A few weeks ago, I had a long conversation about the vertical farming and indoor agriculture industry with Doug Harding from Contain Inc. It was a great conversation. We offer growers very different services, giving us unique perspectives on the challenges and opportunities that the industry faces. That being said there were many places our views overlapped.
Contain helps growers find financing and insurance options that fit their business needs. Contain is an alternate finance group dedicated to indoor growers. They have information about the equipment you use and understand the indoor agriculture industry. It's beneficial to have partners that understand indoor agriculture and how it is unique.
How do seeds and financing relate?
Seeds are overlooked because they are not a huge line item in a farms monthly operating budget. The cost of seeds is usually a tiny fraction of the monthly labor or HVAC costs. Just because seeds aren't the highest expenditure each month, doesn't mean they can be ignored. Seed selection is important.
At harvest, the value of seeds is clear. Here are a few simple questions to understand how seed selection impacts an indoor farm. How many seeds germinated? What was the yield? Were the herbs and vegetables high enough quality to command a premium? The right answers to these questions can significantly impact the overall profitability of a farm.
If the germination rate is low, a few things happen. First, a grower needs more seeds to get the desired output. Second, automated equipment is less effective. With low germination, empty cells are skipped altogether by a machine. Alternatively, a person goes through the farm and adjusts the trays to account for missing plant, raising labor costs. Both of these reduce on-farm efficiency.
Yield might seem like the easiest to grasp. More produce per square foot equals higher revenue. Many farmers haven't tested different seeds to understand how much their yield may vary based on the type of seeds they plant. One grower reported that his yields varied by 70% based on the seeds he used. Think what 70% more or less lettuce would mean for an operation!
Finally, the importance of producing a high-quality product that commands a premium is essential. Many indoor farmers depend on the 18% price premium that consumers are willing to pay for local. They are willing to pay more because they think it's a better product. Therefore, indoor growers have to deliver flavorful and beautiful lettuce to their clients week in and week out. Using seeds well-adapted seeds is the best way to ensure the delivery of the highest quality product possible.
Indoor farms are difficult. Growers know that. Contain knows that. Anything that can increase a farmer's chances of success, whether its access to favorable finance terms or help selecting the best seeds is critical. That's why Contain and Stratagerm have created a partnership to help our clients.