Welcome to zero i'm Akshatrati this week, produce profits and perfume. Clean tech is a tough industry. Sure, if you invent zero carbon tech that's both scalable and cheaper than the fossil fuel alternative, you can make billions of dollars, but many ambitious green companies struggle to turn a profit. Farming, which has been around a whole lot longer than clean tech, is also a notoriously hard business to make money from.
Vertical farming combines both of these things, and the entrepreneurs behind it are attempting something extremely difficult, turning what has been done forever on the X axis into something on the y while also recreating natural conditions such as sunlight, rain, and wind in a completely artificial environment. The tech for modern day vertical farming was pioneered in the nineteen nineties, and it has a big promise if it can be successfully scale and that's a big if. It will use
vastly less land, less water, fewer pesticides and fertilizer. It will cut down on shipping, It can be done in the heart of cities, and on and on. The environment would be perfectly controlled, meaning crops are less likely to be affected by storms, droughts, floods, or disease that will all become worse as we continue to warm the planet.
But all of this requires a huge amount of energy to replace the sun and recreate what nature gives for free, and because energy costs have gone up around the world, it is increasingly hard for vertical farms to break even. This year has seen several companies enter bankruptcy as they've struggled to crack the vertical farming business model. Can you do tubers, potato, carrots.
You can do anything, But do you really think there's a finersial equation growing potatoes in or vertical farm.
I'm not sure. I don't know the economics of lettuce. That is giald Dreyfus, the CEO of vertical farming company Jungle, based in France, and you can hear he's kind of outraged that I would even suggest growing such a low value of food because he has to sell premium products to turn a profit, and that is where the promise of vertical farms falls short. Instead of growing bountiful indoor fields of staple crops like wheat, they mostly produce aromatic
herbs or lettuce. Don't get me wrong, I like lettuce, but it's not going to feed the world. I recently had the opportunity to visit two different vertical farming startups, Jungle in Paris and grow Grace in Singapore, and sat down with the founders to learn about why their specific way of farming is going to make it what they grow instead of potatoes, and the biggest challenges for the Indo Street going forward.
Come closer, Come closer.
We are in one of the six chambers that we have here, and it's a separated climate control, so separated environment.
That's the voice of Jewel Drapfass again, stopping me getting crushed by a giant tray of coriander plants descending from high up above me.
There is six meters by seven, so forty two square meter footprints with nine meters high, and on inchside you have twenty six layers, so the net cultivation area is close to four hundred square meter.
I'm with Zero's producer Oscar Boyd, a Jungle's vertical farm on the outskirts of Paris. It's almost evening and we're in the kind of dimly lit purple room that would look good in a Drake music video.
So basically, it's the nighttime they're sleeping.
Do you sing to them lullabies? Of course, good music and lisbon I played the saxophone.
I was playing saxophone with the plants, and I tend to believe that you had a real effect on them.
In the trees are rows and rows of tiny seedlings of aromatic herbs like coriander, basil and Japanese shiso, all controlled by a central computer system that is monitoring the room's climate. Outside the room, one of the agronomists pushes a button and a nozzle floods a tree with water and nutrients. Then only the size and how much water.
You use here in our system we use ninety eight percent less water than in a traditional agriculture. We flood each plant takes what it needs. We recuperate the water so we don't lose anything.
From above, the growth of each of the plants is closely monitored by infrared cameras to check that they're healthy and to make sure that the maximum number of crops can be harvested each year.
We can monitor everything that is going on. We know from the consider that the two first leaves, how it's gonna grow, and then the stem how big it is. And from this infrared we know exactly if the plant that we're talking about is growing in the right pattern. And also we basically gather all these data together to make all our cycle better and better.
This is one of many chambers at Jungle, some of which we are allowed in, some of which are off limits because of confidentiality agreements. In those chambers, Jungle is growing plants to make perfumes for major brands. Each room has a different climate to suit the conditions needed for the plants growing there. There's also a bunch of warehouse space and a dedicated room for germination, the beginning of.
