Urban agrotech in Moscow: development prospects
The growth of the world service market in digital agriculture sector is steady and robust. According to J’son & Partners Consulting, its monetary value will be estimated at the level of $1.9 billion ($815 million in 2017). One of the most prominent sectors in agriculture is urban agrotech (or agritech).
Moscow’s “RusEco” every day produces over 20 tons of herbs per day. The company claims that producing the same amount of herbs in a conventional greenhouse will require 10 times more cultivation area and water.
Nowadays vertical greenhouses are considered the most popular, they can be installed in enclosed areas. This type of urban agriculture helps to produce food saving resources. Digital technologies are used for cultivating crops, they help to maintain the recommended temperature, humidity and other parameters.
UrbaniEco is one of the Moscow agrotech market players, that created Urbanifarm solution. Automate urban vertical farm is intended for all-year-round herbs, lettuces and berries production, it produces 1400 kg of food per month in 100 m2 area. The farm includes pillars for planting, LED lighting and climate control system.
The prospects of urban agriculture in Moscow
Experts argue that Moscow’s small local farm producing foods for retail and restaurants are gaining popularity. Nevertheless, “RusEco” claims to build a large vertical farm in Moscow. Panasonic, which is also involved in agricultural projects, supposes that vertical farming development is connected with the growing interest in healthy eating. On the one hand, the consumer is curious how to grow something healthy in a megapolis. On the other hand, technologies make it possible to provide the urban dwellers with everything tasty and healthy they need within the city.
The prospects are bright, analytics claim annual growth to be more than 25%. At present not quite a small part of the society tries to consider what they are eating and consume, where it is made and how and so on. But in 5–10 years time the origin of the products, the transparency of agricultural production will become a strong consumers’ advantage.
German Gavrilov, Head of Integrated Solutions and Business Development at Panasonic Russia
Speaking about the development of urban farming across Russia, it is definitely a prospective direction for the north and the Far East, UrbaniEco (vertical farming producer) claims. It is due to the fact that the climate in these areas is not suitable for conventional agriculture.
In Moscow we are witnessing the emergence of small local farms, focused on retail and HoReCa. In terms of profits, the crops feasible for production are the ones that are imported, for example, arugula, basil, some types of lettuce, and also microgreen, that is more and more popular nowadays.
Tatyana Dubovskaya, Head of UrbaniEco
Vertical farming in Moscow: management and workplaces
A vertical greenhouse can be installed in almost any premise, a basement or a warehouse, for instance. For now, there are workers involved in the production process, but in the future most of the processes will be automated.
Urban vertical greenhouses are an opportunity not only to provide urban dwellers with healthy food, but also provide jobs for up to 5 people per 100 m2 of the greenhouse’s used area. In 3–5 years time this sector might provide up to several thousand new worklplaces.
German Gavrilov, Head of Integrated Solutions and Business Development at Panasonic Russia
Every premise potentially can be a placement for a vertical greenhouse, where hydroponic equipment, phyto lamps should be installed and the climate parameters should be set. City farms still use manual work, every farm creates jobs, two people per 100 m2 on average. But the whole sector is working towards robotization and automation.
Tatyana Dubovskaya, Head of UrbaniEco
So far the local farms are close to the final customers, and experts suppose it is a good opportunity to become self-employed or start a micro business or a family business.
Urban agrotech market in Russia
It is a new market and it is rapidly developing. There are not only lettuce producers, but also the producers of fish, seagrass, mushrooms and berries.
One of the most prominent market players is “Skazhi Vkusno!” (“Say tasty!”) that focuses on micro green, it already has offices in several Russian cities. There are also various noteworthy agrotech start-ups, their future is still uncertain, but if they manage to offer an alternative to large agroholdings, which also seek to implement vertical technologies and business models, then they can succeed.
Tatyana Dubovskaya, Head of UrbaniEco
What are the obstacles for urban agrotech?
Despite all the bright perspectives, experts say inadequate legislation can create obstacles for agrotech development. Another problem is the attitude of the lessors — many of them prefer businesses that do not require additional reconciliations. But still there is no general way of development of the whole sector, in each city the city farming’s development depends only on the attitude of the local municipalities.
Supervisory authorities probably will not let the sector develop very quickly, but we believe urban agrotech will acquire civilized regulations and become an essential part of sustainable cities over time.
German Gavrilov, Head of Integrated Solutions and Business Development at Panasonic Russia
There are no feasible barriers for selling the production of urban farming, the company just needs to be voluntarily certified and be evaluated in laboratory trials, for example, microbiology testing, if their client has special requirements. But i also see some other risks for agrotech development, as there are almost no lands of agricultural designation, so the lessors may prefer to work with other lessees, that do not require additional reconciliations. We are going through crisis now and there are many empty premises, but in the future is can become a barrier for small business development in the city farming, as only large companies can go through all the reconciliations and public hearings. It means that every city has different perspectives of city farming development, which may depend on the attitude of the local municipalities.
Tatyana Dubovskaya, Head of UrbaniEco
World experience
Experts note that Moscow should consider the experience of Germany and focus on placing vertical farms in shops and restaurants.
These cases are used by GOOd BANK and InFarm, they suit well with the new concepts of the market and increasingly popular foodcourts, that focus on healthy eating.
Tatyana Dubovskaya, Head of UrbaniEco
Interest towards agrotech on various markets
Vertical farms can be in high demand not only in retail and restaurant business but also in development. For example, green areas in an apartment complex will make it more attractive for potential residents.
The quality and the range of fresh herbs should be improved in the retail sector, our country still has to catch up with Europe, and it has a bad impact on the health of our citizens. The HoReCa industry will definitely transform if the vertical gardens and kitchen gardens keep gaining popularity. Moscow is now preparing to launch some concepts with farms inside restaurants or a salad bar in the food court. The green concepts will also be used to increase the attractiveness of new apartment complexes. I am sure that every citizen wants to have a shop with a wide range of fresh herbs nearby.
Tatyana Dubovskaya, Head of UrbaniEco
Retail and customer demands
For customers the critical factors when choosing a product are still price and product appearance.
When the information about how and using which ingredients the product was produced is available for the customer, growing vegetables within the city will become much more popular. Nowadays many customers are still influenced by the fact who sells them vegetables at the market. If they like the seller, they buy from him. In the near future we will chose not only the seller, but also choose the producer, and how it influences our health and the environment.
German Gavrilov, Head of Integrated Solutions and Business Development at Panasonic Russia
Customers choose the product judging by its taste, flavour, and appearance. As practice shows, there are no prejudices about vertical farming, especially after going on a special testing tours to such farms). As for the retail sector, the consider the price, value the stability of the supplies and quality, so the local production has the undoubted advantage over foreign suppliers.
Tatyana Dubovskaya, Head of UrbaniEco
Optimal business models
According to the experts, the most promising farms are the local ones situated near a shop, cafe or a salad bar run by the same person. In the retail sector, there is an increase in the popularity of lettuce mixes, the demand is rising, so the producers can experiment with the assortment. Experts note that city farmers should work towards producing finished goods and creating a unique product range, towards the sectors, where margins are higher and competitive advantages are bigger.
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