Controlled-atmosphere agriculture survey signals 2021 optimism
By CHRIS KOGER December 30, 2020
A recent report on controlled-environment agriculture shows that greenhouse and vertical and indoor farm growers are overwhelmingly optimistic about 2021.
The second annual CEA Census Report from Autogrow and Agritecture Consulting collected information from 371 respondents across the globe, 20% of which are based in the U.S. The majority are principally indoor vertical farms (60%) and on-the-ground greenhouses (36%).
Of those who responded, 95% report they have an “excellent” or “good” outlook for the next 12 months.
“The optimism reflects what we have seen across many areas of the industry including increased technology adoption and increased consumer expenditure on fresh produce,” Darryn Keiller, Autogrow CEO, said in a news release on the report’s findings. “And despite the challenges we’re seeing an overwhelming number of new entrants into the market.”
Twenty percent of respondents founded their company in 2020, up from 6% in the 2019 survey.
The number of CEA growers who have no background in agriculture grew from 41% to almost half having no experience growing crops.
“That lack of experience has an impact on new technology solutions created and the need for more education to be available to support them,” Keiller said in the release. “It also shows a real desire to make a difference considering their willingness to start during a pandemic.”
That inexperience comes at a cost, with only about a third reporting they’re turning a profit; 60% of growers with some experience reported their business was profitable in 2020. The report notes that profitability appears to be closely tied to how long the business has been in operation.
Another divergence from traditional farming methods is the younger age entering the business, with 71% of the founders under 40 years old, a sign that CEA has been embraced by younger entrepreneurs.
Crops grown by the companies involved in the survey, and the percent who reported growing them, are:
Lettuce and salad mixes (68%)
Microgreens (66%)
Other leafy greens (chard, kale, cabbage) (53%)
Herbs (53%)
Vine vegetables (tomatoes, cucumbers, peppers) (25%)
Berries (14%)
The COVID-19 effect
While 43% of the growers in the survey reported sales are down more than 10% this year, Autogrow and Agritecture Consulting note that restaurants and hotels are the largest customers for operators (according to the 2019 survey results), so it may be surprising that more operators didn’t see sales drop to that extent.
Overall, 31% of those surveyed reported similar sales to 2019, and 26% reported sales hikes of more than 10%.
As with other companies that rely on foodservice sales, the controlled-environment agriculture sector shifted from B2B models, with an 8%-point increase in consumer-supported agriculture and produce box business models and slight increases in retail and farmers markets sales.
Farms beefed up their digital presence, with website ordering platforms appearing to provide the most substantial revenue increases, according to the report.
Of those surveyed, the largest percentage reported no specific challenges because of the COVID-19 pandemic, at 43%.
Challenges reported because of COVID-19 include:
Adhering to social distancing and other healthy/safety guidelines;
Ability to pay employees for all the hours needed;
Staff layoffs; and
Finding labor.
‘Mega Farms’
Survey participation was weighted to small- and medium-size operations, but companies ranged from those with revenue under $10,000 to more than $3 million.
Smaller operations can operate in urban environments, although operating costs are a challenge.
Operators of what the report refers to as mega farms, such as Plenty, Appharvest, Aerofarms and Bowery, show strong returns on investments, and have advantages that include ability to scale up, operating efficiencies and ability to automate all areas of production.
Those companies, however, may have to work harder to create an “authentic consumer connection,” according to the report. “Large farms serving many markets can’t match this connection, but they can build trust via social media and compete more on price points with competitive, conventionally-grown products, and those two factors may be good enough for their target customers.”
The full report is available at https://bit.ly/2L4nchN.
https://www.thepacker.com/news/packer-tech/controlled-atmosphere-agriculture-survey-signals-2021-optimism
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