According to the FAO, the agrifood industry is “the entire range of actors and their interlinked value-adding activities that are engaged in:
- The production of food products
- The production of non-food agricultural products
- The storage, aggregation, post-harvest handling, transportation, processing, distribution, marketing, disposal and consumption of all food products including those of non-agricultural origin.”
For indoor farms, some may be involved in just one part of the activities mentioned above, or perhaps multiple. Either way, identifying potential drivers that could impact the entire agrifood industry will allow an indoor farm to strategize for their year ahead and develop a resiliency plan for their supply chain. Figure 1.1 below by FAO breaks down a typical agrifood system and the surrounding systems that impact the success of all of the industry players’ activities.
The purpose of this article is to identify a few of the ancillary drivers that have been indicated in the left side of the image below.
Driver 11: Public investment
Whether it’s the US Department of Agriculture’s $2.8 billion investment plan for 70 selected projects under the Partnerships for Climate-Smart Commodities plan, or the United Kingdom’s third round of the Farming Futures Research and Development Fund which seeks to boost agricultural productivity and sustainable farming practises through automation and robotic technologies, we can see a very clear building of momentum towards agri-financing. We expect this to continue, despite the current economic instabilities.
Where this gets interesting for indoor farms is that as agri financing grows, investors will get more and more savvy about what technology and/or business model works, and what may not necessarily stand the test of time. In other words, hypes, greenwashing, or mere trendy ideas may not get an indoor farm very far anymore. In fact, many indoor farms that we work with are preparing for much more challenging fundraising going into 2023 – and rightfully so. As Agritecture noted, “In the midst of this global economic downturn, a correction has come, and we’ve now witnessed multiple CEA farm shutdowns, and several others lay off significant staff numbers in recent weeks”. If there’s a time to let go of old practices in order to build a better business, therefore being able to access investments that can help an indoor farm, it’s now. For us, we see the solution in closed-loop practices.
Driver 14: Consumption and nutrition patterns
We have seen that consumers continue to push forward the demand for whole foods that are clean, healthy, and as free of chemicals as possible. We believe that this will continue to hold true, especially since “consumers talked about health 12 times more than sustainability when eating plant-based foods, and choose plant-based options for health reasons 16 times more often than the environment. Nevertheless, the Tastewise study showed that significant interest is building in sustainable ingredients produced using practices such as regenerative farming.
For indoor farms, many players have used a range of terms and slogans to indicate that their crops are as healthy of a choice as possible, whether it’s being “pesticide-free”, or “farmed regeneratively”, or even “greenhouse grown”. What we look forward to seeing is how marketing strategies for indoor farms will begin to evolve as a way to differentiate themselves from others, sans greenwashing.
Driver 15: Cross-country interdependences
We are seeing a consistent trend among countries that are taking very serious measures to build food production sufficiency. A series of geopolitical events have made it clear that reliance on the supply of major crops and agriculture inputs such as fertilizers have threatened food security. Governments have opened up their focus to not just embracing agriculture technology, but also the reduction of food waste. By using technology that is IoT-enabled, agrifood players are able to trace their food production as well as inputs, which then reduces food loss in the supply chain.
This presents an opportune time for indoor farms to explore what technology may make sense for their operations versus what may not be the best fit. This will require staying ontop of (1) the agriculture technology that countries they’re operating in are embracing as a way to reduce food insecurity and (2) what technology is being rolled out and which ones remain unproven, or have failed. Also, having a very clear idea of which technology the companies in an indoor farm’s supply chain may be employing will be important.
As indoor farms continue to monitor the many drivers of the agrifood industry, choosing the right partners in the supply chain can make the act of maneuvering through these opportunities as well as challenges much easier, without compromising on being a proponent of climate-smart agriculture. If there’s any way for us to support your indoor farm, whether it’s through our organic hydroponic nutrient, our fully compostable grow media, or our offsite food waste recovery technology, feel free to reach out to us here.