LOADING...

Posts Tagged "urban farm"

Controlled Environment Agriculture

News, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Controlled Environment Agriculture

Background

“Like extracting bread from air.”  In 1908, Fritz Haber’s invention of synthesized fertilizer revolutionized the agriculture industry. Through a process of extracting ammonia for fertilizer use from the air, annual global crop yields doubled overnight.  His invention is credited with our ability today to feed billions of people. But new problems are catching up to us.

Here in the United States, we are extremely reliant on international imports to meet our produce needs. Coupled with the challenges of affordability and accessibility of labor, much of the country is also incapable of producing outside for the colder half of the year.  Specifically, as of 2020, 53% of all the fresh fruit and 32% of all the fresh vegetables consumed in this country are imported.[i] Comparatively, increasingly unpredictable weather patterns are only making the challenges of conventional domestic farming more difficult.  Globally, we are still struggling to meet demand for produce.  In fact, a 2015 World Health Organization study found that only 36% of the global population has adequate availability of fruits and vegetables to meet minimum nutrition targets.[ii]

Controlled Environment Agriculture

Fortunately, a new wave of technology categorized as controlled environment agriculture (CEA) has the potential to revolutionize America’s food production system once again and help alleviate the greater global deficit of high quality, affordable produce. CEA is proven to increase yields per acre by a magnitude of over 10 times that of conventional agriculture through curation of year-round, ideal conditions and symbiotic micro-ecosystems.[iii] Conventionally, these facilities use hydroponic, aeroponic and aquaponic systems to grow vegetables without soil.  This technology allows growers to use exponentially less water and fertilizer than conventional field agriculture.  With new innovations in digital monitoring, robotic harvesting, and automated sorting and packaging, the challenges of finding labor are also alleviated.  Equally important, CEA avoids the externalities of environmental degradation, systemic in conventional agriculture.

Through CEA we are able to produce higher quality crops without damaging the ecosystem.  The controlled environment facilitates the elimination of toxic chemicals in exchange for biological pesticides (predators for parasites).  Additionally, as facilities move closer to market in response to demand for local produce and rising shipping prices, breeding programs are able to pivot away from a focus on shelf life (for long-haul shipping) towards flavor, texture, and nutritional value.  Changes in consumer demand for healthier local food is creating growing demand for CEA and ultimately opportunities for investment in the asset class.

Overview

Over the last century, conventional industrial farming has had catastrophic effects on the environment.  Chemical pesticide use has decimated insect pollinator populations.  Monoculture farming, erosion from tilling, herbicides, and fungicides have polluted, depleted, and sterilized our soils.  Excessive fertilizing has polluted our water.  It is not an exaggeration to say that the choices we make today will have cascading effects for centuries.  The United Nations Food and Agriculture Organization estimates that 33% of the world’s soil is moderately to highly degraded through erosion, salinization, compaction, acidification, chemical pollution and nutrient depletion.  

These degradations hamper the soils’ ecological functionality affecting its food production capabilities.[iv]  Insect populations have also declined by 75% over the past three decades, largely due to agricultural practices, hampering natural breeding and fruiting processes.[v]   The cataclysmic loss of biodiversity is reaching a breaking point that will not be easy to reverse.  Therefore, it is critical that we reinvent the way in which we produce our food.  Controlled environmental agriculture addresses all of these environmental concerns by creating a closed loop system.

Structure

CEA can be classified into three main structures: high tunnels, greenhouses and plant factories. Each has their own benefits and limitations.

  • High Tunnels are the least expensive and most common solution in the market today. At as low as $3 per square foot in construction cost, they require very little capital to get started.  While they are a great improvement over conventional agriculture, they have a short life span, are very susceptible to environmental damages, are less light and heat efficient, and are uninsurable.
  • Greenhouses average $35 per square foot at commercial scale and are the most energy efficient form of CEA.
  • Indoor Plant Factories — typically what people think of when they think of vertical farming — are highly variable in price (generally between $100 and $200 per square foot for new construction), but can essentially be established in any reclaimed building or container.  They are very high in climate control efficiency and yields per acre possible (by growing vertically) but are more limited in what crops they can grow efficiently.  (Some crops demand more light than the LEDs can provide.) Plant factories also require extreme electricity consumption. For example, lettuce crops grown by CEA consume upwards of 350kWh per square foot per year compared to a typical greenhouse’s 25kWh per square foot.
Choosing the Right Asset Type

