Healthy Shake-up of US Indoor Farming
High-tech leafy green indoor farming is facing a moment of reckoning. Over the last six years, the industry has gone from a dollar magnet to a graveyard for some hundreds of millions of dollars’ worth of failed businesses, leaving many barely standing.
Post-mortem forensics show that self-inflicted wounds, systemic risks, competition with conventional agriculture, and untimely demand-related trends are the main factors behind the recent setbacks. In light of this, we emphasize recommendations for a less risky and more successful business model.
Industry experts, however, remain somewhat bullish and ‘long’ on high-tech leafy green indoor farming, particularly in the greenhouse segment. The current correction is viewed as a healthy shake-up that will eventually make the industry much more resilient.
There are still many bright spots for the future of indoor pre-packaged leafy green products. Demand for indoor-grown pre-packaged leafy greens will recover as inflation subsides. In addition, many successful farms offer other incumbents and new entrants hard-learned lessons about what to do and what not to do to be successful.
It is not uncommon for disruptive technologies to go through a boom-and-bust business cycle. The good news for incumbents and new entrants is that the industry as a whole is determined not to repeat the mistakes of the past. Rather, it will focus on delivering high-quality, affordable, sustainable, and profitable products while being agnostic to the underlying technology.