As can be seen from the analysis above, when comparing total landed costs, vertical farm crops are around 3 times respective open-field crops while the gap for greenhouse crops is lower, to around 1.5 times. The cost structure for vertical farms and high- tech greenhouses is primarily driven by electricity costs required for the lights and climate control, which ultimately drive the much higher yields per acre. Greenhouses have a lower cost structure as compared to vertical farms and are not as exposed to energy costs as vertical farms. However, there are key advantages in terms of resources utilized, with the right crop selection per acre, yields could be as high as 35 times open field farming while water use is as low as approximately 15 percent of open field farming. Irrespective of the crop grown, vertical farm operations are highly electricity-intensive, require capital intensive build-out and currently still require significant labor to grow a pound of produce. Even with improvements in LED efficiency, and improvement of labor efficiency in operations, total production costs will likely remain 2-3 times open field farming for a pound of produce grown, unless yields can be driven much higher. Furthermore, with

rising energy rates, increasing costs of raw materials, labor, and land, and increasing financing costs, vertical farms face significant headwinds to become cost competitive against traditional open-field farming and other CEA players, such as traditional greenhouses and greenhouse start-ups. Greenhouse start-ups, on the other hand, according to our analysis, are closer to cost parity with open- field growers, with 1 pound of bell pepper costing approximately 50% more than open field produce. Even though modern greenhouses can also be energy intensive, the cost structure is not as heavily reliant on electricity and novel technologies as vertical farms. Greenhouse start-ups are likely better positioned to achieve economically viable operations as compared to vertical farms in the near future. With key advantages in terms of resource utilization, such as lower land use, less water use, consistent yields and lower transportation costs, vertical farms and greenhouses can be possible solutions in situations where such resources are already scarce. End customers located in areas with high population density, low arable land and water can be one such use case.

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