Vertical Farming vs. Greenhouse Farming

Growcer - Vertical Farm vs. Greenhouse
When starting a farming operation, the first choice you face is what type of farm to start. The options are many: indoor vs. outdoor; arable vs pastoral; intensive vs. extensive. For farmers going the indoor route, one of the biggest decisions is between vertical farms and greenhouses. Both vertical farms and greenhouses operate indoors, which means they enjoy benefits like climate control, year-round growing, and chemical-free pest control.

However, there are as many differences between these types of farms as there are similarities. Each one serves a unique purpose; but, they can be compared in terms of efficiency. For a long time, it was thought that greenhouses were more efficient and profitable than vertical farms, due to the lack of a need for artificial lighting. But recently, a study out of Quebec showed that vertical farms enjoy a number of benefits over greenhouses–especially if the farm is operating for commercial purposes.

To understand what those benefits are, we first need to understand the reasons for farming indoors in the first place.

 

Why grow indoors?

For most of human history, farming has been an outdoor operation. Plants need sunlight to live, and soil to get water and nutrients from, so it’s no surprise that the traditional farm is an outdoor farm.

But as agriculture developed, farmers gradually realized that there were benefits to farming indoors. For one, it allowed certain crops to be grown all year long. For another, it kept pesticides at bay. And finally, indoor farming in ‘hot’ greenhouses could cause plants to grow faster than they would outdoors. By the late Roman Empire, greenhouse-like methods were already being used for these and other reasons.

In the 1800s, Greenhouses hit their stride, as European farmers started using them to grow tropical plants that otherwise wouldn’t grow naturally on their continent. This fact illustrates the main benefit of indoor farming: it provides the ability to grow crops year round, in a controlled environment, free from pests. 

if you want it a bit shorter, this whole section can easily be cut

The differences between vertical farms and greenhouses

Although vertical farms and greenhouses are both indoor facilities, the similarities end there. First, greenhouses rely on sunlight, while vertical farms rely on artificial light. Second, vertical farms have plants stacked in layers, while greenhouses have them arranged on one horizontal plane. Third, vertical farms can operate in urban areas, while greenhouses require a large amount of space and are therefore best suited for rural or suburban environments.

Many people have argued that, because vertical farms require artificial light, they are necessarily less efficient than greenhouses. It is true that artificial light is a major cost at vertical farms. However, the paper “Comparing a Greenhouse to a Vertical Farm in Quebec” showed that growing lettuce in a vertical farm can actually be more profitable than growing it in a greenhouse, owing to two factors: increased yield per square meter, and centralized distribution.

"When starting a farming operation, the first choice you face is what type of farm to start. The options are many: indoor vs. outdoor; arable vs pastoral; intensive vs. extensive"

Yield

The main advantage that vertical farms have over greenhouses is greater yield per square meter. Although vertical farms have higher light and heat costs, they have the benefit of more produce grown per unit of soil. This means that even though vertical farms cost more to operate, they produce more crops, with the end result being higher revenue.

The policy paper mentioned proves this through the results of a simulation, which showed that lettuce grown in a vertical farm has a slightly higher yield than that grown in a greenhouse.

Distribution

One major advantage of vertical farms is centralized distribution. Because these farms can be run in warehouses or almost any kind of building, they can be located in urban areas. This puts them right at the heart of major distribution hubs, in the middle of a big local customer base. So, compared to a rural greenhouse, a vertical farm has less distance to travel to get to customers, and when it does have to ship over a distance, it has better transportation options.

 

As a result, vertical farm crops can be sold more quickly and at higher margins than greenhouse crops. According to the Quebec paper, this creates a perception of freshness that helps the vertical farm produce sell quicker than the greenhouse equivalent.

Gross profits

As a result of centralized distribution, vertical farms may enjoy higher gross profits than greenhouses. The Quebec paper showed this to be the case specifically for lettuce grown in the Quebec area. Although the wholesale price of lettuce produced at greenhouses and vertical farms is usually the same, the vertical farm’s lettuce may enjoy a premium when sold in its local market due to the perception of freshness. Additionally, because the vertical farm is located in an urban area, it can ship more fresh produce to more customers, without high transportation costs.

A second reason for the higher gross profits at vertical farms is winter heating costs. It’s almost taken as a gospel truth that greenhouses use more electricity than urban farms. But that’s not necessarily the case. It really depends on the specific farm(s) in question. As the Quebec experiment showed, in areas that get extremely cold in the winter, Greenhouses can be very expensive to heat. Depending on how rural their location is, they may need to be heated by a generator; and depending on their size, they may consume quite a bit of electricity. So while the vertical farm needs to be heated year round, the greenhouse can actually be more expensive to heat in the crucial winter season.

Growth potential

One area where vertical farms really shine is the potential for growth. While sales from greenhouses are growing at 8% year-over-year, sales from vertical farms are growing at a full 30% annually. That means that vertical farms are growing more than three times as quickly as greenhouses. While part of this can be explained by the fact that vertical farms are newer than greenhouses, it also has to do with centralized distribution. Since vertical farms have access to urban distribution centers, they can get more product out, more quickly, than greenhouses can. The greater yield per square metre of vertical farm space also contributes to this fast growth.

Putting it all together

Vertical farming is the cutting edge of agriculture. Offering the ability to grow more crops, in a controlled environment, inside major distributions hubs (i.e. cities), it takes advantage of economies of scale in a way no other farming operation can. In the past, many critics have cited lighting costs as a stumbling block to profitability for vertical farms. But as the Quebec research paper showed, vertical farming can actually be more profitable than a conventional greenhouse operation. Especially when situated in major urban centers, and taking full advantage of the distribution benefits that come with that, vertical farms can be highly profitable. And when you add the benefits of automated labor into the equation, the benefits can be greater still.

  • We see VF as the evolution of the greenhouseWe see VF as the evolution of the greenhouse
  • Latest developments in LED (less consumption) and solar energy (higher efficiency) will reduce the biggest remaining cost factor (energy) during the next years
  • Automation will increase the benefits of a VF even further

Vertical farming is the cutting edge of agriculture. Offering the ability to grow more crops, in a controlled environment, inside major distributions hubs (i.e. cities), it takes advantage of economies of scale in a way no other farming operation can. In the past, many critics have cited lighting costs as a stumbling block to profitability for vertical farms. But as the Quebec research paper showed, vertical farming can actually be more profitable than a conventional greenhouse operation. Especially when situated in major urban centers, and taking full advantage of the distribution benefits that come with that, vertical farms can be highly profitable. And when you add the benefits of automated labor into the equation, the benefits can be greater still.

  • We see VF as the evolution of the greenhouseWe see VF as the evolution of the greenhouse
  • Latest developments in LED (less consumption) and solar energy (higher efficiency) will reduce the biggest remaining cost factor (energy) during the next years
  • Automation will increase the benefits of a VF even further

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