How indoor ag is still primed for growth

Added on 25 August 2023

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How indoor ag is still primed for growth

The indoor agriculture industry is currently experiencing a turbulent period characterized by numerous bankruptcies, layoffs, and farm closures. It’s clear a complex web of factors are influencing its ups and downs, yet the future outlook still holds hope for the industry. In this article, we dive deeper into the reasons behind these closures, examine the enduring appeal of indoor ag, and paint a picture of what the industry may look like in 2030.

Why Closures Are Shaking the Industry

Poor farm economics are the most cited reason for farm closures. As elsewhere in farming, some vertical farms struggled to find sufficient labor to operate at capacity. Many vertical farms target the high end of the leafy green and herb market. The segment is hyper-competitive in some geographies, and was, as ever, price competitive. Indoor farming is capital intensive, and some firms were juggling several capital-intensive farm builds simultaneously. Too many vertical farms felt compelled to develop their own technology, rather than focusing on farming. That said, farming always comes with economic challenges, and these are not unique to vertical farms. As the USDA notes: “many farm households primarily rely on off-farm income.”

Some commentators have concluded that recent farm failures mean that indoor farms are not scalable, but that conclusion is premature in our view. There are few large-scale farms, and they haven’t been around that long.