Indoor farming, also known as controlled environment agriculture, is exactly what the name suggests — the practice of growing crops in a controlled environment, usually indoors.
Global indoor farming is currently valued at $40.51 bln, as per a report from Fact.MR, and is expected to surpass $118bln in the next decade.
Under this type of farming, artificial lights, and technology are used to optimize growing conditions and increase crop yields.
“It’s a lot of the same technologies you’d see in a building for human comfort, but being put to use for plants.”
– Jennifer Amann of the American Council for an Energy-Efficient Economy
Due to the increased demand for fresh foods with high nutritional value, efforts to mitigate the effects of climate change, and the need for higher year-round yields using limited space and water, there has been a rising interest in cultivating crops in an enclosed space.
Indoor farming, after all, offers an economical, resource-efficient, and environmentally sustainable way of growing food.
Additionally, one gets to achieve precise control over environmental factors such as humidity, light, temperature, and nutrient levels in order to boost productivity and address challenges related to traditional farming.
Some of the popular methods used in indoor agriculture include hydroponics, aeroponics, and aquaponics, which have expanded the boundaries of what can be grown indoors. Moreover, the integration of LED lighting, the Internet of Things, and artificial intelligence are helping advance the sector.
For instance, in Texas and the US, vertical hydroponic greenhouse company Eden Green Technology controls every aspect of a plant’s life at its 82,500 square feet facility, where seven miles of pipes deliver nutrient-rich water and cool air is pumped to create the ideal microclimate for lettuce, which is then sold to Walmart. The facility utilizes LED lights, which use programmed algorithms to provide the right amount of light, in addition to natural light, which makes it “pretty agnostic to the outside environment.”
The use of technology in farming has been on the rise thanks to its ability to reduce costs, increase crop production, and improve efficiency.
The use of big data, IoT, robotics, and AI is particularly beneficial in automating farming operations. While GPS and sensors use a data-driven approach to optimize crop production, drones help in field inspection and monitoring of crop growth and livestock.
Using AI to Reduce Energy Usage in Indoor Farming
Indoor farming is the new way of doing agriculture, which is enhanced with the use of technology. However, while plant factories with artificial lighting (PFALs) can boost food production per unit area, they require resources such as carbon dioxide and energy to maintain optimal plant growth conditions.
So, a new study made use of a new tech, AI, to reduce the energy consumption of indoor farming by as much as 25%.
Incorporating AI into plant factories can help regulate light and climate systems, substantially reducing energy usage in factories and saving precious resources while amplifying efficiency.
These plant factories are big indoor farms equipped with complete climate and lighting control. According to Benjamin Decardi-Nelson, a postdoc fellow in the laboratory of Fengqi You in Energy Systems Engineering at Cornell Engineering, if these plants all over the world use AI, it can help “facilitate crop photosynthesis, transpiration and respiration in these buildings.”
This is a huge achievement and can potentially help feed the growing food demand of the world as the population rises. The world population is currently at 8.2 billion and as per United Nations projections, will reach 9.7 billion by 2050 and 11.2 billion by 2100.
Combined with urbanization and climate change, there is a need to work on the current food production systems and make them more efficient so that they can meet the rising demand. Hence, the focus on indoor farming, which relies on technology to create controlled environments. This makes them less vulnerable to climate change and other factors affecting traditional farming.
But indoor farming isn’t without challenges either. As per You, the current environmental control systems are simply “not smart enough.” They’re energy-intensive and require careful resource management to be sustainable.
One answer is ventilation but while it can bring down energy usage, it affects carbon dioxide levels and moisture balance, which complicates plant growth. Here, AI can be of immense help by managing several complexities.
Artificial intelligence is already seeing a lot of usage in the sector ranging from forecasting yields based on satellite data, analyzing various data (field photos and satellite, weather, and soil moisture) to identifying crop issues, and predicting disease patterns by analyzing plants & then recommending treatments to reducing pesticide use by pointing out only affected areas. AI further helps farmers optimize resource usage and negotiate harvest prices by assessing yield rates and quality levels.
