
So before you ever put down roots, it’s critical you do your market
research to nd out what your markets can’t get or needs more of, who your
customers will be, and the potential prices you could charge.
Doing so will either save you a lot of money and heartache by telling you your
idea isn’t worth pursuing or give you the green light on your farm planning
journey.
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Doing so requires that you know who your end customers are and keep your
farm location as close to them as possible.
If you’re selling speci cally to restaurants, you want your farm close to the
restaurant(s) you’re serving.
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Even though their farm was growing for local restaurants, they chose to do so
through a distribution middleman which took his product across town to their
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warehouse only to return to the restaurants down the street.
This logistical oversight made Liotta change this thinking about farm locations.
Instead of establishing a farm near the end consumer, he opted instead to set
up their operations closer to their distribution partners.
For new farmers, the lesson here is about knowing not only who you want to
see consuming your food, but also how they’ll get it. For PodPonics, once they
grew large enough and began selling through a distribution partner, the
middleman essentially became their customer.
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When searching for a facility, it helps to know exactly what type of equipment
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you’re using and the energy requirements of each.
Before making a decision on a building, you must know how much power
you’ll need to support your growing equipment, lighting, pumps, HVAC,
automation equipment, dehumidi ers, fans, computers, etc. Growers serious
about scaling up should also consider any increases in power requirements for
future expansions.
Depending on the equipment you choose, should be paired with a quali ed rep
that can help you identify not only the best equipment to meet your farming
goals, but also work with you to identify your electrical loads.
Having these exact numbers will allow you to seek out a building with the
proper electrical capacity to make your farm work the way it should.
The bottom line: Both your geographical location and the physical space
where you decide to install your vertical farm should be carefully considered.
Your business will not get o the ground or go very far without a good
location.
Looking to dive deeper? This video will walk you through some of the
considerations for the proper indoor farm facility.
2) Choose a pricing strategy based on value.
One of the most important coaching conversations we have with our growers is
about how they should price their products.
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3/31/2021 9 Reasons Why Vertical Farms Fail - Upstart University
It’s a common instinct for new farmers to simply survey the prices on grocery
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store shelves and price their product to compete.
“We got into the market trying to compete with the California growers so we
priced our product exactly the same as them… Our focus was to try and sell
at the same price as everyone else, and try and lower the cost of producing
it,” Liotta said.
But that’s fundamentally the wrong approach and Liotta admits it cost
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When we tell our farmers they should actually avoid competing with
conventional growers, they often give us a confused look.
They forget that their product has signi cantly fewer “unknowns” to it and
customers perceive local products as a fresher, more trustworthy option.
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Their produce was not grown in some unknown eld using
unknown chemicals handled by unknown people and shipped for hundreds if
not thousands of miles to sit on the shelves for an unknown amount of time.
Today’s consumers have even been shown to shell out more for the increased
bene ts of quality, transparency, and peace of mind.
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129 It’s important to remember that pricing is as much about customer perception
as it is about pro t margins. Both must be considered and play into how a local
farmer communicates their value proposition through branding marketing.
The bottom line: Your pricing should match the quality of your product, not
the status quo. With the right system and distribution strategy, the local
product you produce should be better than anything else on the shelves and it
should be priced to re ect the increase in value.
The lesson may seem to only apply to bigger farms, but we’ve seen this time
and time again with small producers too, albeit in di erent ways.
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Know your “why”.
The more time, attention, and money you spend trying to productize the
system you’re growing with, the less time you have to delight your customers
with fresh, local food.
The same goes for decisions about which equipment to use to accomplish this
goal.
The bottom line: Farmers can either grow food or develop technology- not
both. Attempting to do both, as shown by all three panelists, ends poorly.
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Farmers who waste time on unproven systems or tinkering with their own
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tech instead of acquiring customers will ultimately end up out of business due
to losing sight of their core objective: Selling food.
Matt Liotta of Podponics event went as far to say that “People are the
problem,” when describing the challenges of balancing operating expenses and
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proper farm management.
All three panelists experienced similar challenges when discussing the workers
on their respective farms. While the wages ranged were relatively low (ranging
from $9-$15/hr), the costs added up quickly when paired with the growing
techniques in use.
Many of the failed farms in question ignored ergonomics and were the
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opposite of e cient for humans to be working in. Multi-layered systems with
grow beds reaching to the ceiling meant that farmhands had to travel up and
down on a scissor lift to perform basic farm operations like planting,
inspections, maintenance, and harvesting.
