[NEW TREND] Vertical Farming 101
When cannabis became big, cannabis growers went all-in on developing the most efficient technologies to grow marijuana indoors.
They needed to do that. In Canada, for example, the climate is too cold for growing cannabis outside.
But if electricity is cheap, the problem goes away. You build a warehouse-like structure, put it hydroponic irrigation, install some light sources, and voila. You’re now growing cannabis.
Now, the cannabis industry has been transforming. It’s not 2017 anymore when you could add “cannabis” to your name and see your share price soar.
But the legacy of those years will go into a much larger and also lucrative industry.
If you can grow cannabis anywhere, why can’t you grow… anything else?
Vertical Farming Goes Mainstream
Vertical farming is just that. It’s about building facilities where vegetables grow in vertical installations or on the walls. Take a look.
You can literally repurpose an old container and turn it into a mobile farm.
It’s a win-win. First, the containers get recycled.
Second, vertical farms are compact, mobile, and can be installed anywhere.
This means two things: you don’t need a lot of land to grow vegetables, and you don’t need to move the vegetables to a remote warehouse or market.
Third, this technology uses way less water. More than 80% less than a regular farm, to be precise.
How Big Can It Be?
Very big. It could be bigger than chicken egg production in the US, which is valued at about $9 billion a year. Or three times bigger than the country’s orange market.
By 2027, vertical farming could be worth about $12 billion, according to Emergen Research. It’s projected to grow by over 20% between now and then.
Keep in mind, though, that we’re talking about average growth rates. Some companies will grow much faster.
What Is Going to Drive It?
Post-COVID, we’re expecting a “green recovery.” It is already underway, and it’ll accelerate this year.
In short, the “green recovery” means that the post-pandemic economy will be much more nature-friendly and clean than before.
There’s no going back to 2019.
And why would we want to go back to that year if we can do better?
For the food industry, being “better” means being more sustainable and using fewer resources.
And the consumer is willing to pay extra for higher-quality food. So there won’t be a lack of demand for food that sets itself apart as more environmentally-friendly.
We talked about plant-based food. It is also going to be a part of this trillion-dollar “green recovery.”
Vertical farming fits the bill perfectly.
So expect to hear a lot about new vertical farming startups and vertical farming becoming one of the defining trends of this decade.
How to Play It
There isn’t an easy way to get exposure to it right now. But Invesco Cleantech ETF (PZD) invests, among others, in companies working in the sustainable agriculture area. So it’s worth taking a look.
Thank You For Your Loyal Readership.
The Financial Star Team.
