Up Up and Away!
The Economics of Vertical
Farming
Chirantan Banerjee, Lucie Adenäuer and
Stephan Rickert
Content
c.banerjee@ilr.uni-bonn.de
Global situation
Design of the Vertical Farm
Facts and Figures
SWOT Analysis
Market Analysis
Outlook
2
Global situation: where do we stand?
c.banerjee@ilr.uni-bonn.de
We need local food production technologies
38% of all land is used for agriculture
1 billion still undernourished
11% arable
thereof 42% in India and China
In rich countries, people spend 10% of their income on food, this is 50% in
case of poor countries
FOOD IS NOT BEING PRODUCED WHERE REQUIRED AND SUPPLY CHAIN IS
NOT WORKING
We need technology to adapt to consumer choice
Striking difference between rich and poor consumer needs
Increasing demand for especially protein rich diets
THIS IS EXPECTED OF ALL COUNTRIES ON THE DEVELOPMENT BANDWAGON
3
Population Trends
c.banerjee@ilr.uni-bonn.de
10
9
8
7
Total population
(thousands)
Rural population
(thousands)
Urban population
(thousands)
Millions
6
5
4
3
2
1
0
1940
4
1960
1980
2000
2020
2040
2060
Source: Population Division of the Department of Economic and Social Aairs of the United Nations Secretariat. World Urbanization
Prospects: The 2007 Revision.
Possible Solutions
c.banerjee@ilr.uni-bonn.de
We need to produce 100% more food!
2% increase of agricultural land expected until 2040
20% more food
Another 10% is expected from increased cropping intensity
Problem of land use for fuel
How do we reach the missing 70% ?
5
Design of Vertical Farms
c.banerjee@ilr.uni-bonn.de
6
Vertical farming is a system
of commercial farming
Plants are artificially
stacked vertically
above each other
Plants, animals, fungi and
other life forms are
cultivated for food, fuel
Through Controlled
Environment
Agriculture
Design of Vertical Farms
7
Design of Vertical Farms
7
Design of Vertical Farms
7
Design of Vertical Farms
7
Design of Vertical Farms
7
Design of Vertical Farms
7
Facts and Figures
c.banerjee@ilr.uni-bonn.de
Personnel
Power Demand
Plant Seeds
Water (recycled)
Nutrients
Fish Food
13
Facts and Figures
c.banerjee@ilr.uni-bonn.de
14
Facts and Figures
c.banerjee@ilr.uni-bonn.de
Building
Parameters
Cost Scenarios
Production
Parameters
with Salvage
Value
without Salvage
Value
Mechanised
Probability distribution of costs per kg biomass
Manual
Aeroponics
Production
technology
Elevated CO2
Normal
High 30%
Fixed Cost Margin
Medium 20%
Low 10%
High 30%
Variable Cost
Margin
Medium 20%
Low 10%
Cost of producing edible biomass is around
3.17 €/kg
Worst case: 6.32 €/kg
15
SWOT Analysis
c.banerjee@ilr.uni-bonn.de
INTERNAL ANALYSIS
STRENGTHS
WEAKNESSES
Industrialisation of Agriculture
Space
Independence from External Threats
Light
Energy generation
Water
Environment
Energy Balance
EXTERNAL ANALYSIS
OPPORTUNITIES
Consumer preference
Sceptisism
Climate change & Environmental concerns
Existing patents
Race for food soveriegnty
Limited market
Renewable Energy
16
THREATS
Price and subsidies
Market Potential
c.banerjee@ilr.uni-bonn.de
Criteria:
Population above 5 million
Per Capita income above $ 20,000 p.a.
Short Term Market Potential
Long Term Market Potential
DESERTS
DESERTS
TAIGA
TAIGA
N = 47
17
MEGACITIES
N = 2900
MEGACITIES
Outlook
c.banerjee@ilr.uni-bonn.de
Economic research is required to ascertain:
The energy balance
The cost of production
Linear programming of optimal cultivation strategy for cost minimisation
The cost benefit analysis
Consumer studies
A comprehensive market analysis with identification of potential candidates
More Ideas?
18
THANK YOU!
http://www.ilr.uni-bonn.de/pu/publication/Publikationen/vertical_farming.pdf
CHIRANTAN BANERJEE, LUCIE ADENÄUER AND STEPHAN RICKERT
Institute for Food and Resource Economics,
University of Bonn, Germany
c.banerjee@ilr.uni-bonn.de
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