The life of plant germination room. It's nice, huh should we do the interview here?
It's all very high tech for farming, and it is well beyond the pilot stage. There are real plants being grown on a real vertical farm that are being sold across Europe. But it has taken a long time, a lot of effort and a lot of money for Jill to get his company this far. As he told me when we sat down after our tour of the farm, Jill, welcome to the show. Thank you, let's hear the full story of your company. When did you first think of creating a vertical farming startup?
So I was working in finance. I was in two thousand and fifteen January. I was reading an article about the food crisis and how we're going to feed the world by two and fifty. This was a double page in the Financial Times, and at the end of the article there were three lines on vertical farming.
And I was like, I've never heard about this. It's fascinating.
So I started researching during nighttime, and then he took over my work. I was obsessed. I went to meet the father of the concept in New York very soon after that, a guy called Dixon de Pomier is an emeritus professor from Columbia University, and he took me with him the following week to the first world conference on the topic in Vegas.
So we're in twenty fifteen.
The place that has no water.
Yes, absolutely, and honestly, the people that were there and what I heard made me felt like I was at the right place at the right time for the first time in my life. So I came back to Paris, quit my job and started to travel around the world to try to understand what existed. I spent some time in Japan, which is the beginning of commercial vertical farming.
I spent some time in Texas, which was the base of the tech for vertical farming, because the LEDs that were using in a control environment come from foty years of research by NASA that wanted to grow some plants in the ISS for astronauts in long missions. And I spent obviously a lot of time in New York where all the big operations started with arrow farms, Bowery farming. I also met my partner there, Nicholas, on the rooftop
farm by chance. I didn't know him, and we're the two French people in this game, and intellectually it clicked pretty rapidly, and basically this is how Jungle was born. In March twenty sixteen.
Jill and Esteam initially began research and crops and vertical farming methods in Portugal, but in twenty nineteen, with the support of French supermarket Monopre, Jungle moved to its current location, a four thousand square meter farm just outside Paris. In twenty twenty one, it secured a fifty million dollar investment
to help fund its expansion. You spent three years figuring out research and development for one hundred crops that you learn, how to grow them in a controlled environment, what to feed them. Now you're running a commercial operation. How many of those hundred crops do you grow today?
So we have twelve commercial products out of those hundred, and we have eight others that we are commercially active, whether it's perfume or cross So commercial active on twenty crops.
That's okay. So when we think about vertical farming, because of the way the plants are grown, where the environment is controlled, there is no soil, there's only water and nutrients. Does that mean there are certain types of crops that can never be made in a vertical farm.
Economically, you can do whatever you want in a vertical farm. It has to make financial sense. It all comes down to that. So there's one thing you cannot do with truffles because truffles grow in Sorry, but you can do mushrooms.
Can you do tubers, potato carrots?
Yeah, you can do anything.
But do you really think there is a financial equation growing potatoes in vertical farm?
I'm not sure. I don't know the economics of lettuce, Is it financially viable growing lettuce?
And it is basically so is financial viable? What does that mean?
All the companies in vertical farming started and are very much focused on aromatic herbs.
Why is that?
Because the price hidough of romatic herbs is very high because it's a very light product, it has a life cycle that is very short, and the morphology of arentatic herb is not so high and not so large. So basically that city you can have per squameter is very important. Basil, for instance, which is our best seller and the best seller of most vertical farming companies, and the best place which is south front of northern Italy, and it has like three or four harvest per year. Here in Jungle
we do fourteen four zero, no one four. Sorry, that would be crazy, that would be a good model. So basically what makes it viable is how long is the growing cycle, but also how much are you're going to sell it? Who you're going to sell it too? Do you package it or do you sell it bulk? Because
this has a big impact on the price. And we're never going to do to answer your question, We're never going to do fruit trees We're never going to do lemon oranges because then the height doesn't make any sense where not for now, we're going to do main crops such as wheats, soy corn because it doesn't make any sense. But maybe one day will.
