1. Up Up and Away! The Economics of Vertical Farming
Chirantan Banerjee, Lucie Adenäuer and Stephan Rickert

2. Content Global situation Design of the Vertical Farm Facts and Figures
Global situation
Design of the Vertical Farm
Facts and Figures
SWOT Analysis
Market Analysis
Outlook

3. Global situation: where do we stand?
We need local food production technologies
38% of all land is used for agriculture % arable
1 billion still undernourished thereof 42% in India and China
In rich countries, people spend 10% of their income on food, this is 50% in case of poor countries
FOOD IS NOT BEING PRODUCED WHERE REQUIRED AND SUPPLY CHAIN IS NOT WORKING
We need technology to adapt to consumer choice
Striking difference between rich and poor consumer needs
Increasing demand for especially protein rich diets
Rich consumers want choice of organic food,
Poor want cheap and nutritious food
Transition economies are witnessing increased demand for mineral, vitamin and protein rich diets
In 1985, the Chinese ate 20 kg meat a year, in 2000 this became 40 kg, in 2030 it will be 80 kg per head
THIS IS EXPECTED OF ALL COUNTRIES ON THE DEVELOPMENT BANDWAGON

4. Population Trends Few words on production need
Few words on production need
9 billion to feed by 2050
100% more food required
More protein, vitamin and mineral rich food at lower and stable costs
Source: Population Division of the Department of Economic and Social Aairs of the United Nations Secretariat. World Urbanization Prospects: The 2007 Revision.

5. How do we reach the missing 70% ?
Possible Solutions
We need to produce 100% more food!
2% increase of agricultural land expected until % more food
Another 10% is expected from increased cropping intensity
Problem of land use for fuel
How do we reach the missing 70% ?
13% more land will be converted for agricultural use in developing countries by 2040
The dilemma of land use for food or fuel looms even larger
Will the rest 70% come through technology induced increases in productivity?
ADVANCES IN GENETICS, NUTRITION, DISEASE AND PEST CONTROL AND LIVESTOCK MANAGEMENT ENABLED A PHENOMENAL GROWTH IN THE PAST
THE NEXT BIG QUESTION IS:
IS VERTICAL FARMING THE NEXT CHAPTER OF A LONG DUE GREEN REVOLUTION?
IS IT TECHNOLOGICALLY AND ECONOMICALLY PRAGMATIC ENOUGH TO EVEN BE A CANDIDATE THEREOF?
From US has managed to increase
corn yield from bushels
Meat production by 88%
Eggs and poultry by 411%
TFP by 158 %
While resource use increased by only 3.6%

6. Design of Vertical Farms
Vertical farming is a system of commercial farming
Plants are artificially stacked vertically above each other
Plants, animals, fungi and other life forms are cultivated for food, fuel
Through Controlled Environment Agriculture

7. Design of Vertical Farms
37 Floors, m high
0.25 ha footprint, 0.16 ha built-up area
Equivalent to 9.27 ha with 68 ha due to multiple harvest
Building cost mill € with 90 mill € of equipments
Needs 80 mill litres of water
10,000 l nutrient solution
Sequesters 868 tons of CO2 per year and more…

8. Design of Vertical Farms
37 Floors, m high
0.25 ha footprint, 0.16 ha built-up area
Equivalent to 9.27 ha with 68 ha due to multiple harvest
Building cost mill € with 90 mill € of equipments
Needs 80 mill litres of water
10,000 l nutrient solution
Sequesters 868 tons of CO2 per year and more…

9. Design of Vertical Farms
37 Floors, m high
0.25 ha footprint, 0.16 ha built-up area
Equivalent to 9.27 ha with 68 ha due to multiple harvest
Building cost mill € with 90 mill € of equipments
Needs 80 mill litres of water
10,000 l nutrient solution
Sequesters 868 tons of CO2 per year and more…

10. Design of Vertical Farms
37 Floors, m high
0.25 ha footprint, 0.16 ha built-up area
Equivalent to 9.27 ha with 68 ha due to multiple harvest
Building cost mill € with 90 mill € of equipments
Needs 80 mill litres of water
10,000 l nutrient solution
Sequesters 868 tons of CO2 per year and more…

11. Design of Vertical Farms
37 Floors, m high
0.25 ha footprint, 0.16 ha built-up area
Equivalent to 9.27 ha with 68 ha due to multiple harvest
Building cost mill € with 90 mill € of equipments
Needs 80 mill litres of water
10,000 l nutrient solution
Sequesters 868 tons of CO2 per year and more…

12. Design of Vertical Farms
37 Floors, m high
0.25 ha footprint, 0.16 ha built-up area
Equivalent to 9.27 ha with 68 ha due to multiple harvest
Building cost mill € with 90 mill € of equipments
Needs 80 mill litres of water
10,000 l nutrient solution
Sequesters 868 tons of CO2 per year and more…

13. Facts and Figures Requires 3.5 GWh power for 5.3 mill €
Requires 3.5 GWh power for 5.3 mill €
Seeds worth € 44,000

14. Facts and Figures

15. Facts and Figures Probability distribution of costs per kg biomass
Cost Scenarios
Building Parameters
with Salvage Value
without Salvage Value
Production Parameters
Mechanised
Manual
Production technology
Aeroponics
Elevated CO2
Normal
Fixed Cost Margin
High 30%
Medium 20%
Low 10%
Variable Cost Margin
Probability distribution of costs per kg biomass
Produces 3,573 tons fruits and vegetables and 137 ton Tilapia fillet
Which costs between € 3.17 and € 6.32
+ 2,443 ton manure and 3 mill litre bio-gas
Cost of producing edible biomass is around 3.17 €/kg
Worst case: 6.32 €/kg

16. SWOT Analysis INTERNAL ANALYSIS STRENGTHS WEAKNESSES
INTERNAL ANALYSIS
STRENGTHS
WEAKNESSES
Industrialisation of Agriculture
Space
Independence from External Threats
Light
Energy generation
Water
Environment
Energy Balance
EXTERNAL ANALYSIS
OPPORTUNITIES
THREATS
Consumer preference
Sceptisism
Climate change & Environmental concerns
Existing patents
Race for food soveriegnty
Limited market
Renewable Energy
Price and subsidies

17. Market Potential Criteria: Population above 5 million
Criteria:
Population above 5 million
Per Capita income above $ 20,000 p.a.
Short Term Market Potential
Long Term Market Potential
Market:
21 megacities
7 desert nations
6 Taiga nations
N = 47

18. Outlook More Ideas? Economic research is required to ascertain:
Economic research is required to ascertain:
The energy balance
The cost of production
Linear programming of optimal cultivation strategy for cost minimisation
The cost benefit analysis
Consumer studies
A comprehensive market analysis with identification of potential candidates
More Ideas?

19. Chirantan Banerjee, Lucie Adenäuer and Stephan Rickert
Thank You!
Chirantan Banerjee, Lucie Adenäuer and Stephan Rickert
Institute for Food and Resource Economics,
University of Bonn, Germany