Today’s idiot stupidity

An ambitious, almost fantastical, manifestation of agricultural technology is expected to come to fruition this fall. From the remains of an abandoned steel mill in Newark, New Jersey, the creators of AeroFarms are building what they say will be the largest vertical farm, producing two million pounds of leafy greens a year.

Capital cost, $30 million.

Wholesale price of leafy greens? $1 a lb?

Without even thinking about operating costs doesn’t cover cost of capital, does it?

The US simply doesn’t have a shortage of land. It’s an idiot idea.

No, this isn’t just grumpy mcgrumpface about hippies being idiots. There’s an Oz version of a technology which uses solar to desalinize seawater which is then used to grow tomatoes, cucumbers and the like hydroponically. That one has some merit to it. Stick one of those structures in the Bahamas and undercut the 300% tariff rate which American produce faces……

But why try land light growing techniques in a place with a superabundance of land? We’re trying to optimise the use of scarce resources. What’s scarce about land in the US?

More on this here:

Economics Is Scarce Resources Allocation – What Resource Constraint Does Urban Farming Solve?

25 thoughts on “Today’s idiot stupidity”

  1. Is the plant an industrial scale pilot? May make sense if they’re trialling the tech with a view to rolling it out somewhere sensible

  2. Bloke in Costa Rica

    If they can market them as artisanal wonder-greens to dopey hipsters then they can probably charge Whole Foods prices. But are there that many dopey hipsters?

  3. I would hazard a guess that the advantage is not the fact it uses less space, its that its an industrial process that is not subject to the vagaries of the weather and animals. The production will be utterly controlled, produced in exact known quantities at exact known cost. Farming is massively dependent on weather and issues with animals and insects, so that any process that eliminates such factors should have a big advantage.

  4. What would be the cost to “restore” the land to its “natural state”?
    $30m for an “environmentally-friendly” vertical greenhouse may be cheaper than the alternative way to satisfy econuts: a clean-up using methods mandated by the FDA.

  5. The other problem is that all that abundant land is a along way from the consumers. If only there was some way of hauling that food over the long distances in bulk. Some sort of move-lots-of-food-across-big-distances system.

  6. What Jim says. Echoes of your own comment about fracking, that it transformed a primary sector activity (drilling for oil) into a secondary sector activity (manufacturing). Here we’re transforming agriculture into a tightly controlled process, which we can dial up or down as needed.

    The eco-loons will still complain that we’re eating stuff out of season, of course.

  7. It’s going to be economically viable where agriculture is an industrial process in the first place. Cut flowers might be a good example. High value crop already grown in a controlled environment. Might even be more economical to stack the growing beds. Lower heating costs because the surface area to lose heat through is vastly reduced. Growing close to the market reduces transport times & costs & extends the lifespan of the product.

  8. I’m not sure that this is stupid. If they can make this work it can be replicated in places where land is scarce. Where I live (Hong Kong) it would be nice to get organic leaves farmed locally. At present the alternatives are vastly expensive produce flown in from Oz/Nz or crap from China.

  9. Bloke in North Dorset

    @MC,

    Given the cost of land in HK (unless something has changed since I worked there) it would probably be cheaper to fly them in from Oz/Nz.

  10. BiND – depends where. The Island or Kowloon, yes. New Territories not so much, esp if land is zoned as industrial.

  11. The problem in HK is not price of land or cost of imports, but the fact that almost everything is a fantastic oligopolistic stitch up by the Tycoons. There are basically only two supermarket chains (Jardines and Li Ka SHing) and they have margins up to 10x that of British supermarkets, especially for Western food. Waitrose essential bacon can be bought at GBP2.39 for 200g in the UK is HKD$90 which is basically nine pounds! It is, quite literally cheaper to eat out. Obviously, following the weakness of sterling post Brexit, the price has gone…up.

  12. MC & BiS

    But the Dutch do this already: nature, in terms of weather, wildlife in all it’s forms, and variability have been eliminated.

  13. The US has an abundance of land, sure – but it doesn’t have an abundance of land that in places that are otherwise suitable for agriculture.

