Vertical farming preps for an economic blow

In the news

If you predicted the Netherlands would become a major exporter of food to its European neighbors, take a bow. As this piece notes, by embracing vertical farming early, the small nation figured out not only how to double its food output while halving the resources used to do so—it also now provides vegetables to much of Western Europe, dedicating 24,000 acres to greenhouse-grown crops.

We’ve written about the potential of vertical farming, as well as the drawbacks, which include the cost of precision watering and lighting, and the reluctance of some farmers who are heavily invested in traditional methods. But global economic headwinds have added to the challenges, as explored here. At the moment, vertical farming is not economically competitive with its traditional counterpart.

It’s one thing to tackle large-scale innovation programs when economic winds are at your back, but the challenge is ramped up by widespread economic difficulties.

The Cognizant take

“We talk to a lot of food companies,” says Jenny Edwards, Principal Sustainability Advisor at Cognizant's Sustainability Services practice, “and most agree that for consumers, sustainability takes a backseat when prices and cost of living increase.”

Organic food, she notes, sees a smaller drop in demand because consumers perceive it as a health choice. “People believe they get a benefit from buying organic,” Edwards says. “As to sustainability, they believe the world (i.e., someone else) gets a benefit—and they’re less willing to pay for that when money gets tight.”

In the short term, this doesn’t bode well for innovations like vertical farming, an area that requires major investment if it is to scale.

And that’s a shame, Edwards notes, because over the long haul, the promise of vertical farming is increased efficiency that will serve agriculture companies—not to mention humankind—well. “As your supply chain grows more efficient, both profits and sustainability increase,” Edwards says. “But in the short term, it’s going to cost you to improve those processes.”

Often, Edwards adds, innovations that promote social or environmental benefits but don't promise much to businesses in the short term are more vulnerable until they reach a certain level of maturity and/or scale.