So what does make sense? Besides selling aromatic oabs, Jungle makes a lot of pets money selling flowers to perfume houses. We weren't able to go into the perfume growing rooms, but Jill did tell us about the success of one particular flower, Lily of the Valley, that the startup is growing for the perfume company firm a niche.
When you talk about perfume or cosmetic, it's a very different approach because as we did it with the Lily of the Valley, it never existed as a natural compound in a perfume. The flowering cycle of Lily of the Valley is too short in nature to be extracted. It flowers only once a year, between seven to ten days, depending on seasons, and an extraction cycle lasts between two
two three months, so not enough time and not enough quantity. Obviously, with our partnership with Filminish, they asked us to try lily. We secure the genetics. We did the R and D to determine the right recipes and we were able to grow them in sufficient quantity so that they could extract, because to make an extraction and a viable extraction need
a lot of biomass. And basically the chromatographic report, the toxic report, and the nose to the people who have this job said that they never got anything like that in their hands. So when you look at this type of crop that never existed as natural compound, of course the price is much higher because it never had a price,
so we needed to determine the price. But now, in terms of crops for perfuman cosmetics, it varies from a few euros to a few thousands of euros per kilo per kilo, and a company like FRM and issue our partners, they use a thousand, five hundred different variety of crops per year and we are eligible in our system of twenty five percent of that.
So basically it's about three hundred plants.
Plants us of plants, yes, sir, because of the height and the requirement.
Yes, And in those plants you have lidely of the value that we created. But also you have mint, you know, because these companies, they do flavors and fragrances.
It's called fn F. It's the industry.
So they use mint for perfume, but they use also meant to create a taste for any product that you could find in retail.
So your business moves from making herbs to actually making much high value products. You don't need to make herbs.
Not exactly.
We develop strong relationship with customers, so we're happy to keep that going and it's part of our revenue, so it's important to stabilize that. And if you realize in terms of quantity, perfume is one on scale to one two hundred, perfume is one, cosmetic is ten, and food is one hundred volume in volume, so it's a different price structure, but there's also a different volume.
Is a different business model.
So we need to carry on growing food, and we will carry on growing food, and we want to go about R and D to develop a lot of other things.
And herbs that you produce here and then you sell in supermarkets. Are they cheaper than what's already available in the supermarket grown in the wild.
There are the same price as the basic stuff in France. And I'm going to talk about France because I've studied that market pretty much, so we are entry level price for the same weight, but we have virtues of using a lot less water, zero pesticide, and lots of taste and basically grown locally. So in France, if you want to address a market and you're a newcomer, you're not going to say, Okay, I have all these virtues and I'm going to be more expensive. In the States, it's
a different game because agriculture is not the same. The guys that are producing in vertical farms, they have a price premium to their here it doesn't work.
It's all well and good for vertical farms to grow perfume crops and aromatic herbs, but to feed the world they'll need to start growing staples like wheat, soy and corn. On this front, there has been some progress. In November last year, an Amsterdam paced startup called Infarm managed to grow wheat for the first time, and it said they could grow six harvests a year, compared with just one in open field farming. However, that same startup closed down
is European Operations earlier this summer. Jeal compares progress and vertical farming to the recent history of another green industry with well documented boom and bus cycles, the solar industry.
Vertico farming could have a parallel with the renewable energy sector. With those solar power energy Why in the beginning of the two thousand you had a solar panel that was expensive, that was heavy, and through innovation investment, in time, it became profitable. Africo farming is exactly the same. You're going to have a machine. The capex of the machine is going to be divided by two or go even lower
than that. The output that we get today a jungle we have between forty five to fifty five kilo of biomass per square meter preur. This could go to eighty one hundred or even above one hundred kidos. So many crops that were not profitable are going to become profitable. So we're talking about tomatoes, raspberries, strawberries, and also cucumbers, zucchinis. Chilis basically between fifty to sixty percent of anything that you can find in the supermarket, and we can go even beyond that.
