Who will win in indoor farming?

According to Allison Kopf, CEO of Artemis, there are five ways for big players to get into indoor farming. “The indoor farming market (both greenhouse and vertical farming) is one of the fastest growing industries. Large agricultural and tech companies are trying to find ways to take advantage of the industry’s rapid growth. “

“Artemis is one of the leading software infrastructure companies in the industry, which gives us an overview of the industry’s growth and needs,” says Allison. “Our market has historically been fragmented, where traditional companies have been developing for decades and where new players have emerged more recently with innovative models to establish themselves as market leaders. Most producers are trying to replace traditional produce grown in the field and increase (ie in their local country) the production of fresh produce; and we are seeing this change as well. “

Allison says that in the 1990s in the United States, the number of eaten tomatoes grown in greenhouses was negligible. Today, just 20 years later, almost 40% is grown indoors. This change doesn’t just happen with tomatoes, it happens with the crops best suited to growing indoors, such as lettuce, herbs, cucumbers, peppers and increasingly berries.

“In this industry, unlike more traditional commodity markets, we do not yet have dominant suppliers (inputs, chemicals, finance, technology). Large companies have largely left the market open to small specialist companies and startups. But that is about to change. covered market has shown that this is a sustainable and major part of our agricultural supply chain and someone will enter this market with the goal of winning. So who will it be? “

“I think the winner will own one or more of the areas below,” says Allison.

Data
Companies that understand producer workflow, farm finances, operational data, and organic data will have a distinct advantage in the battle for the market. This creates an opportunity for people like lighting, ranching, climate control, greenhouse manufacturers, lenders and others.

According to Allison, it’s not just about getting closer to the farmer, it’s also an opportunity to develop technology faster and to have commercial R&D capability at your fingertips. “Lighting, for example, is one of the most efficient components for indoor growing. Yet lighting companies do not have access to information on the performance or quality of producers. “

With access to farm information, lighting can become proactive and intelligent, rather than the PLC technology of the past. Signify and Osram are already leaders in horticultural lighting and are probably in a strong position to start offering smart lighting solutions. “Beware of breeding companies here too. Unfold was recently launched with $ 30 million in funding from Bayer for indoor crop breeding. I would expect others like Syngenta and Rijk Zwaan follow with similar initiatives, ”says Allison.

Finance
There is an estimated $ 20 billion gap in project funding over the next 3-5 years for the construction of greenhouses and vertical farms in the United States alone. Farm businesses that have lending capabilities, like ADM, Bunge, Cargill, Dreyfus, and others, will find indoor farming opportunities less risky from a growing perspective than traditional commodity investments. . Lenders will need to be familiar with the relationship-heavy buying market and the lack of product sales contracts, but should be able to underwrite producers who sell to well-known retailers, like Costco, Walmart, and Target.

“Many growers also need an operating line of credit, and often have to purchase consumables like seeds, growing media and chemicals in bulk to get better prices. With some buyers, producers face long periods of receivables, which also affects operating cash flow, ”Allison says.

Ultimately, traditional farm businesses that lend to agricultural producers will win by creating financial products for the domestic agricultural space and partnering with producers of technologies that can help reduce the risks of the investment. This opportunity will unlock billions of dollars in new income for someone in a relatively short period of time.

Traceability
Product recalls and supply chain blind spots hurt everyone in the ecosystem. Large agricultural companies have started to add traceability to their strategic plans. Many are testing blockchain-based technologies. Allison says others are focusing on digital workflow platforms. For the most part, companies have yet to figure out how to trace it back to the farmer and this is where the most opportunities lie with indoor farming in particular.

Because indoor farming is more predictable, companies that can track the product from input to cultivation to finished product and throughout the supply chain will have a critical advantage over others. Retailers like Walmart and Target are making this a priority and have the potential to significantly disrupt their supply chains with indoor farming.

“Let’s say Walmart has partnered with indoor growers for 100% of their green salads, tomatoes, cucumbers, peppers and berries. While implementing this, they established traceability standards for producers and demanded compliance with those standards. This would not only ensure safe products that are normally high risk for consumers, it would also allow a stable year-round supply of products (with accurate predictions) for Walmart and lay the groundwork for advancing sustainability significantly. means less food waste, more efficient production, a stable year – round products, safer and more sustainable production, ”says Allison.

It’s not just retailers who can set the bar for traceability. Big tech companies like Schneider Electric, which have their technology in the hands of all components of the supply chain, from producer to retailer, are also in a unique position to offer end-to-end traceability products.

Consumables
Consumables are another exciting opportunity for more traditional players entering the indoor farming market. Today, producers buy products from many individual suppliers. This drives up the price and makes reliability difficult. If a supplier no longer has a product, producers are forced to purchase new, untested products or find another supplier on short notice.

Large greenhouse growers often import products from other countries and buy in bulk just to try to keep prices down. And there is a serious lack of transparency in pricing and performance. Since the industry is changing so rapidly, producers are forced to buy more based on marketing claims than actual performance.

Allison adds, “Indoor growers spend a lot of money on inputs each year and are willing to do so because quality has a direct impact on prices. This is a radically different approach to traditional commodity markets where performance is the primary, if not only, driver of financial performance. For this reason, producers tend to pay more for inputs to impact not only yield, but also quality.

Farmer’s Business Network has created a marketplace to solve exactly this type of challenge in the input space. This market is ripe for an offer like this. Large chemical companies like OCP and ICL should pay attention to this market as well, as specialty products are likely to become one of the biggest product categories over the next few years.

Digital workflow
Companies like Trimble, John Deere, Syngenta, and Corteva have started to make inroads in digital workflow products. None of the products designed for the field workflow cover the indoor agriculture workflow.

“In indoor farming, you have to couple traditional cultivation processes and the biology of cultivation with a manufacturing mindset. In indoor farming, the growing times are considerably shorter than in the field. , so the challenges are more aligned with a plant. You think about how to manage space, time and throughput on a continuous basis. It’s just in time inventory management, “says Allison.

Understanding this workflow is essential for all of the other elements listed above. This is what leads to proper data collection, ensures traceability and enables models such as financing or a consumables market. Companies with a deep understanding of inventory management, like NetSuite, Sage, SAP, and Microsoft, may well benefit from this new industry. Other farm businesses that also work in construction and manufacturing, like Trimble, could gain here as well.

For more information:
Artemis
Nathalie Delima
[email protected]
www.artemisag.com


Source link

About Nell Love

Nell Love

Check Also

How West Coast Brands Drive Sales When Ordering Home

When Arno Hesse speaks, business leaders listen. Hesse, a co-leader and investor with Slow Money …

Leave a Reply

Your email address will not be published. Required fields are marked *