The costliest aspect of running any CEA facility is electricity consumption.  Not accounting for transportation or increased quality’s value proposition, electricity consumption is the biggest barrier today to achieving production cost parity with conventional agriculture.  The key to understanding which structure type is optimal for a given location is through understanding the supplemental lighting efficiency, the cost of electricity, and local conditions.  Consider this: In New York state, at current electricity prices, even if LED technology was perfected to translate 100% of input energy to light, a greenhouse’s use of the sun and supplemental light, instead of 100% artificial lighting, is still more efficient than the benefits of a plant factory’s more insulative qualities.

For this reason, choosing the right asset type to invest in for a given location is critical.  Are you near the Arctic Circle where natural sunlight is very limited for half the year and temperature lows are extreme?  Then a plant factory is likely the correct option.  Are you in a generally mild climate state with high electricity costs?  Then a greenhouse may be right for you.

ESG considerations

CEA is a better impact solution than many other popular alternatives.  It is often carbon negative.  It requires limited use of rare earth metal materials whose mining undermines the true environmental values of many energy oriented ESGs.  CEA very poignantly addresses the problems of biodiversity and habitat loss. Additionally, it decreases agricultural water usage by over 95% and fertilizer usage by 60%.  It dramatically reduces the waste of shipping.  And socially, it has the potential to solve global food crises.

Opportunity

As of today, investment in CEA has reached just over $2 billion across North America and Europe.  The compound annual growth rate for the North American vegetable greenhouse market since 2007 is greater than 20%.  In a $20 billion market, crops from CEA facilities only account for 1.3% of the annual produce consumed in the US.  With total food demand expected to increase between 59% to 98% by 2050, CEA’s growth potential is exponential.[vi]   Moreover, this does not even account for the opportunity of increased produce demand facilitated by improved accessibility; research shows an increase of up to 32% in produce consumption for each additional supermarket in a census tract.[vii]

The barrier for some, and therefore the opportunity, is that these facilities require high upfront costs.  In addition to the structures themselves, the intricate hydroponic irrigation systems, robotic equipment and sensory equipment can carry a large price tag.  As a plethora of start-up companies race to compete and establish market dominance, they are hungry for capital.  As such, many forego ownership of their facilities, instead focusing on their core expertise and leveraging capital towards opening more facilities.

Investing

Several developers and investors are capitalizing on this opportunity in a number of ways.  The most common is a sale-leaseback.  As examples: Equilibrium Capital acquired and leased two greenhouse facilities to indoor agriculture company Revel Green for $11.3 million and plans to finance at least three more greenhouse facilities.  Another firm, Green Acreage provides sale-leaseback and construction financing to companies operating in the cannabis industry.  Green Acreage invested $77.3 million with Acreage Holdings that entered into long-term, triple-net lease agreements with Green Acreage for properties in California.  Other players in the market executing similar strategies include Power REIT, which owns six CEA properties in southern Colorado and Maine with a total of approximately 131,000 square feet of greenhouse and processing space; and Innovative Industrial Properties who focuses on the acquisition, disposition, construction, development and management of CEA facilities across the country.

To better understand the lucrativeness of the opportunity, Innovative Industrial Properties states that their typical absolute net lease terms are 10 to 20 years with base rents at 10% to 16% of total investment and 3% to 4.5% annual rent escalations.  Typical deals range from $5 million to $30 million and carry security deposits and corporate guarantees.  This compares quite favorably to conventional farmland sale-leasebacks that often have 5-year terms and net around 5% of the purchase price as base rent and escalate 7.5% to 12.5% every term.

Other Opportunities

Other growers have opted for mixed-use facilities where they can rent roof top greenhouse space.  This allows growers to be in deep urban locations and virtually eliminate shipping expenses.  For example, Gotham Greens recently purchased and built a 15,000 square foot greenhouse on a vacant Brooklyn rooftop.  Others have chosen to take the concept directly to the literal market.  BrightFarms has, to date, signed up eight supermarket chains around the country (including three of the largest national chains) to build these rooftop farms for about $2 million per acre.  The facilities are expected generate $1 million to $1.5 million in annual revenue.

