Merchant Innovation

Farming’s AI, Data Driven (And Vertical) Tech Revolution

Farming has been around for thousands of years – tens of thousands of years, perhaps, according to some estimates.

And it is a labor-intensive, resource-intensive and time-consuming endeavor.  Consider the fact that, as measured by the Water Footprint Network, it takes about 26 gallons to make one pound of tomatoes, and 67 gallons of water to produce one pound of oranges.

In the bid to transform age-old processes, to make them more efficient in a world marked by increasing scarcity of resources, climate change, and a growing population, data – and in particular the intelligent use of data – can help transform food production supply chains, improving safety and reducing costs.

In an interview with PYMNTS, Sonia Lo, CEO of Crop One Holdings, which operates vertical farms, pointed to artificial intelligence (AI) and analytics as keys to growing crops with precision.

By way of background, vertical farming involves growing crops in stacked layers. Crop One has said that it can deliver between 20 to 25 harvests per slot, versus the two to three harvests that traditional farming can produce per slot per year.

At a high level, Lo said that conventional agriculture suffers from increased climate volatility and cleanliness issues.  She pointed to seemingly annual recalls of romaine lettuce in the wake of E. coli and other contaminants that sicken significant numbers of people and even lead to fatalities.

She said that vertical farming “essentially electrifies agriculture,” she said, adding that “anywhere that you can generate an electron you can grow food.”

Vertical farming is, in its essence, the entirely artificial environmental infrastructure around the growing network, which mitigates climate volatility – there’s no climate to speak of.

“Because you are taking on more control, you are also enhancing the cleanliness of the product,” she said, “as well as the use of precious resources such as land and water.”

 Key Technological Drivers

The key drivers of all this efficiency, from a technological standpoint, are cheap LED lighting, marked by a doubling in lumens per watt every 10 years. The cost of that lighting, too, is halving every decade, akin to what Lo termed a Moore’s Law for lighting.

Another driver is the ubiquity and lower cost of sensors, in turn, tied to data collection.

“Anywhere you have a sensor, you have a data stream that comes off of that. It’s just a question of how you are defining the knowledge that you want to come from that data stream,” she added.

The dual efficiencies are reduced cost and reduced waste per unit of space.

Ripple Effects Through The Supply Chain

The tech-driven efficiencies ripple through the supply chain, beginning at the very source of production.  Lo told PYMNTS that with every 1,000 seeds planted through the Crop One system, the yield is between 997 to 999 saleable plants for harvest. By way of contrast, traditional farming methods yield roughly 280 plants.

“In vertical farming, you have precise spacing, as well as information about growth rates – and you’ll know when plants are about to [touch leaves] with other plants,” which can inhibit growth, she said.

Moving further along the supply chain to the harvesting process, Lo said that the large harvesters that take the plants out of the ground could cause bruising and other damage.

She said the company leverages machine learning to identify plants that may turn out to be suboptimal and which should be removed. She maintained that the Crop One harvesting process is done much more gently” because we are harvesting with people [rather than machines] and we’re using ceramic knives, which don’t cause browning at the cut plant edge,” she explained.

There’s also room for efficiency, and better quality control, in the washing and packing of produce, she said.  During traditional processes, there more opportunities for plants to be damaged for pathogens such as  E. coli to spread – chiefly because farmers do not have a direct route to market, she said.

“The vast majority of produce is actually processed by enormous pack houses,” in California, she said.  And the grower that has E. coli on their product has its produce mixed in with others’ untainted produce that is co-washed and co-packed. Such co-mingling leads to multistate outbreaks that dominate headlines.

By way of contrast, she said that Crop One’s chain extends directly from the point of planting to the point of retail sale – and traceability exists back through the chain.

“With data flows and sensors, we can trace where a plant was grown down to the 2-foot by 4-foot shelf on which it was grown. A field-based farmer today can maybe trace the contamination back to the farm at which it was grown – maybe,” she told PYMTS.

And in terms of the ripple effects to the end consumer, she said that the price paid by consumers for vertically farmed products is cost comparable to field farmed organics produce, with costs continuing to trend downward.

The Larger Picture

Looking ahead, Lo said that geographic expansion is driven by market pricing. She noted that markets such as Dubai, North America and Europe can be thought of as “willingness to purchase” markets and then there are “cost-plus” markets.  The “cost-plus” markets, she said, are those marked by infrastructure that already supports mass produce crops – and where, if Crop One were to enter those markets, Lo said the company might break even. Willingness to purchase markets are profitable, she said.

“The important thing to do is to start off in markets where we can be profitable and work toward lowering our cost basis to those markets that are ‘cost plus’.” In entering a market such as India, she said, the focus would initially be on serving the middle class in that country, which she said is marked by a “willingness to pay pricing structure.”

Looking ahead, she said the company’s goal is to use its technology to feed the top three quintiles of the world’s population in the next two to three years (and employ the bottom two quintiles), and feed all five quintiles in the five to seven years.

At present, the vast majority of the vertical farming industry is capable of only growing leafy greens commercially, but that will change, moving to new markets like plant-based starches, oils, and proteins and strawberries as the next generation of LED lighting and data science takes root.

“We are looking to grow a nutritionally complete meal,” she told PYMNTS.

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PYMNTS LIVE VIRTUAL PANEL: WHY SWIFT GPI IS JUST THE BEGINNING 

On Tuesday, March 31, 2020 at 9:00 AM (ET) join PYMNTS CEO Karen Webster and panelists Vincent Kilcoyne and Roland Brandli of SmartStream for an in-depth discussion on the need to use transformative digital strategies to remain relevant in today’s challenging financial landscape. The discussion will cover strategies that will allow clients to improve operational control, reduce costs, build new revenue streams, mitigate risk and comply accurately with regulation.

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