Vertical Production and the Evolving Market

A couple of days ago, an article was published by AmHydro that was pretty down on vertical hydroponic production. At first, I was going to simply ignore it, but we’ve gotten more and more questions from folks asking us when we were going to respond, and given the level of confusion rising in the space I felt like it was necessary to publish this response.

The article published by AmHydro disputes the spatial and productive efficiency of towers and calls into question the validity of vertical growing compared to traditional horizontal production.

I initially didn’t intend to respond because we are not an “us vs. them” type of company and because in our core we believe that small growers are amazing and important for local food economies, no matter what equipment they’re using. In the end, equipment should match the crop, the grower’s needs, and the marketing opportunity.

Another thing to note is that Joe (the author) is one of the best growers in the industry in my opinion and when he speaks people should listen and consider his thoughts very carefully. However, the things that we say and our outlook on life is colored by our experiences and our world-view, and this is obvious in this instance.

Joe and the folks at AmHydro have a very conventional view on the industry — that is, they view the market today much the same as the market 10 and 20 and 30 years ago. That is a market where folks compete on price in a low-margin industry where consumers and producers are typically separated. And to be clear, they aren’t totally wrong in this perspective. It is how the industry has worked for a long time, and how much of the industry still works today. But it’s not how the industry works in the future.

So here is my response:

First off, and I cannot stress this enough, the math presented against vertical is not correct. I don’t intend to spend too much time on this- if you’ve grown with our equipment or read our materials, you can do the math for yourself. I know people might want to hear debate on this point, but that’s not the point that I want to spend my time writing about. I don’t mean to be dismissive here, I just mean to say that evidence for vertical has been presented again and again, and there’s no reason to dissect it yet again here. I’m tired of that debate, and the market adoption of vertical production equipment speaks to this more clearly than any article. Instead, I think the best use of our time is to look to the idea that underlies this entire debate, and will likely be the source of many debates into the future.

The thing that I really want to talk about is that the market for produce has changed — and the people that get it, get it, and the people who don’t, don’t. In fact, this is worth stressing: traditional players don’t understand that the market has changed because they have optimized around a very specific and desperate model for so long that they only know how to measure a few things — the most critical things to the old model. This makes it very hard for them to understand why a consumer would discriminate on anything other than price.

Production is moving closer and closer to consumers because that’s what people want — fresh in a way that California ag can’t deliver. This means that the place where things are grown will ultimately become more important than most other product features.

Most consumers live in urban and suburban areas, which means that vegetable production needs to move closer to urban and suburban areas. One hallmark of these areas is the fact that land is expensive, so maximizing output as a function of that land area becomes critical. Consumers also care about price (although less than they used to as more people begin to understand the tradeoffs between price and quality!), so as producers we need to learn how to get food consumers at reasonable prices.

Also, we need to grow and distribute our produce in a way that allows local producers to escape the “sell it or smell it” cycle of pricing craziness.

In short, we need to stabilize the market, improving value to consumers while improving the economics of producers, and minimizing waste — which will singlehandedly impact whole-system sustainability in really positive ways.

How then do we do this?

We believe that the market is ready for something different. By working with local farmers around the country, we are seeing that consumers want new and different products. They don’t just want high-quality food, they want to know who grew it, how it was grown, and the story of the person who grew it.

This has led to modern growers embracing techniques that seem crazy to conventional growers growing for a very specific market where only a single thing mattered: price.

The situation that we see today is similar to the emergence of organic in the 90s. Imagine how conventional growers felt about “Organic” produce in 1996 or 1997. They said, “This is crazy, it costs too much and it’s basically the same thing that we produce, maybe worse! Why are people buying this?!”

But their complaints weren’t necessarily about the way the food was produced; their complaints were voicing their frustration with a market that they couldn’t understand: a market that was rewarding some growers for a product that didn’t seem different to them, or at least seemed different in the wrong ways.

This is the market we have today. There is a class of growers who understand that they can improve their production, implement organic production methods, improve their relationships with their customers (and improve their margins as a result), and build dynamic, profitable businesses around a new model that is not just about production, but consumers, distribution, and the whole-system. These modern farmers don’t accept the thinking that says there’s only one way to grow and sell food. They’re taking a new, holistic look at the problems and finding models and growing methods that solve them, holistically…

At the end of the day, vertical plane production is significantly more productive than horizontal plane production, in greenhouses or otherwise. When we move this production method indoors, it becomes orders of magnitude more productive than horizontal plane production. I don’t think this is something worth debating at this point. We’ve been super-transparent for years — being explicit about the pros and cons of vertical-plane equipment and even recommending that folks don’t use vertical equipment when it isn’t appropriate for them.

What I do want to note is that these types of articles aren’t actually about methods and price — these types of articles are about an industry struggling to understand its significance to the future and a consumer base that doesn’t care how their produce is grown — but only that it is grown locally and sustainably and that it offers a chance to make a human connection.

At the end of the day, I’ll take a cue from the organic industry in the 90s when it began to catch flak from conventional growers. It just said, “We see something in the market that you cannot because you’ve been indoctrinated into a certain way of thinking for the last 50 years of commodity agriculture.”

You do things your way, and we’ll do things ours. There’s plenty of room in the market for both of us. And all of us are important to the future of food.

In the end, this isn’t a debate about what is right right now. This is a debate about a future that is very different from the present — one that feels scary to those who have built businesses around an unchanging market, but hopeful to those that believe that consumers and producers can have a better, healthier and more sustainable future.