International investment continues to be an important funding source for controlled environment agriculture as countries like Saudi Arabia and the UAE look to establish sustainable domestic food systems through the furtherance of the technology.  Correspondingly, many CEA growers have gotten their start through partnerships with sovereign wealth funds.

The opportunity is clear; how real estate investors choose to enter the space is up for debate.  Funded by $82 million from Equilibrium Capital, AppHarvest, a 3-year-old start-up, has purchased 366 acres in eastern Kentucky with the goal of leveraging economies of scale.  With plans to develop a 2.76-million-square-foot greenhouse for $97 million, AppHarvest will be one of the largest greenhouses in the world, supplying much of the Eastern seaboard within one day’s drive.

Conclusion

Although CEA has existed for the past decade, technological development and botanical research have greatly reduced the risk and challenges of the business.  Digital monitoring and control technologies have simplified running a controlled environment agriculture facility.  Concurrently, consumer demand for high quality organics has risen dramatically, creating a bigger market.

As we stand today, the climate crisis has reached boiling point and habitat degradation has pushed biodiversity to the brink.  CEA stands as a profitable, sustainable, lower-risk alternative to conventional agriculture, whose biggest challenge is simply the upfront costs of developing the facilities.

Fresh Alternative Farms:

If you are interested in starting a controlled environment agriculture facility of your own, send us a message and check out our partner organization: FreshAF

Citations

[i] Center for Food Safety and Applied Nutrition. “FDA Strategy for the Safety of Imported Food.” U.S. Food and Drug Administration, FDA, www.fda.gov/food/importing-food-products-united-states/fda-strategy-safety-imported-food.

[ii] FAO, IFAD, UNICEF, WFP and WHO, The State of Food Security and Nutrition in the World 2020: Transforming food systems for affordable healthy diets, 2020. https://www.unicef.org/reports/state-of-food-security-and-nutrition-2020

[iii] GL Barbosa, FD Gadelha, N Kublik, et al., Comparison of Land, Water, and Energy Requirements of Lettuce Grown Using Hydroponic vs. Conventional Agricultural Methods, International Journal of Environmental Research and Public Health, 2015, 12(6), 6879-6891. https://doi.org/10.3390/ijerph120606879

[iv] FAO, Polluting Our Soils Is Polluting Our Future, May 2, 2018. www.fao.org/fao-stories/article/en/c/1126974/.

[v] Euan McKirdy, New Study Suggests Insect Populations Have Declined by 75% over 3 Decades, CNN, October 20, 2017. www.cnn.com/2017/10/19/europe/insect-decline-germany/index.html.

[vi] Maarten Elferink and Florian Schierhorn, Global Demand for Food Is Rising. Can We Meet It?, Harvard Business Review, April 26, 2019. hbr.org/2016/04/global-demand-for-food-is-rising-can-we-meet-it.

[vii] “Growing Beyond the Hype: Controlled Environment Agriculture.” S2G Ventures, www.s2gventures.com/reports/growing-beyond-the-hype%3A–controlled-environment-agriculture.

 

Tannenbaum Design Group | Landscape Architecture and Outdoor Design | Controlled Environment Agriculture


Date: Jun 3, 2021
AUTHOR: tbaumdesign
Comments: 1

Placing a Value on Design

News, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Placing a Value on Design

Design fundamentally has two elements – Form and Function. Function is the tangible aspects. What is it? What can I do with it? It’s easy to compare apples to oranges, see what is demanded across a population, and then ultimately put a price tag on what people are willing to pay for it. A deck for a deck, a shade structure for a shade structure, etc… Form, however, is much more intangible. It’s a subjective feeling about the creation. Is it beautiful? How do I feel in it? When a Landscape Designer puts a price on their work, they are putting a valuation on their own time and projecting that out as a fixed bid estimate of their total expected time expenditure. But how do we account for the value of the form, not just the function? For that, we look to secondhand sales to find out.

In 1999, a study conducted by Clemson University looked to quantify the effect of different quality landscaping improvements on the ultimate home sale price. They studied the effect that different properties in a wide variety of locations and conditions sold for using landscape quality as the variable. Consequently, what they found was that with all other variables accounted for, an excellently landscaped property could fetch up to 14 to 17% more at sale then one with landscaping rated as poor. In Denver today, that’s equivalent to $70,000 more for the average home!

Turn those drive-bys into walk-throughs, get more bids, and sell for more.

