"No one has the successful business model for vertical farming yet"

Vertical farming is hot, hip and buzz. For now there is no blueprint for a successful business model. According to Lennart Visser of Total Produce B.V. at least. Part of the solution? "The focus has to be more on the consumer. And technology has to be used to foresee the customers' needs."

"No one has found the successful business model for vertical farming yet," says Lennart Visser, Sustainability & Marketing manager for Total Produce BV at the MVO Nederland site. Vertical farming is about efficiently producing fruit and vegetables: lower water use and less waste in a closed environment, 24 hours per day, 7 days per week and 365 days per year.

According to Visser the world of vertical farming is changing so quickly that they have to wait for a business case which profits all parties concerned. "It's moving at lightning speed. New technologies are constantly being applied, new LED lighting developed, other crops grown and new parties concerned. These developments make creating the successful business case challenging."

MVO Nederland did research into the business model of vertical farm world wide together with Total Produce. View the factsheets of the farms we visited here.

Goldman Sachs and NASA
Visser: "Vertical farming is often funded from a combination of private and public money. The government plays an important role and sees this form of production as a possible solution to feeding the people. In 2050 we will have 9.5 billion people on the planet, how are we going to feed them?

Besides governments and universities, other parties have also shown interest in vertical farming, such as Goldman Sachs and NASA. NASA is currently researching how they can grow lettuce in space to add to the astronauts' menu."

Market driven strategy
Visser has plenty of ideas on how to get this successful business case. "I think that the focus should be more on the buyer of the products. A pull strategy should ensure products that fit the eating habits of a consumer in a certain country. These are very different. This is why creating a consumer profile is essential. What does the consumer want exactly and what do they look for when buying a certain product?

When you have this answer, you can calculate backwards and see how vertical farming can provide this. Then there will be questions like: what products and volumes are desired, when and in what size of packaging? It is important here that a 'green' entrepreneur is pulling the cart and has the right knowledge to push the right buttons and tune demand and supply into each other."

Scale size
Compared to conventionally produced products, the products from vertical farms are quite expensive at the moment. "The 'innovators' in particular by products from a vertical farm through direct sales or small supermarket chains. This group of consumers is prepared to pay a high price due to the freshness and the sustainable character. And mainly because the product has been produced in a reliable and safe environment.

Scale size is important for the future to make the product competitive and available to a larger group of consumers."

Imagine you have a vertical farm where you produce 24 hours per day, 7 days per week. The lettuce that you grow is packaged here and goes straight to the customer. Is there still a place for a company like Total Produce BV?

Visser: "We see an important role for ourselves as chain director. We have to know the customers' needs and accurately turn this into a demand to the producer.

Thanks to vertical farming we will be better able to foresee that customer need. We can better guarantee the supply of products and are less affected by climate swings that can stand in the way of production. We can also supply products that have been produced without pesticides. In vertical farming we can be the ones that steer the production towards what the customer wants."

Source: MVO Nederland