Taiwanese PFAL’s — The Promise of Integration & Innovation
*Copyright of Hokuryukan Agri-Bio Magazine — Published Spring 2018
Size can be a deceiving factor, especially when evaluating the Plant Factory industry in Taiwan. Despite smaller facilities and limited government support, Taiwanese PFAL’s continue to produce out of season and specialty greens — aspiring to reduce the dependence on imported food crops and to create new and profitable markets. While new entrant PFAL operators are slowly growing, Taiwanese Original Equipment Manufacturers (OEM’s) and research institutions are also stepping in to provide new technologies and applications for more efficient system design and new business models.
As of late 2017, there were over 120 operational PFAL’s operating in Taiwan, with a combined supply of 2,000 tons a year, accounting for only 0.12 percent of the country’s total demand. The majority remain operated commercially by private companies, with some companies like Nice Green and YesHealth operating multiple Plant Factories around the northern Taipei region. The remainder of these PFAL are operated for showcase and testing by universities and research institutes around the rest of the country. Nevertheless, most Taiwanese PFAL’s remain small, most harvesting less than 1,000 plants each week — and the largest factory having daily production of 6,000 plants a week at full capacity.
In Taiwan, starting operations small is a critical PFAL strategy for long term viability and profitability. Despite tighter margins, most PFAL operations begin small, meeting local market demand with competitive prices for imported produce or new niche varieties altogether. Most favor fast-growing, small plant varieties that require only low light levels and offer a high economic value and a high harvest index. The concept of “Local for Local” production is promoted by many PFAL’s to avoid international imports for crops like lettuce that can only be grown in Taiwan during the winter season, but remain highly consumed during the summer. According to Dr. Wei Fang at the National Taiwan University, the primary PFAL crops are lettuce varieties, followed by Brassica (Cruciferae) cultivation — each producing minimal plant waste with only the plants’ roots getting discarded.
In recent years, Taiwanese PFAL’s have received media attention for their cultivation of specialty and niche products, creating new markets for these higher priced products and byproducts. Crop varieties such as Ice Plant (Mesembryanthemum crystallinum) and Rocket Lettuce or arugula (Eruca sativa) have substantially higher market value due to their exotic and niche appeal from restaurants and bars. Companies like Nice Green and YesHealth have taken advantage of these new markets to also develop secondary byproducts such as noodles made from PFAL plant varieties and even luxury face masks from other varieties. This approach successfully diversifies their product revenues and, in some instances, greatly extends the shelf life of perishable crops grown in PFAL’s through the incorporation of these “products” into medicinals and cosmetics.
Among Taiwanese PFAL’s, there seems to be no shortage of innovative business models and marketing tactics. In addition to meeting and creating local market demand in grocery stores and restaurants, some PFAL’s have even developed online health memberships and CSA models. One company, Cal-Comp Biotech in Taipei provides a variety box of weekly produce for over 500 customers, including local schools. After starting with in house production for employees, Cal-Comp Biotech expanded their operations, providing a weekly variety of premium grown veggies with their annual membership. While this strategy is highly marketable, it also grants PFAL operations more flexibility in the cultivation of different plant varieties at their discretion.
Starting a new PFAL in Taiwan has real economic advantages that are unique to the country. These include the cost of LED lights and labor. While high spectrum LED lights remain a critical capital expenditure for new operations around the world, domestic production in Taiwan is nearly one-third as expensive as Japan. Additionally, labor costs in Taiwan are far lower than the United States, Japan and Singapore. This allows for more manual support of small scale PFAL’s instead of expensive automated equipment. Operational space is still expensive, especially in the capital Taipei, which explains why most PFAL’s are located in pre-existing offices or other adaptive reuse locations. While these economic advantages provide only a boost for small operations, they are critical benefits for PFAL’s in a country with little to no support from the local and national government.
There is subtle recognition by the Taiwanese government for the commercial value of these PFAL facilities. Government subsidies for commercial PFAL’s remain elusive, yet governmental provision of academic support and grants for controlled agricultural sciences have grown dramatically in the past 2 years. Despite the progress for research support, agricultural authorities are still reluctant to classify these products as truly organic — due to the soilless conditions of these farms, pointing, once again, to the global challenge of classifying PFAL products as “organic” or not.
Subtle government support seems to be supplemented by the formation of trade associations that combine the talents of private firms and academic institutions. One example is the Taiwan Plant Factory Industry Development Association, formed by twenty businesses and academic research institutions, including the Industrial Technical Research Institute, the nonprofit research institute that famously played a role in kick starting Taiwan’s world-leading semiconductor industry. Industry associations are further providing Taiwanese Plant Factories with close access to custom designed products, including selective sensors, LED spectra, growing beds and more. These customized domestic technologies are providing rapid iteration in PFAL cost reduction and quality improvement of crops, facilities and systems. These thoughtful and innovative “associations” may prove to be powerful engines of technological innovation and improvement across all countries at the forefront of this emerging industry.
In Taiwan, innovation is synonymous with the integration of technologies. These small scale PFAL operations, combined with the rapid testing of new and custom built systems are decentralizing a fast growing industry with little government support. Whether or not these smaller scale PFAL operations will be successful in the long term is still uncertain. But It is unlikely that the future of Plant Factories in Taiwan will be determined by one or two operators. Rather, the steady and simultaneous development of Taiwan’s Plant Factories will likely push forward new innovations, applications and technologies relevant for the global industry.
