Why vertical farming needs to grow up

I am delighted to write the first of what will hopefully become many columns for Produce Grower magazine. I am writing for you, the grower, and your stakeholders. The focus for this space will be on the growth and development of the vertical farming industry as a relatively new means of growing fresh produce.

In this Vertical Thinking column, I will identify several critical success factors that every indoor vertical farm must manage effectively to not only survive but to thrive, i.e., to be viable and go from good to great. For more on this concept, I recommend “Good to Great: Why Some Companies Make the Leap and Other Don’t” by Jim Collins.

To clarify, vertical farming is a means of growing food indoors under controlled environmental conditions. Vertical farms differ from greenhouses in that the walls of the facility are opaque, artificial light (e.g., LEDs) is the primary source of light and plants can be grown on multiple levels, thus maximizing the use of space. Both greenhouses and vertical farms support yield optimization to varying degrees. Vertical farms also provide the greatest barrier to outside pests.

A modern, high-tech, indoor vertical farm carefully monitors temperature, humidity, air flow, PAR light levels and CO₂ within the facility. If the plants are grown using hydroponic methods, the water will be monitored for pH, dissolved oxygen and nutrient concentration.

Plants grown in soil may be checked for temperature, oxygen and moisture in the root zone. The plant canopy will also be monitored for light intensity in the PAR region, the total photons received per day (e.g., the daily light integral, or DLI), temperature and signs of disease or nutrient deficiencies. In short, high-tech vertical farms are data-intensive “plant factories” — a concept first introduced by Dr. Toyoki Kozai and his colleagues — that run 24 hours a day, 365 days a year.

While vertical farming holds great promise, it has not been without its failures. Even a casual reader will have noticed that several indoor farming companies have gone out of business. In March 2023, I compiled a list of the top nine vertical farms. Just two years later, seven of the nine were either out of business or had filed for bankruptcy. Most recently, in April 2025, Freight Farms, a company that supplied shipping container farms, shut its doors.

There are many reasons for these failures, but in the end, it comes down to business fundamentals. We will explore some key factors in subsequent columns. The business must be profitable at both the unit economic level (e.g., production facility) as well as the organizational level, which includes overhead (i.e., SG&A). The farm must generate sufficient cash so that the owners can pay themselves and their employees a living wage or better.

This is one of the problems of container farms as a class: They are just too small to generate enough cash. Size matters (but there are limits, which will be explored in a future column).

Additionally, farm entrepreneurs need to find investors who understand that indoor farming does not offer five or 10 times return on investment but is a cash-cow business that can generate healthy 15 to 20% returns if operated correctly.

Finally, indoor vertical farms are organizations that need to be developed into places that people want to work. People need training and development. Transformational leadership is essential. They need a reason to get up in the morning. Appeal to their sense of wonder and value, and your organization will thrive. Too many of these businesses are being run as if the people are simply widgets.

In short, vertical farm companies need to grow up and act like real, sustainable organizations weaned from venture capital money. More on all of this in future columns.

Until then, keep growing.