Paradigm shifts happen slowly, then all at once. Covid-19 has shown us this. Climate change has too. Pandemics and global warming are linked. So are rising flood waters, violent hurricanes and recent wildfires in California that threw up enough smoke to darken east coast skies.
Business is usually ahead of government on coping with change. We’ve already seen multiple adaptations to the pandemic, including working from home and kerbside pick-up of shopping. But I think the shifts are about to get bigger and more profound.
One area to watch closely, because it is linked to climate change as well as disruptions such as cross-border migration and deglobalisation, is vertical farming. This involves growing produce on giant, multistorey walls that are nourished with precise levels of light and water, a concept developed by Columbia University professor Dickson Despommier.
Vertical farming has the potential to increase the production of fruits and vegetables without genetic modification or the cultivation of new farmland. That is important because many plants needed for a healthy diet can be grown all year round in the traditional way in only a few places — and climate change is causing trouble for many of those areas.
The US fires wiped out crops and endangered thousands of farm workers. One of the affected producers was Driscoll’s, a California-based company that is the world’s largest distributor of berries. Soren Bjorn, president of Driscoll’s of the Americas, told me “there are basically three types of climate (outside greenhouses) in which you can grow berries, including California.”
Alter the temperature even a little bit, and the crop is ruined. Is it any wonder, then, given changing weather patterns and rising global temperatures, that Driscoll’s has decided to make a major investment and enter into a new joint venture with Plenty, a San Francisco vertical farm start-up? “Instead of worrying about moving an entire farm further up a mountain”, says Mr Bjorn, “we can move to vertical farms.”
These farms rely on high-tech materials, bespoke water systems and powerful data analytic software. They can cost tens of millions of dollars to build. But, says Plenty chief executive Matt Barnard, it’s all about context: “We can produce an acre of capacity cheaper than California farmland can be bought — which is, in any case, a false choice, since the land isn’t available.”
For high-margin produce, vertical farming makes a lot of sense. It has the potential to slash the fossil fuel needed for harvest and transport, as well as reduce the risk of weather-related crop failures and cut fertiliser runoff and water waste. Done right, vertical farming uses about 5 per cent as much water as traditional agriculture.
Smart cities in China and elsewhere are already implementing these systems. In the next two to five years, they will start springing up in cities or even at corporate headquarters around the world. Google’s campus in the Bay Area was one of Plenty’s demonstration projects, and the company’s early investors include Alphabet’s Eric Schmidt and Amazon’s Jeff Bezos.
Backers are seeking to limit and eventually eliminate long supply chains, particularly those that involve air transport. But vertical farming has the potential to distance the business of agriculture from an ongoing point of geopolitical conflict — migrant labour.
For many crops, the industrial agricultural business model requires large amounts of relatively low-skilled labour. These workers are generally brought in from outside the local farming area and that can lead to populist backlash in a time of rising debts and shrinking public budgets. “Labour is more than half our cost,” says Mr Bjorn, adding that it is also “a source of tension” in nearly every country. Vertical farms, which serve their local area and are mechanised, avoid this issue.
To the extent that the world continues to deglobalise, regionalise or localise, the appeal of vertical farming may be as much about minimising these risks as about trade and tariff wars. They could save energy, satisfy new environmental standards and feed growing urban populations in emerging markets clamouring for more high-nutrient produce.
That said, there is no doubt that it is better for a country to have its own food production sources than be at risk of being hit with a 30 per cent strawberry tariff as part of a trade conflict. Vertical farms also create a way for producers to meet demand in new markets. Two of Driscoll’s biggest strawberry markets are Hong Kong and the Arab world. “We are never going to grow outside there,” says Mr Bjorn.
But a vertical farm can go anywhere with water and power. And, as with most types of manufacturing, the sector is already showing strong multiplier effects that are driving up local wealth and innovation.
Plenty invented new forms of plastic and LED lights in order to build its farms. It does not sell them to other companies yet — but it could. One-third of its workforce are engineers, the sort of high-wage workers who spend and fuel more job growth. “We make farms like Intel makes chips,” says Mr Barnard. Both may be made more locally in the future.