Cultivating the World’s Growth

Plenty Unlimited Inc.'s facility in Compton, California

Controlled environment agriculture (CEA) describes a variety of systems that use technology to provide optimal growing conditions for crops, from simple hoop houses and traditional greenhouses to fully indoor vertical farms. The most advanced CEA operations are fully automated systems that deliver the exact environmental conditions required by specific plants, including the optimum temperature, humidity, and light levels. CEA operations can grow large amounts of produce while using significantly less water and land and eliminating the need for certain pesticides and fertilizers. VEDP spoke with CEOs from major CEA companies on how technological advancements will affect the future of the agriculture industry in Virginia and beyond.

ARAMA KUKUTAI

San Francisco-based Plenty Unlimited Inc. operates a technology platform that can grow fresh produce almost anywhere in the world year-round with peak-season quality and up to 350 times more yield per acre than conventional farms. Plenty’s proprietary approach is designed to preserve the world’s natural resources, make fresh produce available to all communities, and create resilience in our food systems against weather, pests, and climate impacts. Arama Kukutai was an early investor in Plenty, has been on the company’s Board of Directors since 2016, and was named CEO in 2022.

ALEXANDER OLESEN

Babylon Micro-Farms was founded in 2017 by University of Virginia (UVA) engineering students with the goal of empowering anyone to grow their own fresh, sustainable food. Initially, the founders wanted to design a low-cost micro-farm to provide nutritious produce for food-insecure refugees in the Middle East. Babylon’s modular, vertical micro-farms allow users to grow vegetables two to three times faster, using 90% less water than outdoor farming, powered by a proprietary remote management platform. The company’s clients include IKEA, LinkedIn, MSC Cruises, and Neiman Marcus. Alexander Olesen is a co-founder of Babylon Micro-Farms and has served as CEO since the company’s founding. 

DAVID ROSENBERG

Since 2004, AeroFarms has been a leader in indoor vertical farming, using proprietary aeroponics to optimize growing while using up to 95% less water and zero pesticides. The company utilizes genetics, engineering, food safety, data science, and nutrition to understand plant biology in new ways. Its commercial farms are optimized for year-round production, no matter the season or weather, and grow more than 550 different varieties of leafy greens, berries, tomatoes, and more. David Rosenberg is a co-founder and CEO of AeroFarms.

Virginia Economic Review: What do you see as trends in the controlled environment agriculture sector from a company perspective over the next five to 10 years?  How are things changing?

David Rosenberg (AeroFarms): We see next-generation crops like berries as the newest advancement in the CEA space. Berries are a beloved fruit across the globe, yet they are continuously cited as a pesticide-heavy crop within traditional field farming, landing on the Environmental Working Group’s Dirty Dozen list year after year. AeroFarms has grown numerous varieties of berries in our research and development farms, and we are scaling innovative commercial indoor vertical farming solutions to provide consumers with safe, pesticide-free berries at an excellent value proposition in the coming years.

Alexander Olesen (Babylon): In recent years, the approach was “bigger is better” with indoor farming. That is beginning to change. We are going to see a more balanced approach as businesses weigh factors like crop selection, output, price point, and sustainability/marketing goals. Greenhouses, large vertical farms, container farms, rooftop farms, and smaller on-site business-to-business farms like we’re building will play their respective parts. 

Arama Kukutai (Plenty): The market is mature enough now that substantial growth is likely in the indoor-grown category. We’re seeing a desire for fresh products at an affordable price that are available all year round and indoor agriculture is well positioned to deliver that. We are insulated from the pressures that are impacting supply from the field, like increasingly challenging weather, the reliance on shipping product from one coast to the other, and the challenges over water and water access. By growing regionally, indoor farms can also address consumer and retailer demand to shorten supply chains to reduce food waste and improve food quality.

I think, also, what we are seeing is the beginning of more sophistication of diversity in the sector. Today, the biggest suppliers are all essentially using existing greenhouse technology, and they’re mainly growing tomatoes and leafy greens. There’s a whole portfolio of crops that consumers want that we can grow indoors to provide an increasingly resilient supply — and one that’s also differentiated in terms of quality, because the closer you are to the consumer, the fresher the product is, which is a proxy for nutrition and taste.

Virginia Economic Review: How does your company use data and analytics in its growing operations?

Rosenberg: Our plant scientists monitor millions of data points every harvest. They are constantly reviewing, testing, and improving our growing system using predictive analytics to create a superior, consistent result. We utilize and have developed cutting-edge approaches to machine vision, machine learning, and IoT integration, bringing agriculture into the future at a rapid pace. Our digital controls include an integrated algorithm for every stage of growth as well as our proprietary agSTACK software, allowing for a smart, fully connected farm. We are also in a multi-year partnership with Nokia Bell Labs to expand our joint capabilities in innovative networking, autonomous systems, and integrated machine vision and machine learning technologies to identify and track plant interactions at the most advanced levels.

Virginia Economic Review: What workforce concerns are most pressing to CEA companies? How can states, regions, and localities work to address those issues? 

Rosenberg: There is more competition than ever for an entry-level workforce, and we need to be able to position our work as year-round opportunities to have a positive impact on our food systems. Support at the local level can be a resource with recruiting and basic job skill readiness. Longer-term, CEA companies are partnering with local governments and universities to create a pathway for students who want to go into careers in CEA.

Olesen: To make sure that there are sufficient workers with the right technical and horticultural skills to help grow the industry. We are fortunate in that we have Virginia Tech, Virginia State University, UVA, and many more top schools.

Virginia Economic Review: How do CEA techniques affect the scope and techniques of shipping produce to different states and regions?