    Its why where I live – a real-life, no shit desert – is a farming community.

    The land is cheap *here* and that covers (along with subsidies to ) the cost of water to make that land usable.

    Though I’m pretty sure this is still hippy-dippy ‘sustainable’ bullshit that no one will ever seriously pay to use – if its cheaper to import meat from New Zealand then no one is going to raise lettuce outside Hartlepool just to satisfy ‘locavores’.

  14. MC
    August 15, 2016 at 8:53 am

    I’m not sure that this is stupid. If they can make this work it can be replicated in places where land is scarce. Where I live (Hong Kong) it would be nice to get organic leaves farmed locally. At present the alternatives are vastly expensive produce flown in from Oz/Nz or crap from China.

    The big assumption here is that this will produce anything for significantly less than shipping it from elsewhere. *Transport* costs for shipping goods of all types – including food – are incredibly tiny, so removing them by growing locally will have an equally tiny effect on the local price.

    Which means for this to be economically viable – without subsidy – they’re going to have to be on the forefront of a revolutionary agricultural technique. And if that’s the case then we’ll see this tech being adopted all over the world, even in places where ag land is already cheap.

    And if anyone seriously thought that this had that potential then I’d expect there to be a lot more ‘pilot programs’ and testing and public talk than this and a mention in ‘Popular Mechanics’.

  15. if its cheaper to import meat from New Zealand then no one is going to raise lettuce outside Hartlepool just to satisfy ‘locavores’.

    But they do, already? Farmers’ markets are a big thing here and you get some really strange stuff grown and sold to satisfy the dubious demands over-monied & economically and scientifically illiterate.

    It’s a partially industrialised variant of the old Womens’ Institute produce sales. Except without the charitable motive. But often involving the people who, a generation ago, would be behind or in front of the WI stalls.

  16. Yes, I’m guessing trendy urban farm “premium” product. They aren’t really selling greens, they’re selling the ability to brag about how fashionable your food is, and (to some people) that’s worth a lot more than $1 per lb.

  17. Control the environment, control the pests and diseases.
    Plant a hundred plants and harvest from that hundred? Can be built in areas close to where being sold? Can be built in areas where farmland isn’t a viable option for that crop?

    While this is an expensive undertaking, proving it can work could cause other building to be altered or built elsewhere. Same day delivery of picked produce? Short transportation distances? Reduced needs of pesticides?
    These things matter to some people.

    Whether it can prove commercially viable in America is more open to question. Can parts of the farming be automated? Can it all be automated/semi automated once set up?
    Can it have lower running costs per unit than a farm with the same crop? Certainly can work towards that.

    You buy a farm, how long do you factor in repaying the capital costs over? 🙂

  18. Fruit and veg is expensive here as it’s mostly imported and with the small domestic market there’s hardly cut throat competition to drive efficiency. Planning law is very flexible for existing developed land (they don’t seem to mind building way up), but there’s no new land coming on the market.

    Even if they could make it only slightly more expensive than traditional farming, there could be a niche to fill in tightly packed places like Malta.

  19. While $30 million in capital costs may seem high 80 tillable acres in Newark does not appear to be a cheaper option. The real number we need is a comparison of the operating costs. We also need to know the amount of added profit the vertical farm can expect by virtue of the produce reaching the market we supply is traditionally low.

  20. Ag – “The big assumption here is that this will produce anything for significantly less than shipping it from elsewhere.”

    I’m not assuming anything, I am suggesting that if this project is a success* then it’s a good thing that could be usefully replicated elsewhere.

    I have no idea whether it will work or not. If it doesn’t, hey ho – at least it’s VC money and someone else’s taxes wasted.

    *I wouldn’t count it as a success if it is dependent on state subsidy though. It may be one of those projects that keeps on rolling (and keeping the founders very comfortably) on a combination of VC investment and subsidy until it is proven beyond doubt to be bollocks and gets closed down.

  21. Given that this is New Jersey it will be decorated with ‘solar panels’ aligned to reflect in the offices of a political opponent.

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