Season 6, Post 18: The rise of the vertical farm

There are site visits and then there are site visits. Your author has been privileged enough to tour semiconductor clean rooms and salmon farms (both in the pre-Blog era) as well as see offshore wind turbines at close hand and witness glass turned into solar panels. However, little can prepare a visitor for the experience of a vertical farm. There was a feeling of awe and beauty, of calm and efficiency. The lighting and temperature conditions helped too. More importantly, vertical farms help address the crucial future trend of security of food supply, a theme we have discussed previously and expect only to grow in importance.

Your author’s host for a morning last week was Jones Food Company. Located in rural Gloucestershire, the JFC2 facility (JFC1 is in northern England) looks inauspicious from the outside, a former forge converted into a 65,000 square foot ‘big box’-style warehouse. Inside, an almost fully automated and proprietary system processes around 500 trays of leafy green salads and fresh herbs daily. This translates into roughly 10,000kg a week of finished product, which is then sold to major food retailers and wholesalers around the country. We saw the varied stages of the process, from germination through to packaging. Inside the main grow room, products develop on trays stacked up to 15 storeys high under consistent lighting and temperature conditions that are constantly reviewed and optimised.

There is no doubting the ambition behind the team at Jones. Beyond its current two assets, plans are already underway for a third and management believes that their footprint could expand to around ten vertical farms in the UK. Moreover, the country could theoretically support a markedly large number of such farms (perhaps more than 90, according to Jones). The rationale is simple, “to replace food imports and give reliability of supply chains to retailers”, in the words of the group’s Finance Director. Beyond the UK, Jones believes that there is a strong logic for the vertical farm business model in geographies as diverse as Scandinavia and the Middle East.

Vertical farming, we were reminded, is still a very young industry with less than ten years of history (we first wrote on the topic in 2019). As a result, “there is a lot more we can do”, according to Jones. Future farms could see further automation and efficiency gains with an increasing emphasis on remote monitoring and data analytics. Locating farms close to renewable energy sources (as well as deploying rooftop solar) would also help improve returns on investment as well as sustainability credentials. The products your author tasted on site at JFC2 showed remarkable freshness and vitality. Other crops, such as strawberries or tomatoes could follow, should the economics be sufficiently compelling. For now, the only way forward for the vertical farm sector seems to be up.

Please note that the Future Trends Blog not be publishing next week – your author will be on a wine tour in Spain –  and will return in the middle of May

2 May 2024

The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

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Alex Gunz, Fund Manager

Photos by the author