The latest study, meanwhile, used AI to reduce energy use in indoor farming. According to Decardi-Nelson, streamlining operations using AI to reduce energy consumption can make indoor farms viable even in those regions that have limited energy-saving opportunities. He added:
“By strategically aligning environmental control system technology with plant biology, energy can be conserved using ventilation while minimizing carbon dioxide waste and maintaining ideal growing conditions.“
A Smart System to Make Food Production Sustainable
Published in Nature on Sep. 9, the study used deep reinforcement learning and computational modeling to examine plant-environment interactions.
The researchers from Cornell University used AI techniques to assess lettuce cultivated in indoor agriculture facilities across ten diverse global locations with distinct climates. This included eight locations throughout the US, including Ithaca (New York), Fargo (North Dakota), Phoenix, Milwaukee, Seattle, Miami, Chicago, and Los Angeles. The other two included Dubai, United Arab Emirates, and Reykjavík, Iceland.
The study found that AI can considerably enhance energy savings in PFALs as well as support sustainable food production. The AI achieved energy savings by optimizing lighting and climate regulation systems, which reduced energy usage.
In places with cooler climates that currently use non-AI technology, the introduction of AI reduces the energy required to produce one kilogram of lettuce indoors by 32.42%. Specifically, the energy consumption drops from 9.5 kWh to 6.42 kWh per kilogram of fresh weight.
In warmer climates, such as Dubai or the southern United States, AI reduced energy usage by 22.28%, lowering it from 10.5 kWh to 7.26 kWh per kilogram of fresh weight.
According to the study, outdoor temperatures between 0 and 25 degrees Celsius favor ventilation-related energy use reduction. However, ventilation-related energy savings negatively impact other resource utilization, such as CO2 use. Outdoor humidity, meanwhile, had no clear pattern or effect on energy use.
The study found that having high ventilation during dark period, which are eight hours of night simulation, and low ventilation during light periods, which is sixteen hours of day/sunlight simulation, provided an energy-efficient solution for optimal indoor CO2 levels for photosynthesis, oxygen for respiration and plant growth, and balanced other ventilation requirements.
“This is a very similar concept to smart homes.“
– You, the co-director of Cornell University AI for Science Institute and the co-director of the Cornell Institute for Digital Agriculture
Much like how we want to be comfortable at our home while reducing energy use, crops do too, he stated, noting that AI helps with that very well. By using AI to optimize artificial lighting and other energy systems, we can save on costs.
“This work focuses on a smart system to make food production optimal, sustainable and lower the carbon footprint.“
– You
Balancing Energy Use and Sustainability is Key to Profitability
Reducing energy usage is one of the most critical aspects of successful indoor farming. Due to using more energy than traditional greenhouses, it is a major cost for indoor farming with lightning accounting for the majority of energy consumption here.
High costs can threaten the profitability of this venture, making the sustainability and viability of vertical farming extremely difficult. Not to mention, rising costs tend to be passed on to consumers, so reducing energy usage and in turn, the cost can help alleviate the financial burden.
Against that backdrop, a lot of continuous research and development in the world of indoor farming is on reducing these costs and finding sustainable methods so that food production challenges can be addressed effectively.
Last month, researchers from Ben-Gurion University of the Negev created a closed-loop system to produce more fish and vegetables while using less energy. As part of the research on aquaponic systems, this new system formed a near-zero waste unit by treating the fish solid waste with anaerobic digestion and recovering energy and nutrients into the system.
Led by Prof. Amit Gross, director of the Zuckerberg Institute for Water Research, the system showed 1.6x more plant productivity, 2.1x lower water usage, and 16% less energy consumption per kilogram of feed than conventional systems.
Having one ton of fish, which is a high-quality source of protein with a far smaller carbon footprint, can actually allow the system to operate without any external energy, as per study. Moreover, by having negligible waste production and significant carbon sequestration, this system has the potential to be a sustainable stand-alone unit.