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“Scissor lifts are not an ideal solution, stated Mike Nasseri, Harvest Supervisor a
Local Garden, a mechanically complex Vancouver-based farm that declared
bankruptcy back in 2014. “Don’t use scissor lifts. Find another solution, please.”
Adding to that, Matt Liotta chimed in: “It’s very telling that Aerofarms, the big
farm in the news right now is using scissor lifts,” citing the operational
constraints of the world’s largest indoor farm. “Absolutely don’t use scissor
lifts,” he said.
Of course, if you’ve talked to our team in the last 4 or 5 years, you’ve probably
been steered away from these dangerous machines and the ine cient systems
that require their use for everyday operations.
We’re much more fond of systems that enable growers to spend less time
going up and down on a scissor lift, and more time working with their plants or
getting more customers.
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Maybe, but probably not. At least not for the majority of small producers.
https://university.upstartfarmers.com/blog/9-reasons-why-vertical-farms-fail 13/31
3/31/2021 9 Reasons Why Vertical Farms Fail - Upstart University
And why rely on automation to make your farm economically viable? That’s a
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question that tends to stump those obsessed with minimizing the cost of
human labor. But perhaps there’s something to it…
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“Don’t use scissor lifts. Find another solution, please.” — Mike Nasseri
One of the ercest points made during the entire panel occurred when Matt
Liotta discussed his experiences with low-wage labor citing examples of
disgruntled farmhands missing work because of court dates and sabotaging
the system’s nutrient solution out of frustration. He and Hardej made it very
clear that nding and developing quality farm laborer is critical to operating a
farm with as few hiccups as possible.
But nding capable labor to make a local farm work is a di cult task, especially
if you as the farmer aren’t exactly an expert yourself.
At that time, we
had been
working with
farmers long
enough to know
that there were
some signi cant,
yet common
https://university.upstartfarmers.com/blog/9-reasons-why-vertical-farms-fail 14/31
3/31/2021 9 Reasons Why Vertical Farms Fail - Upstart University
Things like how to grow hydroponically, how to nd customers, and how gaps in the
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to manage your farm business are all areas that most farmers need help knowledge of
with. both our farmers
and their
workers.
The courses we began creating back then are now helping over 1,200 students
learn how to plan, launch and operate a modern farm every month for the
price of a few co ees each month.
The bottom line: It should be clear by now that labor poses signi cant
challenges for local farmers and hiring workers without the knowledge they
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need to succeed will only pour fuel on the re. To continue growing at the
trajectory it’s currently on, the indoor/vertical farming industry will need even
more accessible educational opportunities for training and developing their
farm laborers as well as business managers.
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3/31/2021 9 Reasons Why Vertical Farms Fail - Upstart University
The real issue these three farmers faced was not “Can we grow it?” but “How do
we run the growing operation e ciently and minimize cost?”
These are two fundamentally di erent questions with the second incorporating
the complexity of humans working on the farm.
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These types of production methods are totally ine cient because of the time
spent traveling up and down aisles and between layers to do everything from
the initial planting all the way to the harvest, and everything in between. Such
complicated work ows reduce e ciency and increase labor costs,
When asked what he would do di erently the next time around, Paul Hardej of
FarmedHere said he would avoid building such a tall system that requires lifts
to provide basic access.
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3/31/2021 9 Reasons Why Vertical Farms Fail - Upstart University
Instead, he would think about any future vertical farm as rst and foremost a
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“manufacturing and production process.”
The bottom line: When evaluating farm equipment options, it’s important to
see past production. Every system can grow crops, but not every system can
optimize your work ows and maximize labor e ciencies.
7) Data is useless unless you can put it to work.
There seems to be an entire subset of the rapidly growing AgTech industry that
is straight-up batty over data. And rightly so.
The proliferation of sensors and cameras to glean ever more data from a
controlled environment farming operation is opening up new doors for
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What’s more is that these types of data collection systems require signi cant
amounts of capital and time to deploy, time and money that most local farmers
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don’t have.
Data helps to inform decisions, but don’t bet the farm on it.
Data is actually the one area that granted each of these “shuttered farms”
some hope.
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Podponics, for example, used data to analyze and augment their production
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technique for lettuce to reduce labor time during the harvest.
FarmedHere also leveraged data systems to collect and provide helpful insights
to improve their farm’s yields.
Both farms stated that while new technology can certainly be used to the
advantage of a new farmer, data and tech alone won’t save you. It’s up to the
grower to nd a system that produces the yields they need at the cost they can
a ord to sell to the customers they’ve found that are demanding it. And right
now, no single data-driven growing solution can remove the farmer from this
set of skills.
