3.1.2 MARKET SEGMENT
Controlled environment agriculture is primarily driven by two major growing formats, greenhouses and vertical farms. Key distinctive characteristics are that greenhouses rely to a certain extent on natural sunlight, while vertical farms rely solely on artificial light. There is a spectrum of farm types, such as shaded structures, hoop tunnels and shipping
containers, that fall under both categories and differ on the level of technology employed, construction material used, growing technique used and reliance on natural light. However, the focus of this chapter will be on the two major formats. Figure 1 below aims to highlight key characteristics as well as key advantages and disadvantages of both growing structures.
TWO MAJOR GROWING SYSTEMS DOMINATE THE CONTROLLED ENVIRONMENT AGRICULTURE (CEA) SPACE
Overview Of Major CEA Market Segments
Greenhouses
Vertical Farms
Traditional Greenhouses
Greenhouses Start-Up
Vertical Farm Start-Up
Description
• Semi-permanent to permanent structures - shaded, polycarbonate or glass • Reliance on natural sunlight Hydroponic or soil-based growing system • Grown primarily through patient capital • Fruit and vine crops like tomatoes, cucumbers, peppers • Berries are increasing
• Permanent system – mostly glass • Heavier reliance on artificial light • Hydroponic, aeroponic, aquaponic and soil-based growing system
• Modular structures like shipping containers or
permanent structures with multiple growing levels
• Complete reliance on artificial light • Hydroponic, aeroponic and aquaponic, rarely soil-based
Typical Crops
• Primarily lettuce, variants of leafy greens and herbs
• Primarily variants of leafy greens and herbs
Typical Construction Costs
• $0.5 to $1 million per acre
• Typically, greater than $1 million per acre 1 • Example: $1.3 million per acre for AppHarvest and $3 million per acre for Bright Farms
• Typically, greater than $16 million per acre 1 • Example: $16 million per acre for 80 Acres Farms to $50 million per acre for Aerofarms
Key Advantages
• Established in the fresh-produce industry • Lowest cost structure • High variety of crops produced
• Familiarity in the industry • Near all-year production • Better unit economics than vertical farms
• Year-round production irrespective of season • Highest yield per sq.ft – lowest land required
Key Disadvantages
• Seasonal production based on climate • Largest land requirement
• Larger land requirement than vertical farm • Limited crop catalog
• Highest cost structure due to
electricity consumed and CAPEX
• Limited crop catalog • New to industry
CEA START-UPS
Source: Agritecture, Roland Berger
Figure 1: Overview of major CEA segments 1) Acres reflecting the building footprint and not cultivation footprint (latter being higher )
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