“Feeding the more than 8 billion people on the planet while reducing greenhouse gas emissions will require innovative technologies. Those that combine two functions in one are obviously preferable.“
– Prof. Gross
A separate research from July this year, reduced the electricity bill of greenhouses by almost a quarter by tinkering with the artificial lighting schedule.
In this month-long experiment from Skoltech researchers, different varieties of lettuce and endive (chicory) were tested in two identical greenhouses. All the conditions except the lighting regimen were the same. While both received 16 hours of light daily, only one had dark hours scattered throughout the day based on when electricity was most expensive, and it “did not measurably affect plant growth.”
Companies Involved in Advancing Indoor Farming
Now, let’s take a look at a couple of companies that are pushing the boundaries of agricultural tech through innovative indoor farming solutions.
#1. Village Farms International (VFF)
This one is involved in indoor farming, growing produce, and cannabis under controlled conditions. The company grows, markets, and distributes premium-quality, greenhouse-grown fruits and vegetables in North America through the wholly-owned subsidiary Village Farms Fresh.
Having been in the market since 1987, Village Farms currently boasts 240 acres of glass greenhouses in the US and Canada. In a recent interview, President and CEO Mike DeGiglio talked about their technological focus on software design to control the internal environment of the greenhouse. The bulk of the company’s funds are also spent on creating a greenhouse climate that works regardless of the outdoor environment.
The other focus is on having technology on the energy side and supplementing carbon dioxide. “If we can reduce energy costs, we would be much more sustainable,“ said DeGiglio. Hence, Village Farms has invested with FuelCell Energy, Quadrogen Power Systems, and the National Research Council of Canada to build a pilot project for fuel cell technology for its greenhouse in British Columbia.
With a market cap of 110.61 million, VFF shares are currently trading at $0.99, up 30.09% YTD. It has an EPS (TTM) of -0.45 and a P/E (TTM) of -2.18. For Q2 of 2024, the company reported a 19% YoY increase in consolidated sales to $92.1 mln, with the Fresh Produce segment having a 7% increase and the Canadian Cannabis segment 45%, while the US Cannabis segment recorded a decline.
The net loss was $23.5 mln while adjusted EBITDA reported a loss of $3.6 mln and cash flow improved to $5.7 mln during the quarter. This year, the company also filed a $200mln offering, proceeds of which would be used for working capital and general corporate purposes.
#2. Hydrofarm Holdings Group (HYFM)
Hydrofarm is a supplier of controlled environment agriculture (CEA) equipment and supplies for hydroponic and indoor farming. This includes nutrients, lighting, plans to optimize or scale your commercial operation, and more.
With a market cap of 31.26 million, HYFM shares are currently trading at $0.68, down 25.89% YTD. It has an EPS (TTM) of -1.55 and a P/E (TTM) of -0.44. For Q2 of 2024, the company reported a decrease of 13.1% in net revenue at $54.8 mln. With that, its net loss increased to $23.5 while gross profit came in at $10.9 mln and adjusted EBITDA at $1.7 mln.
“In the second quarter, we delivered positive Adjusted EBITDA for the fourth time in the last five quarters, illustrating the effectiveness of our restructuring plan and related cost savings efforts.“
– Bill Toler, chairman and CEO
Hydrofarm is currently working on achieving cost savings via enhanced utilization and productivity at its facilities while the company remains confident in its growth opportunities. Hydrofarm held $30.3 mln in cash at the end of the quarter and maintained $20 mln in borrowing capacity.
Conclusion
Today, we live in a world that is facing the problem of fast-increasing population, urbanization, climate change, land degradation, and widespread use of pesticides and fertilizers while consumer demand for nutrient-dense food with minimal environmental impact is on the rise.
This is why indoor farming has been gaining a lot of popularity. Not only is it well-suited for urban environments but it also uses less water, has fewer occupational hazards, and reduces environmental impact. With its many benefits, indoor farming offers a promising solution to the challenges of modern agriculture.
By leveraging technology to create controlled environments, indoor farming helps meet the growing demand for fresh, locally grown, and nutritious food while addressing sustainability concerns.
Click here for the list of the top 10 indoor agriculture companies.
