As vertical farming captures imagination with its promise of transforming agriculture, the industry stands at a critical crossroads. The landscape has dramatically shifted through 2023-2024, with several heavily funded players like AeroFarms and Infarm shuttering operations. Yet amid this tumultuous backdrop, certain well-positioned companies are thriving, particularly in Europe, where venture funding is beginning to flow again. This pattern suggests a maturation phase for the industry; billions in venture capital initially fueled rapid expansion, but only those with robust business models and technological advantages are emerging from this period of consolidation.
The vertical farming sector’s current challenges echo the dot-com bubble of the late 1990s, which saw over 450 tech companies go public in 1999 alone. When the bubble burst, nearly half of those companies failed, leading to a staggering $5 trillion loss in market value. However, from that upheaval emerged today’s tech giants that combined innovative technology with sustainable business models. The pressing question now is which vertical farming companies will survive and thrive through this market correction.
A noteworthy example of success amidst the shakeout can be found in New Jersey, where Oishii has transformed a former Budweiser factory into a high-tech agricultural facility called Amatelas Farm. This 237,400-square-foot operation is dedicated to cultivating strawberries, a crop that presents unique challenges compared to more common vertical farming staples like lettuce and herbs. CEO Hiroki Koga’s contrarian approach is informed by lessons from Japan, where he observed a similar boom-and-bust cycle in vertical farming a decade prior. He emphasizes the importance of differentiation in products, noting that the lack of distinctiveness in common crops has hindered both scalability and profitability for many vertical farms.
What sets Amatelas Farm apart is the seamless integration of artificial and biological intelligence. Unlike static warehouses typical of many vertical farms, Oishii’s facility features 250 automated racks that move in choreographed patterns, creating a dynamic environment where robots, humans, and bees collaborate. This mobile architecture embodies a fundamental rethinking of indoor agriculture, with each farming unit mimicking the natural rhythm of day and night. Central to Oishii’s success is an AI system that processes an impressive 60 billion data points annually, allowing for real-time adjustments to growing conditions.
Pollination, a persistent challenge in indoor farming, is notably improved at Oishii. The facility’s bees operate as they would in the wild, achieving pollination rates exceeding 95%, compared to the 60-70% typical in traditional farming. This remarkable efficiency not only enhances fruit quality but also aligns with the company’s goal of profitability despite high initial capital investments.
Initially, Oishii’s strawberries were priced at $50 per package, reflecting the premium nature of their product. However, through relentless operational improvements driven by AI insights, the price has dropped to $10, defying trends in the industry where many companies struggle to achieve cost reductions. This success has paved the way for Oishii to explore other challenging crops, such as the Rubī Tomato, leveraging their AI systems to maintain precise growing conditions.
The implications of Oishii’s achievements extend beyond its own operations, suggesting a potential roadmap for the broader vertical farming industry. As companies like Oishii navigate the complexities of crop cultivation, they may provide valuable insights into sustainable practices and operational efficiencies that can benefit the entire sector. The current consolidation phase could ultimately lead to a stronger, more resilient industry equipped to meet the challenges of modern agriculture.
