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Will Urban Agriculture Last?

Or is it just a passing, rather unprofitable trend?

Will Urban Agriculture Last?

Researchers found that roughly two-thirds of farmers weren't making a living.

Images: Gotham Greens

Urban farming keeps growing: it's now possible to buy your hyper-local lettuce from flatpack shipping container farms, hydroponic kits attached to unused wall space, old-fashioned community gardens, and state-of-the-art vertical farms run by robots. But a new study raises a question—is growing food in cities a passing trend, or is it likely to last?

In a survey of 370 urban farmers working in the U.S., researchers found that roughly two-thirds of farmers weren't making a living. Only a third of the urban farms were operating as nonprofits.

But the survey also demonstrated the huge variety between what's considered an urban farm—and it's likely that high-tech vertical farms, at one end of the spectrum, may end up much more financially successful than smaller counterparts. When the survey was conducted in 2012, vertical indoor farming was at the early stages. Now, companies like AeroFarms and FarmedHere plan to open farms across the country. Gotham Greens, after a few years of successful operation in New York, opened the world's largest rooftop greenhouse in Chicago.

"I think that the bifurcation—i.e., that between large, commercial, hydroponic operations and the smaller, soil based operations—will continue," says Carolyn Dimitri, lead author and associate professor of food studies at New York University. "Growing high-value crops such as baby leafy greens is a great application of hydroponic farming: these crops are profitable because they high value, and have short growing cycle and are not space consuming. There will be more of these large scale farms, but I suspect they will remain contained to leafy greens and located near dense urban population."

In part, that's due to simply economies of scale. "Larger doesn't always mean better, but it helps with the financial viability if you can cross a certain threshold and get a certain amount of scale," says Viraj Puri, co-founder of Gotham Greens. "Obviously that's going to be challenging in cities given sort of competing real estate. From a pure play profitability, scalability standpoint, I think the technologically advanced urban farms probably have a higher likelihood of success."

For an outdoor garden, especially in colder climates, it may be possible to grow only a couple of crops of vegetables in a year; indoor farms like Gotham Greens can grow year-round and use automated systems that also dramatically improve yields. Aerofarms, which will open a 70,000-square-foot vertical farm in an old warehouse in Newark this spring, can grow 75 times as much produce as a traditional farm on the same footprint. "We are cost competitive today with traditional field farmers," says Marc Oshima, co-founder and chief marketing officer of Aerofarms. Higher tech farms can also attract the investment needed to hire needed staff and set up sophisticated logistics and marketing programs.

"We can meet the needs of a large institutional customer that will buy hundreds of pallets a week of product, versus some of these small urban farms may be running through a CSA model or hand delivering to local restaurants," says Puri. "While that's all very important, all part of the urban agriculture farming fabric ... there are some limits to scalability using that model."

Still, even indoor urban farming isn't a fully proven model yet. "It's very capital intensive," he says. "There's not a lot of groups doing what we're doing that have been successful. So it can be challenging in its own ways. Running any kind of commercial scale operation, let alone a farming operation, is going to be challenging. I think it's a very exciting concept, but I don't know if it's a strictly proven, fleshed-out idea."

For smaller community garden-style farms to last over the long term, Dimitri suggests that more should consider becoming nonprofits. "The smaller farms will struggle, similar to their rural counterparts," she says. "The nonprofit model is helpful in that it allows farms to secure grant funding, and allows them to use interns and volunteers. However, raising funds is hard work as well, and the current interest in funding urban farms may not last forever."

Puri is more optimistic, saying that smaller urban farms—like those focused on education—also play an important role and are part of a longer-term shift in how people think about food. In general, he thinks urban farming will last. "I don't necessarily think it's a passing fad," he says. "I see urban farming as one part of a much broader movement that's taking place across the country, where people are interested in transparency, how food is produced. Urban residents want to connect with how food is produced."

"Personally, I am not convinced that farming is the best use of urban land," says Dimitri. "However, I think urban farms similar to Gotham Greens and Aerofarms will probably be a permanent part of the urban food landscape."

Investors seem to agree: Aerofarms, for example, recently raised $20 million to help it continue to grow, out of $70 million so far, from major players like Goldman Sachs and Prudential.

The larger world of agriculture is beginning to see urban farming differently as well. In February, Aerofarms presented at the annual USDA Outlook meeting. "It was the first time that urban farming was integrated into the program, signifying that we are at a major tipping point in how our industry is perceived and received," says Oshima.

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