3.1.4 ECONOMIC COMPARISON
CEA start-ups face high costs to operate primarily due to high upfront capital intensity, large energy requirements and expensive land costs. The aim of this sub-chapter is to compare a selection of crops on cost economics. The selection considers a combination of growing structures, greenhouse and vertical, crop mix, including both vegetables and fruits, as well as maturity of the growing structure, both operational as well as anticipated. To fully understand the cost structure and compare annual yield, water and electricity usage on a per lb. basis, the following crops and growing structures have been considered: • Leafy greens in vertical farms: This crop is the most adopted crop grown by emerging greenhouses and vertical farms. Vertical farm format was selected as the growing format. • Peppers in greenhouses: Peppers are selected as they are already grown under the CEA format and are among the fastest-growing crops to be adopted under the CEA format. 24 High-tech greenhouse format was selected as the growing format. • Strawberries in vertical farms: Strawberries are amongst the most popular crop that will be brought under the CEA format going forward. 25 Vertical farm format was selected as the growing format based on discussion with experts.
Each crop is economically compared on a total landed cost basis. To effectively compare open-field grown crops to CEA crops and choose relevant CEA farm size and technology, detailed cost models were developed in collaboration with Agritecture. Cost structure for each crop includes the following categories: • Growing costs: All operational expenses that are incurred to grow the crop, with major categories being seed costs, labor costs, electricity costs, water costs and land rent costs.
• Packaging costs: This category includes costs related to packaging, cooling, and palletizing.
• Overhead costs: All costs that can be depreciated over the yield produced are included here. Typical examples will be capital expenditures, any insurance and certification costs. • Transportation costs: Assuming demand centers to be in Chicago or New York, transportation costs have been estimated from California for open-field grown crops. For vertical farms and greenhouses, it is assumed that they are within 300 miles of the demand center and a corresponding transportation cost is assumed.
24 YOY dollar sales growth of greenhouse-grown vegetables and herbs in the US in 2018 | Statista 25 Global CEA Census Report 2021 | Waybeyond, Agritecture Consulting
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