Thank you for the turn, for the conversation.
Thank you.
A lot will need to go right for vertical farms to scale up globally, but advances are being made and vertical farming is being tested right around the world. There are now farms in Japan, Saudi Arabia, the Netherlands, the US and other places. And when you talk to people about why vertical farming is important, one reason you're often hear is reducing water consumption. The closed loop environment means
that water can be recycled and reused. Another is improving food security, especially in smaller countries that have little land available for farming and who rely heavily on food imports. On my recent tour of startups in Asia, I was able to visit a second vertical farm in Singapore, a country that is one hundred percent urban that's coming up after the break.
So would you like to guess how much letters we have us every week? Now?
I'm in Singapore talking with Graycelip, a co founder of grow Grace that opened its first proof of concept vertical farm in summer twenty twenty. To even for an untrained eye, there are some physical differences between this farm and the one I saw in Paris. What's being grown is a little bit different. The trays are larger, there's more vertical space between them. But technology wise, it's a similar idea.
Grow Grace is growing a lot of lettuce, so much that Grace has found it hard to find enough buyers.
Right, So, assuming that all the letters weigh two hundred grams, how much do you think we have us every week?
One term?
Okay, so we have us one point two times every week, so there is yes, very good. Actually actually not many people get so close. A lot of people will say that, okay, three hundred.
Cag So it seems I'm good at guessing the volume of things. It's a side benefit maybe of spending years in a chemistry lab. Anyway, that is a lot of lettuce. And even though Grace does have some buyers, she told me how difficult it is to turn a profit.
So there is about six thousand hits of letters every week, and that's a lot of lettice. Which is why I have trouble bringing this farm to profitability because it takes a long time for us to establish a relationship with a buyer.
Right.
And then also at the same time, even if this buyers want to support me, they cannot buy more of one variety, but they can support different crops that I grow. So which is why R and D is very important.
Finally, on the tour, Grace showed us the rainwater that they harvest.
So this farm utilizes one hundred percent rainwater, and that is our sixteen cubic meter rainwater harvesting tank.
And the rainword that's being harvested is on the roof of this building.
That's right, It's from the roof of this building.
Yeah.
Right. So in Singapore, harvesting rainwater is illegal. You need a special license to harvest raamwater because if everybody starts to harvest rainwater commercially, then our reservoir will be empty.
What did you have to do to get a license for rainwater.
Highway, Well, basically you have to fill up a lot of farms and submitted to.
Pub pub or the Public Utilities Board is the water authority in Singapore, and Grace's application was approved. The government of Singapore has a lot of incentive to reduce food and water imports because currently it imports over ninety percent of its food and more than half of its water. The island also doesn't have much land to grow crops. That's one of the many things Grace and I talked about after the door Grace, Welcome to the show.
Thank you very much.
Akshat. You have been operating this vertical farm for the past year. Almost just walk us through the story of how you got into vertical farming.
Okay, so this happened I think quite many years ago when I was a mother raising young children, and I remember being very concerned about what I feed to my children. So I was giving them a lot of vegetables, thinking that it's very good for them. And at some point I came to realize that a lot of these vegetables that I've been feeding my children are coming from countries which grow them using a lot of pesticize. So that
made me really angry and really sad. So then I decided to grow my own vegetables at home, and at one time I was growing thirty six different types of vegetables. So one day I was harvesting kill with my son, and we harvested two big baskets of kill and we started juicing them and making them do kill chips, and I remember at that moment, I experienced immense joy in my heart because I was feeding my children clean, healthy
produce that we grew in my own garden. And at the moment I had an epiphany and I told myself how wonderful it would be if I can bring this clean, nutritious food to fellow singapore Rans.
And the farm that you ended up building cost about three million Singapore dollars and you had to bring in a number of partners to be able to build it. What was the challenge and who were these partners?
