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

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Presentation on theme: "Up Up and Away! The Economics of Vertical Farming Chirantan Banerjee, Lucie Adenäuer and Stephan Rickert."— Presentation transcript:

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  SWOT Analysis  Market Analysis  Outlook 2 c.banerjee@ilr.uni-bonn.de

3 Global situation: where do we stand? 3  We need local food production technologies  38% of all land is used for agriculture 11% 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 THIS IS EXPECTED OF ALL COUNTRIES ON THE DEVELOPMENT BANDWAGON

4 c.banerjee@ilr.uni-bonn.de 4 Population Trends Source: Population Division of the Department of Economic and Social Aairs of the United Nations Secretariat. World Urbanization Prospects: The 2007 Revision.

5 c.banerjee@ilr.uni-bonn.de Possible Solutions 5  We need to produce 100% more food!  2% increase of agricultural land expected until 2040 20% more food  Another 10% is expected from increased cropping intensity  Problem of land use for fuel How do we reach the missing 70% ?

6 c.banerjee@ilr.uni-bonn.de 6  Vertical farming is a system of commercial farming  Plants, animals, fungi and other life forms are cultivated for food, fuel  Plants are artificially stacked vertically above each other  Through Controlled Environment Agriculture Design of Vertical Farms

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13 c.banerjee@ilr.uni-bonn.de 13 Facts and Figures

14 c.banerjee@ilr.uni-bonn.de 14 Facts and Figures

15 c.banerjee@ilr.uni-bonn.de 15 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 High 30% Medium 20% Low 10% Facts and Figures  Cost of producing edible biomass is around 3.17 €/kg  Worst case: 6.32 €/kg Probability distribution of costs per kg biomass

16 c.banerjee@ilr.uni-bonn.de 16 INTERNAL ANALYSIS STRENGTHSWEAKNESSES Industrialisation of AgricultureSpace Independence from External ThreatsLight Energy generationWater EnvironmentEnergy Balance EXTERNAL ANALYSIS OPPORTUNITIESTHREATS Consumer preferenceSceptisism Climate change & Environmental concernsExisting patents Race for food soveriegntyLimited market Renewable EnergyPrice and subsidies SWOT Analysis

17 c.banerjee@ilr.uni-bonn.de 17  Criteria:  Population above 5 million  Per Capita income above $ 20,000 p.a. Market Potential Short Term Market Potential Long Term Market Potential N = 47

18 c.banerjee@ilr.uni-bonn.de 18  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 Outlook More Ideas?

19 http://www.ilr.uni-bonn.de/pu/publication/Publikationen/vertical_farming.pdf C HIRANTAN B ANERJEE, L UCIE A DENÄUER AND S TEPHAN R ICKERT Institute for Food and Resource Economics, University of Bonn, Germany c.banerjee@ilr.uni-bonn.de T HANK Y OU !


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