![]() ![]() That's not telling us that there's a shortage of cheap water to farm with, entirely the opposite. Those guys in CA getting the stuff at $100 per acre foot and so on. The actual reason for a shortage in certain places is that farmers get too much of it subsidised too much. Sure, people talk about water but again, water really is that thing that falls, free, from the skies. Sure, there's all sorts of shouting from the usual enviro types that precious natural resources are being destroyed because folk build houses on flat land and so on but that's something that's happening at the margin of 0.1% of farmland a year. Does the US have a shortage of farmland? Not that anyone's really noted, no, it doesn't. But in economic terms that's the same statement - capital has got cheaper relative to labour. Sure, we could say that's nothing to do with the minimum wage, it's that computers have got cheaper. Or, as can be observed, increase the minimum wage and McDonald's starts sprouting ordering screens. On the other hand, if capital is cheap with respect to labour then you use lots of machines and very few humans. If labour is cheap and capital expensive (they're the same statement, if labour is cheap then capital is expensive relative to labour) then you hire lots of cheap labour to make your whatevers. So, well, what's the actual problem here? Why is no one -seemingly - managing to make this work? The economics hereĪ standard and very sensible piece of economics is that you always optimise for your scarce resource. Fast Company tells us that they're all in fact falling over. None of the other urban farming companies seem to be doing well. Which has also just had an emergency fund raise, that time only four months after arriving as a SPAC onto Nasdaq. It's the basic offering that gets me.Įlsewhere I've written about Kalera (KAL), another urban/vertical farming stock. That tomato factory is through the heart of the pitch that they're making about indoor farming. Note that this is not all the company does, the one factory. Which is great, of course it is But the crunch question becomes, well, what's the increase in costs? Do we get a less than 10x increase in costs to go with the increased yield?Īpparently not so far at least as AppHarvest has just had an emergency (-ish) fund raise because they were not sure that they still qualified as a going concern without one. Or, perhaps a 3 to 5 increase in standard polytunnel agriculture. Standard outdoor grown tomatoes (of the same varietal) will produce maybe 30 tonnes an acre. AppHarvest plants and harvests beefsteak tomatoes at the facility, which can produce 45 million pounds of tomatoes each year. Spanning 60 acres, it's one of the largest high-tech greenhouses in the world. ![]() The agtech stock's initial indoor vertical farm in Kentucky planted its first crops in October 2020. On some space of urban or vertical farming (both being synonyms for growing in a factory under lights, probably hydroponically) they can grow 45 million pounds of beefsteak tomatoes a year. ![]() ) Here's the basic pitchĪppHarvest ( NASDAQ: APPH) has a very basic pitch to make. ![]() This is - to be mild about it - something I think they have not proven as yet. AppHarvest will succeed when, and if, their method of farming is more efficient in overall resource use. But land isn't the scarce resource in the U.S. I'm entirely delighted to agree that it's a more efficient use of land. The corporate pitch is that indoor, or urban, farming is more efficient. This information was challenged by a reader, but it's also not relevant to the thrust of this article. ( Author Update Note: This article has been edited to remove some references to areas of land being used by AppHarvest. ![]()
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