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Scaling Up, Starting Small to Work out the Kinks

Bigger is better ... right? Bigger is where you get the efficiencies of scale from. It's how farmers and growers can make money in an commodity business. And it's even more important in vertical farming operations because the upfront capital investment is so big. If you are paying a lot to set up a farm you want to grow as many leafy greens or herbs as possible to help you re-coup your investment.

That makes sense! I understand where you are coming from. Running a large, efficient operation should be a long term goal, but when you are just getting started bigger generally means more problems.

Vertical farmers are not simple operations. The number of things that need to work together to generate a successful crop is unbelievable. The more I learn about vertical farms, the more impressed I am by the successful ones. Given of the number of things that can go wrong and do go wrong, starting small minimizes mishaps and failures. Your end goal might be to have a 250,000 square foot farm or ten 50,000 square foot farms, but that scale is a very dangerous place to start.

Test Farms

Most farms have failures or design flaws and ever farm makes continuous improvements overtime. These problems (both big and small) are practically unavoidable even with the best planning. Let's start small. Maybe you love free cilantro so you planted it. You grew your cilantro and instead of getting a great price because of high Cinco de Mayo demand, you actually got a low price. The price was below your break even requirement. Next time you plant more basil because it is more profitable. If you had a small crop of cilantro, you might lose a little bit of money. If you have a huge crop you will lose more.

Not all problems are this easy. Many of the largest indoor agriculture invests are difficult and expensive to change. Decisions about lights, HVAC system, and the location of your drains they are final. You will need to open a new farm to make substantial changes to these systems. Even with all the best research and advice, every farm is a little bit different and the way all of these systems fit together will vary. That's why planning is imperfect. However, if you start small, and the power supply is insufficient, when you scale up you will address this need and you will gain the efficiency on the large operation.

Advancing Technologies

For some companies they have test farmers or trial areas where they make tweaks that they will ultimately roll out to the entire farm. Other times, these vertical farm businesses are growing so big that they leave the old technology in the original farm and when they open the second farm, they purchase new equipment or implement better systems.

I spoken with farm operators that have grown from one farm to four farms in as many years. However, they learned from the first farm and made changes. Plus they were able to adopt new technology in the newer farms. They did not retrofit the old farms. The result is four farms that are completely different. On one hand it's great to take advantage of the new technology. Plus the newer farms have design improvements that the older farmers did not have. On the other hand, it's a lot harder to benefit from the efficiencies of scale when you have four different farms.

Pencil Farming Series

This entire series came out of discussions with Cornell University and University of New Hampshire staff at a workshop in June. These professors regularly work with indoor farm operators and their biggest piece of advice was to start small. Small mistakes are cheaper and easier to fix.

With more and more investment in this space, its easier than ever to spend a lot of money and build a big farm. The excitement and the back of the envelope math are easy to get caught up in, but just like it's important to trial your seeds, its critical to trial other parts of your farm as well. Plants are not widgets, they all respond to subtle environmental changes differently.

Check back next week for the next post in this series.

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