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How indoor farms can strengthen the fresh produce supply of outdoor growers

"There's a bigger chance of crop failure for outdoor growers not to deliver, because of weather. We should continue to balance it out with CEA produce. However, as a retailer, if you only want to sell indoor produce, there aren't dozens of suppliers to buy from," says Vonnie Estes, Vice President of Innovation at the International Fresh Produce Association.

Vonnie Estes pictured at Plenty's facility

Having worked in fresh produce for decades, Vonnie is keeping busy with technology in agriculture that's used throughout the entire supply chain. Currently, she devotes most of her time to climate change and labor shortages, trying to find an answer on how to mitigate and respond to these shifts. Reflecting on a rocky couple of years within the CEA industry, Vonnie reassures that indoor growers will be able to lock in contracts with retail, "Especially if you're a producer with a strong track record." However, as a new farm that might be a bit harder, especially when making big promises that cannot be lived up to. New farms will have to show a pathway to profitability and proof that they can stay in business to deliver quality products on contracts.

"When there's a shortage due to weather events in open-field production, the trading desks come in trying to fill up the gaps which happens all the time in outdoor-grown. They have built a bigger infrastructure and more growers to pull from over time. Most indoor growers are selling directly to retailers so for the most part do not go through trading desks. As we have more indoor growers and larger supply, indoor will also be able to fill these gaps," Vonnie elaborates.

Indoor helping outdoor
In a panel that Vonnie joined during the Indoor Ag-Con, Jill Carlson from Plenty highlighted how vertical farms and outdoor growers can balance each other out. In February, many outdoor growers in the US are often unable to grow arugula for salad mixes due to the cold and wet season, resulting in a shortage. Jill explained that Plenty is always approached to provide more arugula for their mixes. "This is a great story of how indoor and outdoor are working together, but also an exception."

Another great example Vonnie highlights is the use of transplants in the open field. "Due to the flooding in the past year, many growers were unable to plant in the field. Companies that had transplants grown indoors were much better financially, as they were able to grow to plant the transplants when the field dried out.There are so many ways to use vertical farms that can work together with outdoor farms. I think growers need to provide products to retailers and consumers without anyone telling them how to grow. They just have to supply their customer, that's either bought from a vertical farm or an outdoor producer."

Vonnie highlights the growing preference for locally sourced, pesticide-free produce among consumers, mentioning the benefits of CEA in meeting these demands. "Consistency of supply and quality are two significant factors driving retailers towards CEA producers," she explains. As well as pesticide-free labeling and the diverse lettuce varieties offered by CEA producers.

What can CEA improve?
As Vonnie puts it, this industry is just at the beginning of its development, whereas outdoor growing has been done for centuries. "There's just a lot of experience, history, and infrastructure in growing outdoors. Indoor growers will continue to drive down costs, to get better unit economics, and increase efficiency and at an improved carbon footprint."

Then, would government policies or subsidies help to boost the industry? Having worked in several different market segments that depend on grants and subsidies, Vonnie experiences that it has shown to be a bad business model to rely on government input. However, she believes that policies and funding can help in a lot of ways. "For instance giving a disadvantaged industry a jump start, yet I think CEA should be able to stand without it."

"Given it's such a young industry, some people are quick to dismiss it, saying it won't work and we should stop. But looking at outdoor farming, it took us so many years to develop outdoor farms. I wish things could move faster. Some macroeconomic trends like energy costs etc are working against us. However, the industry will continue to grow, and I think it's a vital part of the future of farming as we have to respond to a changing climate."

The growing benefits of AI
AI is another topic that comes into play more frequently throughout the entire supply chain, in particular, generative AI. Generative AI is transforming vertical farming by providing intelligent tools for optimizing various aspects of farm management, from layout and design to crop cultivation and resource utilization. This technology holds great potential to enhance the sustainability and scalability of indoor farming practices, ultimately contributing to more efficient and resilient food production systems."

AI has also brought us personalization at a retail level, allowing retailers to give consumers what they want. "With AI, retailers can understand what products consumers are buying, where and when they are buying and make a personalized offering to meet their needs," Vonnie emphasizes.

For more information:
International Fresh Produce Association (IFPA)
Vonnie Estes, Vice President of Innovation
[email protected]