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The bottom line: Local farmers should not rely on data to save them from an
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ine cient farm setup or their inability to sell their crops. Data can amplify
and accelerate a farmer’s production and sales, but only if they have the
infrastructure in place to use if e ectively.
8) Is Organic dead yet?
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For a long time, our team has been coaching farmers to reconsider the cost of
an Organic certi cation and instead spend that time and money working to
form real relationships with customers.
Why? It’s not that we don’t see the value in the certi cation on its own, we just
have yet to meet a customer who wants organic food.
What customers really want is transparency and to trust that the food they buy
and consume is safe, nutritious, and grow in ways they can support.
They don’t want a label, they want certainty. We’ve been given a label as a
proxy but what we wanted was trust and security.
Buying from a local farmer gives them greater feelings of security because they
can visit their farm and shake their hand.
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That’s part of the reason why Liotta stated that “local is worth more than
organic.”
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This statement promptly triggered another back and forth between the
Podponics CEO and the FarmedHere Founder as they discussed everything
from consumer perceptions to pesticide use.
And yet, Hardej, who helped FarmedHere become the rst Organic-certi ed
aquaponic farms in the U.S., — a feat that demands the respect and gratitude
from anyone in the modern farming movement — had a di erent opinion on the
value to consumers. He knows rst hand that consumers want to buy brands
they feel are the healthiest and safest option and that often means organic.
In the end, however, he too conceded that “local is the new organic.”
The bottom line: Consumers have lost trust in the conventional ways of
growing food and labels like organic are a poor and increasingly confusing
substitute for true transparent farmer-consumer relationship. This type of
trust and transparency is only truly available with local options.
The table was divided along the typical lines of aquaponics vs. hydroponics
with arguments lobbed in each direction about which was a viable commercial
technique when aiming for pro table production.
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From our
experience,
however, getting
into a
philosophical
discussion along
each of these
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end up going
anywhere.
But the important thing to remember is that every situation, every location, and
every local market is unique and so should be approach when making these
two fundamental decisions.
Our team has helped hundreds of farmers make this decision through an
advanced costs/conditions calculator and we can help you too if you need
more than just a talking head for guidance. We have a free resource download
to help you make a decision.
The bottom line: Everyone has their own answer to these two questions. To
establish a successful farm, you must eliminate subjectivity from the decision
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There are new companies emerging every day promising to deliver new
solutions in every subcategory from growing equipment, lighting technology,
climate controls, data, sensors, automation, consulting, and much more.
If one thing is clear from this post, it’s that we’re all still learning. That’s the
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beauty of fast-growth, nascent industries.
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It’s one of the most promising ways to get fresh food into our cities and food-
insecure places like Alaska and other often overlooked food deserts.
By exerting more control over the growing environment, making better use of
our resources, and implementing smart, labor-e cient growing technology, I
believe we’ll see some tremendous strides made toward greater access to
better food for anyone who wants it.
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It’s through collaborative forces that we’ll be able to keep pushing the
boundaries of what vertical farming is and how it can help us achieve amazing
things.
Upstart University’s eBooks (some free, some paid) — Over the last 5 years,
our organization has worked with hundreds of modern farmers starting and
scaling vertical farms. In the process, we’ve identi ed some of their toughest
challenges and created high-quality ebooks, guides, and even workshops to
help them nd solutions. We’ve got guides on business planning, post-harvest
produce handling, and full crop guides that tell you what speci c crops need to
grow successfully in hydroponic systems. Again, these resources are not for the
average hobbyist just looking for low-quality, anecdotal info on the internet.
These are for serious growers that are seeking real results.
Over 300+ free videos on YouTube — If you’re looking for answers to speci c
questions or more insight into what makes farms using ZipGrow technology
work, you can swing over to our YouTube channel where you’ll nd over 5 years
worth of dedicated modern farming content. We started the channel way back
in 2011 because we were sick of all the BS out there in the aquaponic growing
niche and we decided to do something about it. Over 5 years later, we continue
to push out 2–3 videos per week on topics ranging from indoor farming, LED
lighting technology, quick tips from real farmers, and much more. Check it out
and hit subscribe if you nd these helpful.
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The best way to stop viruses and bacteria is to prevent them in the
rst place. By proactively practicing good food safety and sanitizing
and sterilizing regularly, you should be able to keep them from
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popping up!
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