There is a cost to the investment of labor and materials to make the jump from poor to excellent, but the benefits will still far outweigh the costs. Rarely do our residential landscaping projects in Denver cost even 10% of the value of the home. Numbers crunched, that’s up to a $29,000 instant profit with the sale of your average Denver home.

When looking at your outdoor spaces don’t be afraid of the price tag. The money is being invested as equity into the home with a buffer of profit to dream big and create a space you will love. Regardless, he best way to maximize the value of landscape designing is to plan ahead. Significantly, moving into a new place is the perfect time to start planning your outdoor spaces. Undoubtedly, a more established landscape is worth more to the property and you get to thoroughly enjoy it while you live there.

Outdoor lighting, good yard maintenance, and well-placed trees will always pay for themselves in the end. Designing for varietal leisure spaces, noise reduction, visual barriers, creating a cohesive aesthetic with the architecture, crafting a clean outdoor look that makes the house feel cared for – these are some of the more subtle design challenges that people will subconsciously pay top dollar for.

Sustainable Design

None of this, however, accounts for the added benefit energy and water savings that a sustainably designed plan provides for the home. Not only do you create a curb appeal that makes you proud of where you live and an outdoor space that makes your home feel bigger and more versatile, but everyday utility and maintenance costs can be drastically reduced ultimately paying for the improvements themselves.

Tannenbaum Design Group, for these reasons, is proud to announce a new collaboration with GreenSpot Real Estate. As a landscape designer, we are now offering FREE customized designs with any Buyers or Sellers Agency Listing agreement with the purchase or sale of any home. We want to reinvent the way the home sale industry works by adding more value back into your homes than is paid in the commission. As a seller you profit! As a buyer you get to buy a house you like and turn it into a home you love, for free! What is your sister’s college roommate’s broker friend giving you for the cost of that commission? If you do the math, it makes no sense to go anywhere else.

Tannenbaum Design Group | Landscape Architecture and Outdoor Design | Placing a Value on Design


Date: Jul 23, 2018
AUTHOR: tbaumdesign
Comments: 1

Houston Strong, a New Detroit, and the Future of Bayou City’s Urban Planning.

News, , , , , , , , , , , , , , , , , , , , , , , ,

Houston Strong, a New Detroit, and the Future of Bayou City’s Urban Planning

Background

In late 1950’s, with the decline of the American automobile giants, began the economic and population decline of Detroit. Between 2000 and 2010 alone, forty-eight percent of the manufacturing jobs in the state of Michigan were lost. For reference, in 1950, there were about 296,000 manufacturing jobs in Detroit. Today, there are less than 27,000 manufacturing jobs. In 1950, the city of Detroit was counted as a population of 1.8 million making it the 5th largest city in America. Today, almost 70 years later, there are 700,000 residents.

Detroit was the first modern major American city to experience such a massive exodus out of the city. As people left, property values fell apart and the city became broke. All over the inner city, properties were abandoned and fell into neglected decay. The dense urban areas became a wasteland of dangerous crumbling infrastructure. In its wake, as these structures were demolished, a city with vast plots of uninhabited space was left.

A Reinvention of Urban Planning

All this may sound tragic, but on the other side of the coin was an opportunity – an opportunity for a large major American metropolis to reinvent itself from the industrial era urban design of American cities into a new postmodern evolution. An opportunity for a city to learn from all of the mistakes of the last centuries and implement all the environmental, technological, and sociological understandings we have today on a redesigned American city and a new perspective on urban planning.

As we are beginning to see with the resurgence of the Detroit economy, the city is using the opportunity to embrace sustainability and environmentalism in its movement towards a better future. From cars to bicycles and public transportation, from imported agriculture to vast communal urban farms, from infinite planes of impermeable concrete to a network of green spaces – the infrastructure revolution continues.

A New Opportunity

I mention all this today, because in the wake of the most catastrophic flooding in American history, Houston now has an opportunity. Clearly, a city that floods every single year from non-tropical storms was not going to make it through a category 4 hurricane unscathed. For decades in the field, we have known and discussed the recklessness of building in the flood plains, in any city. We’ve known the macro effects of covering a virtually pancake flat city. Specifically, one that covers a whopping 627 square miles, in 40% impervious surface. Houston was once prairie lands with large plots of open space which slowed and absorbed storm water runoffs. That is the profile of the city for which the city’s archaic bayou drainage infrastructure was actually prepared for. Not what it has become.

