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