Vertical farming’s case to be taken seriously plows on

The food production technique comfortably counts pensions and sovereign wealth funds among its backers, while government and multinational interest undoubtedly lends credibility.

At the start of the year, Agri Investor spoke with Temasek’s agribusiness managing director Anuj Maheshwari about the state-owned firm’s approach to agrifood investing.

Maheshwari posited that while food production has always been viewed and optimized through the lens of cost and taste, when the increasingly important metrics of wellbeing and environmental impact are taken into consideration, “there can be a better of way of producing food,” he said.

“There’s always an evolution of things and we believe the evolution in food will come through the use of technology. This big hypothesis is what defines Temasek’s approach in the sector,” he explained.

One strand of the agrifood space Temasek has supported keenly and whose increasing scalability and wider investor appeal has intrinsically been linked with technology is vertical farming.

Efficiency advancements in LED lighting tech combined with their reduced associated costs – at the same time artificial intelligence and crop management software made forward strides in the past 10 years – have had a game-changing impact.

Confidence has now reached the point where governments are supporting the space and incorporating it into their national food strategy.

In October, German indoor farming solutions provider &ever became one of the first beneficiaries of a grant from the Singaporean government’s 30×30 initiative, launched last year to get the city state producing 30 percent of its nutritional needs by 2030. &ever received an investment of an undisclosed size to build a facility that will annually produce 500,000kg of leafy greens.

And in the Middle East – a net food importer region that is taking multifaceted steps to increase its self-efficiency – the UAE supported the space this summer for its own domestic produce needs while Kuwait’s Wafra committed $100 million to Pure Harvest, supporting its expansion into Saudi Arabia.

One of the drawbacks of vertical farming to date has been the limited variety of crops that can be grown using its hydroponic, aeroponic and aquaponic methods, hence the widespread output of leafy greens among early movers.

A March 2020 Barclays report, titled Vertical Farms: Aiming High, said that while the space could capitalize on a $50 billion market opportunity, it highlighted the sector’s ability to showcase it can grow more than leafy greens at scale as one of several hurdles yet to be overcome.

Vertical farming enthusiasts will have been encouraged, then, by news in August that Temasek and Leaps by Bayer, the impact investment arm of Bayer AG, had jointly established a company that will be given access to intellectual property on thousands of lines of vegetable and fruit seeds from Bayer’s catalogue, to be bred specifically for vertical farming.

While net food importer countries with limited arable land have understandably been most in need of the technology so far, the “real question mark is climate change,” a source told Agri Investor.

“Climate change is the catalyst that can accelerate this multi-fold. If all of a sudden things start getting really bad, it creates even more of an economic justification to bring in vertical farms into other markets as well,” the source said.

Despite the many hurdles it is yet to clear, vertical farming continues to have a credible claim as future-proofed asset.