Yeah, so I formed a company with my two sisters, but they're just sleeping shareholders and we're putting some money there. And also my Dutch partners, so they are a consortium, so they came in as a single shareholder. But the Dutch consortium consists of a few parties.
The Dutch Consortium back in grow Grace includes eight companies whose expertise is in various aspects of vertical farming, lighting, climate control, seeds and growing materials.
The farm costs three million dollars to build, but we do have support from Singapofoo agency as well.
And why was it that the Dutch consortium was so crucial for your farm?
So when I wanted to do this project, I did a lot of research and I've learned that the Dutch hour world leaders in agriculture innovation. The Netherlands is the second largest exporter of vegetables to the rest of the world. So when I wanted to do this, I knew I only wanted to partner with the best in class and it's Dutch technologies. And indeed, I wouldn't compromise the type of technology that I would use in the farm because everyone can grow, including myself and grow thirty six different
types of vegetables in my garden. But how much can you grow? What is your eel, what is the quality of your produce? And are you able to grow consistently? Are you able to grow in an energy efficient and what efficient way? That's a whole different ball game, right And for me, the technology play a critical role, which is why the Dutch involvement is very important for me in this project.
And the technology you use with your Dutch partners is a bit different from the technology that is used in most vertical farms. But recently there have been a spate of vertical farms going bankrupt. Why are you confident that what you are doing how will succeed?
One thing that we have done differently from these all these other indoor farms or the indoor farms that have not been successful is that we do not create our own technologies. We work with technologies that have been proven to be very successful all over you, Europe and America in greenhouse environment. So these technologies have already been used in greenhouses for decades and they have been growing tons
of food very successfully. And what we did was bring these proven and patented technologies to Singapore and we integrate them using local engineering and construction expertise into an indoor vertical environment. Based on my understanding and from what my Dutch partners and I have investigated, a lot of these indoor farms that failed put their own technologies together. And technologies take time to mature, and when you put something
new together, you have to constantly tweak it. You know, you have maintenance issues, your reaction time may not be as fast because you're not familiar with it. So it takes time to mature. And I think because of that, they just run out of funds to further improve.
On the tech. Grow Grace uses technology from a Dutch company called Dry Hydroponics. The name of the company is also the name of the technology, and it may sound a little like an oxymoron. The dry part is that until the roots grow, they don't have constant contact with water. That's the difference between grow Grace and other vertical farms, and that intervention early in the life of the plant, according to Grace, forces the plant to use less water
as it grows. The plant starts off in a substrate made from a mixture of peat and is flooded with artificial light. It's all minimal from a material's point of view. One of the reasons why vertical farms have been going bankrupt is because the produce they make does not generate as much revenue as they need to be able to pay for all the energy and all the equipment that they have spent money on. So what is it that you are growing and are you able to make money?
So growing indoor is definitely much more expensive than growing in a greenhouse or growing in an open field, But being able to grow indoor means that we think control all the growing parameters. And when we can control all the growing parameters, we're talking about precision farming, and that is when you can grow perfect heits of lattices, perfect crops, and these perfect crops, in my opinion, are considered premium produce.
And when it's premium produced, you can command a premium price, even though this is not my vision, because my vision is to be able to grow premium crops that is also affordable to Heartlanders. Unfortunately, at this point we are paying sky hair energy prices, so we cannot afford to do that. But I totally see that this sceneio will change in the near future if we're able to tap
on renewable energy. Meanwhile, yes, we have to sell this as premium crops for a premium price, and there is a demand for premium produce in Singapore because we are importing a lot of premium produce from Japan, from Korea, from Australia and from Europe. And my intention for grow grades one, which is this farm that you visited, is to just replace these imports from these countries that I've just listed.
And roughly, if you were to split the costs of running the plant, how much is it energy, how much is it labor, how much is it equipment?