Conclusion

The choices of the past are what they are. Undoubtedly, now is the time to reevaluate what needs to be done or this will happen again.  We have vast plots of urban land that have been simultaneously destroyed and will likely be rebuilt, but the truth is that majorities of them should not be. That is not to say Harvey, a one in 500 years storm should be the indicator, but rather use the last 10+ years of regular flooding to indicate the unsustainable developments. Areas that have been flooding every other year should not be rebuilt and should become public green space – an environmentally healing, psychologically beneficial, and economically stimulating public good. There needs to be an understanding that this will get worse before it gets better because it will take years to update the drainage infrastructure needed to get Houston through the next storms.

Houston, throughout the storm, brought pride to people across the world as they watched acts of heroism and humanity. Today, Houston can make the choice to be the pride of the nation with a city that uses a disaster to reinvent itself into a new sustainable city. The opportunity to learn from our fellow Michiganders is there, it’s our choice to take it.

 

Tannenbaum Design Group | Landscape Architecture and Outdoor Design | Houston Strong, a New Detroit, and the Future of Bayou City’s Urban Planning


Date: Sep 4, 2017
AUTHOR: tbaumdesign
Comments: 2

Iberia Study – Xeriscaping and Permaculture

News, , , , , , , , , , , , , , , , , , , , , , , , , ,

Xeriscaping

The term “xeriscaping” defines the process of designing landscapes for water-efficiency. The term was first coined in Colorado in 1981, but has existed throughout cultures for many centuries. Xeriscaping is achieved through the practice of designing with 5 basic principles:

  • Minimization of high water demanding ground covers, i.e. lawn areas (using turf only when it provides function)
  • Efficient irrigation techniques
  • Protection and improvement of planting soils
  • Suitable plant species selection for the specific environment (natives and naturalized species)
  • Continual maintenance to reduce water requirements over time

Although the term was first used here, the concept has been implemented throughout the world. Historically Iberians, (i.e. modern day Spain and Portugal) before modern irrigation techniques were very innovative in this field, cultivating fame for their agricultural innovations in dry climates. (As a nifty side fact, this agricultural skill set is the reason the small nation of Bermuda has such vibrant Portuguese subculture today, as they immigrated thousands of Portuguese farmers during the American revolution because they feared an American embargo and needed help becoming agricultural self sufficient.)

Upon arriving in these countries it is clear that there is an embracement of the demands of the environment. There is an acceptance of the existing climate and an adaptation to the natural environment is made rather than fighting the elements at high expense. From this acceptance arises a unique aesthetic that we here can learn from as we move towards sustainable design as a country. A way of rethinking not just our landscape choices but our use of art, hardscape and architecture to match the existing environment rather than battling the natural setting.

Permaculture

Permaculture, as it applies to the landscape, is an attempt to mimic symbiotic relationships found in nature in the practice of agriculture, in order to create self-sufficiency and sustainability. America remains one of the highest consumers of energy, largest producers of waste, and most excessive consumers of artificial fertilizers.

In Iberia, as the colonial empires fell apart, the Spanish, and more extremely the Portuguese, became very poor. Much like many countries that have gone through financial hardships, land became abandoned throughout the major cities, currencies fell apart, and families began to need a means to lower expenses. Through this combination of events, these cultures reverted to the historic practice of self sufficiency in micro farms. All throughout these cities today you will find brilliant little farms using found materials to grow crops in abandoned lots. Because these are personal farms, unlike American mega farms, they lack major irrigation, industrial fertilizers, and monoculture production. Instead, they mix crops and use the symbiotic relationships of the plants to sustain each other, have crop productions all season long, and keep water requirements lower.

In the United States, this has already become a major planning innovation in Detroit as it begins to recover from economic hardship. Entire city blocks have begun to transform into functioning urban farms. Even in areas that may not have the economic hardships, we can still see the value in the environmental sustainability these practices hold.

By reducing the need to transport crops over great distances we can reduce the environmental destruction of the energy usage, but it is more than that. When designed with aesthetic intention, we can turn what would be a landscape that just consumes time, money and water into beautiful, consumable resources that actually save you the owner money at the grocery store.


Date: Aug 25, 2017
AUTHOR: tbaumdesign
Comments: 1