There is quite a bit of buzz among investors, environmental activists, and technology enthusiasts about vertical agriculture. In a world with an increasing population and ever-growing demands for food, it only makes sense to think about the next innovation to farming. Vertical farming has got many people excited, and for good reason. Current vertical farming is valued at around $5.6 billion, mostly for premium organic products. However, serious doubts remain about it, and some worry that it will never be economically viable at scale.

Farming has undergone constant innovation since the industrial revolution, after which the world population exploded. Today, American farmers are more efficient than ever. In the United States, crop yields for corn, potatoes, rice, and soybeans have more than doubled since just 1961, while barley and wheat yields have nearly doubled. The United States is the world’s biggest exporter of food due to efficient farming infrastructure and ample natural space. That space has historically and always been lateral – taking up land mass on farms, fields, and acreage.

Vertical farming is anticipated as the next step in farming evolution. By farming indoors on vertical trays in a controlled environment, crop yield can be maximized while eliminating certain losses. Water use and pest losses can be reduced to virtually nothing, and weather will have no effect on the health of the crop. Controlling the conditions of the environment can produce a perfect yield, providing far more food for the space used than any traditional farming method. Advocates of vertical farming also point out that transportation costs would be significantly reduced if farming products can be produced in cities, close to where they are needed. 

However, vertical agriculture has some serious limitations. It has enormous initial costs, having a high technological dependency. The cost for computers and climate controls for a relatively small amount of farmland is tricky, and the whole operation will have massive maintenance costs. Personnel to maintain the farms will be expensive, but the most expensive part of vertical farming is the energy usage. Employing LED lights to grow crops is a great way to avoid changes in weather and improve efficiency by growing faster, but it also fails to utilize the most important (and free) energy source: the sun. It’s true that traditional farmers are often at the mercy of bad weather, but they also receive massive amounts of energy from the sun with no utility bill. 

Other reported benefits of vertical farming also come with tradeoffs. While some vertical farm companies claim that it will “mitigate the effects of climate change” and is “eco-friendly,” the reliance upon electricity generated partially from fossil fuel sources means that open-field farming is much more emission friendly. Any land use savings made from vertical farming may be mitigated by renewable energy sources’ land footprint.

Despite plenty of hype and investment over the past few years, many vertical farming companies are struggling. Variable and high-costs of electricity effectively eliminate any profits that could be made, and products that do make it to the shelves are usually prohibitively expensive for most people. The vertical farming industry is projected to grow over the coming years, driven in large part by demand for premium organic food. Most current products are not priced to be competitive with normal farming, such as the $60 Omakase strawberries in a premium New York City supermarket. 

In most places, vertical farming simply isn’t able to compete. Without extremely low energy prices, it will never be a major source of food. The U.S. has no food production insecurity and likely never will. In the age of globalization, it seems unlikely that vertical farming will ever achieve a market share or sizable foothold in the wider food market, as there will always be somewhere else where open-field farming can be cheaper. However, that doesn’t mean there is no use for vertical farming. Many have argued that vertical farming can help provide food security during times of supply chain issues or international conflict. The war in Ukraine, for example, has affected global supply chains of grains and cereals, which is dependent upon eastern Europe. 

Vertical farms show a lot of promise, and the ideas behind them are innovative and purposeful, but they are not ready yet. Vertical farming is in its infancy, and without cheap energy and more innovation, it may never outgrow its steep tradeoffs. Still, vertical farming is on the cutting edge of technology, and the work being done can also help improve traditional open-field farming around the world. 


Written by Owen Rogers, Policy Intern

The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.