Okay, so unfortunately energy comprises fifty percent of the overall cost of production and labor twenty five percent, and the other twenty five percent is neutrons sees maintenance at hot repairs.
So this is a pilot firm and you have plans to expand it, right.
Yes, so this is our proof of concept and obviously it has proven to be very successful. So right now I need to prove the value of the farm. This is where I have to work really hard on sales, sell all the produce with a margin, and then from there I can attract investors to invest in an expanded or rather than upscale goog gries too, which I've intended
to build just next to the existing firm. So it is very import for me to build a much bigger farm because we started this company to contribute to food security. We want to be able to grow to bring a significant impact to Singapore, and our vision really is to turn growing cities into thriving farms. We want to be able to build a big indoor farm in every city center, starting with Asia. Right so, yes, we want to build
upskill farm. But before we can do that, we need to take the learnings from building this first farm into
the design and engineering of the second farm. Even though grow Grace is a great farm, but we have learned that we can further optimize it for it to be more efficient, more energy efficient, operationally, more efficient as well, and in order to do this study, in order to do this value engineering, we need to put together a technical committee, you know, to study the lesson that we have learned, where we build this POC, this proof of concept, and for that we will require investment money.
So right now you're trying to raise money.
Yes, we are trying to raise five million dollars for a stick in the company.
Yeah.
So, and I really want to attract investors who believe in our vision, who believe that the future of farming is indoor, who want to bring food security to cities, and who want to contribute to sustainable agriculture.
The substrate you use is pete moss and other organics. Where does it come from? Because pete itself is not a sustainable material.
I have been looking into this as well, and I have been speaking to the founder of dry Hydroponics, who is the designer of the recipe for this substrate. And at this moment, I don't have an answer for you, but we are looking for a more sustainable ingredient for the substrate.
Bloomberg Greens. Shay Lee, who's based in Singapore, was with me on the grow Grace store. She asked how much produce grow grape sells each month and what amount they need to sell to be profitable.
So I'm able to sell fifty percent of the produce, unfortunately at a loss, because when I started growing in November, I need to find a buyer very quickly just to cover costs, right, So I was able to find a buyer to oft take half of the harvest, which is about six hundred kg, but I'm selling it at a loss, and then the other half I would say I'm so far, I'm able to sell twenty five percent at a profit and the other twenty five percent of the harvest are
still unsold. And my plan, my strategy is to be able to offer more crops to buyers, because it makes total sense that one buyer cannot buy more of one crop from you, but they can buy more varieties from you. So I know that my current buyers are very supportive of grew grays, and what I have to do is just to offer them different products, different crops, and that's some that I'm working very hard on, which is why we are experimenting. We're doing R and D every few months for new crops.
And when do you expect to break even if.
I'm able to sell all my crops at a profit, which I'm working towards. I foresee that we will be able to be profitable in the first quarter of twenty four.
Right, So that's breaking even within two years of building it.
No, no, no, not breaking even, but to have the farm stop bleeding and start seeing some money coming in. Yeah, but breaking even is going to take years.
Okay, Yeah, thank you so much, Thank you so much. There's a logical alleo to the idea of vertical farming. Saving on water, soil, and land is a crucial climate solution, as we learn from George Monbio in an episode we ran a few weeks back. Vertical farming also evokes a utopian science fiction world, one that we expect future humans need. But figuring out the business model right now is not straightforward. It will need the persistence of people like Shiel and
Grace to crack it. Thanks so much for listening to Zero. If you want to check out some of the reporting on green tech from my trip to Singapore, it is linked in the show notes. If you liked this episode, please take a moment to rate and review it, subscribe on Apple Podcasts or Spotify, Send it to a friend or someone who eats a lot of leafy greens. Get in touch at zero pod at Bloomberg dot Net. Zero's producer is Oscar Boyd and senior producer is Christine Driskell.
Our theme music is composed by Wonderly Special thanks this week to Cheryl Lee, Natasha White, and Kira binrim i'm Akshatrati back next week.