Rosenberg: CEA allows us to grow closer to consumers and disintermediate the supply chain by operating as both a grower and packer. Due to this vertical integration, AeroFarms can have a product with a longer shelf life that can travel greater distances and make an impact on the number of communities served. 

Kukutai: The obvious benefit is being able to build the facilities closer to the consumer. In Virginia, we’ll have a one-day shipping radius that touches about 100 million consumers. I can’t speak for others, but for Plenty, we’re typically looking at sites where our produce can ship in no more than a day. That means the product arrives at the distribution center, then the store, in a fresher condition, with long shelf life. That also means, we hope, the consumer will have a better eating experience and there will be less waste.

Alongside that, we’re spending less road miles, less fuel, and less CO2 shipping product around. In Richmond, we can ship up and down the Eastern Seaboard 365 days a year with the same quality of product. 

Olesen: Because the product is grown in trays, vertical farming allows for a high degree of automation in both washing and packaging. Hydroponically grown produce such as lettuce is sometimes packaged with the roots to preserve freshness. Building farms closer to the point of sale or the point of consumption reduces the need for long supply chains and refrigerated trucks.

Virginia Economic Review: What other opportunities exist for CEA companies aside from growing produce themselves? Could proprietary technology be licensed to other companies to create an additional revenue stream?

Olesen: I see opportunities whereby CEA is combined with education and hospitality — farms in food halls or greenhouse/restaurant combinations like De Kas in Amsterdam. The remote management system that Babylon has developed certainly has applications in many other industries — for example, we can now predict when a pump is going to fail by a tell in our graphs, which means we can send a replacement to our customer before the pump stops working. That type of predictive information would be helpful in supporting many organizations and different kinds of on-site vertical farming solutions. 

Kukutai: It depends on the business model of the company in question. Some of the opportunity is adding more production because there’s so much growth left ahead. This is still the early days for the industry. There are opportunities to explore growing other types of products — Plenty farms are highly controlled environments, so we’re doing some exploratory work around that. 

Others who have more of a technology offering can look at licensing models. We certainly are, since we own the key parts of our technology stack. I also think there are opportunities to explore adjacent industry efficiencies. We’re really interested in renewable packaging and new types of renewable energy that can lower the carbon footprint of our production and make it more sustainable.

Virginia Economic Review: When you compare the CEA industry in the United States with other countries, where do we stand? What can we learn from foreign leaders in the field? 

Rosenberg: The United States is home to many of the world’s leading CEA companies that are pioneering new technologies and paving the way in this growing industry. Other countries around the world are increasingly interested in the expanding sector, especially those in desert and arid climates that are looking for food solutions that use less water and less arable land. AeroFarms recently opened the world’s largest indoor vertical farm dedicated to R&D in Abu Dhabi in the United Arab Emirates (UAE). The UAE imports approximately 90% of its country’s food supply, and it has looked to companies like AeroFarms to create new, sustainable food solutions to grow delicious, nutrient-rich food within the country.

Olesen: The Netherlands is the undisputed leader in the field of CEA, and they are very much involved in developing the industry in the United States and many other countries. Encouraging Dutch companies with this expertise to open subsidiaries in Virginia is a very effective way to speed up development in the United States. Encouraging investment in CEA automation, data sharing, and access to affordable electricity are critical to scaling the industry. 

The Middle East is making large investments in CEA, as is Singapore. The countries that are investing most heavily in CEA are those that currently have to import almost all of their vegetables because of climate and the lack of arable land and fresh water. 

Virginia Economic Review: How do location considerations differ for CEA companies versus traditional agricultural operations?

Rosenberg: With controlled environment agriculture, there are more options for site selection. The amount of sun depending on proximity to the equator is still a factor for high-tech greenhouses, but for indoor vertical farms like AeroFarms, we can place a farm anywhere, regardless of the season or weather conditions outside. At AeroFarms, our LED lights mimic the sun and our aeroponic technology acts as the soil and nutrients. We can grow our produce in any indoor space around the globe.

Olesen: CEA should be considered as a toolkit that needs to be adapted to the specific market and climate of each region. CEA operations are typically located close to the customer base to minimize transportation. Urban farms are a good example of this. Babylon’s micro-farms engage people, educate, and promote sustainability and eating healthy, and therefore are very much front-facing and located where the food is consumed in lobbies, dining rooms, and cafeterias.

Virginia Economic Review: From your perspective, what do you think makes Virginia an attractive place for agriculture companies in general and CEA operations in particular?

Rosenberg: For one, Virginia is a hub for supply chain routes that connect the Mid-Atlantic region to the rest of the U.S. AeroFarms’s farm in Danville, Virginia, is capable of serving more than 50 million people within a day’s drive. Additionally, AeroFarms chose Virginia for our newest state-of-the-art vertical farm because of the support from local, regional, and state officials who want to see the CEA industry flourish in Virginia.

Olesen: Virginia has a long traditional farming heritage. The central location on the East Coast, close to large metropolitan areas, the pro-business government, and the number of CEA companies already present set Virginia up to become the leading CEA state. 

Kukutai: We chose Virginia after an extensive search of locations in part because it is in a great location to serve many, many consumers up and down the Eastern Seaboard. There are a lot of distribution centers in the area, including major retailers like our partners at Walmart, which we supply today on the West Coast and plan to supply on the East Coast. 

Virginia also has some excellent infrastructure and a very business-friendly government. Capital goes where it’s needed, but it stays and grows where it’s appreciated. We’ve seen a high degree of appreciation for what we’re trying to do, not just commercially, but as an innovation sector. The support infrastructure is there, the educational institutions are there, the policy environment is there. Our decision to come to Virginia has already proven out and we can’t wait to get our first strawberry farm open there.