80 Acres Farms, pioneer and heavyweight of vertical growing, is winding up after the buyer pulled out at the start of August. The company supplied its plants to 18,000 outlets, mostly shops.
80 Acres Farm is ANOTHER vertical farming business shut down in the US in recent years.
Since twenty-two the trade has been racking up collapses rather than successes. A very young trade, mind, because in its present form vertical farming has been going all of about 10 years.
And in the view of plenty of experts, it looks more like the Silicon Valley trades and tech startups than like farming companies.
And a business model carried over from Silicon Valley doesn’t work where growth is set by the life cycles of plants.
Vertical farming isn’t an entirely new idea.
From my childhood in the 70s I remember the visions of hydroponic farms of the future, inside massive giga-towers or on a space station.
It only started to take off recently, when it became technically possible.
But not necessarily profitable, which the run of vertical farm bust-ups shows plain enough.
Vertical growing, and in fact any growing in a controlled environment, needs big money spent on special growing halls (sealed, insulating far better than ordinary greenhouse glass). In vertical farms the plants are grown on special shelves and as a rule and of necessity these are small plants, lettuces or herbs. Maize or grain we’re not going to produce that way.
Growing those herbs or lettuce in a controlled environment needs a lot of electricity to hold the controlled parameters, things like humidity, light, temperature.
With fuel and energy costs going up, growing like that pays even less.
Question is, did it ever pay at all?
80 Acres Farms ran on investor money. Right in line with the ideology and business strategy of startupism.
Which means rounding up mugs who’ll pump money into your playing at business.
The company started in 2015. In that time it pulled in 350 million dollars of funding, so on average it could have been 35 million down every year.
Sounds like a plan for a few years on the gravy train.
Elizabeth Holmes was on the gravy train for over ten years, raising money for her startup Theranos, more than 700 million dollars all told. At the company’s peak in 2013/2014 it was valued at 10 billion dollars.
And that was the essence of that modern form of capitalism which is startupism.
All sorts of financial instruments work a treat, shares on options, derivatives, market bets on the price on a given day, bonds on options, built up to such a size that a normal person can’t get their head round it. Cut loose from any actually existing property, company values and so on.
The total value of securities is well over ten times greater than the assets that are their material base.
So why not set up startups whose only value is their shares on the market. Wasn’t Theranos, worth 10 billion, that ideal made real? And wasn’t Ms Holmes no fraudster but a visionary and a pioneer, and a business innovator.
You could say that today’s capitalism is heading for a simulacrum, where the only product is more securities backed by other securities, those backed by more again, and so on until it comes full circle and securities become the only backing for themselves.
The next step will be something like NFT tokens confirming the value of those shares, or shares whose only value is that they’re backed by an NFT token.
The NFT craze a few years back was basically exactly that.
That was a prophecy.
Why make something with real value? It’s enough to make something with value on the market. Sell shares, bring in investors, and the actual production can be “underwater” like in vertical farming or not happen at all like at Theranos.
“To attract investors, [many vertical farming companies] came up with business plans and financial models that in hindsight turned out to be unachievable,” said Adam Bergman, managing director of EchoTech Capital and a former Citi banker, in an interview with AgFunderNews, after Plenty declared bankruptcy early last spring.
“Biology doesn’t care how much funding you managed to raise. Everything takes time – and you can’t code your way round it,” commented Henry Gordon-Smith at the time, CEO of Agritecture and an expert in vertical farming.
Interesting thing is, not long before it went under, the ONLY person on Plenty’s board with farming experience walked out. Before it collapsed Plenty burned through 1 000 000 000 (that’s one billion) dollars!
Plenty, but also 80 Acres Farms and other vertical farming startups, get compared more than once to Silicon Valley startups.
And it’s not a compliment, because the only goal becomes raising money for more growth instead of actually building up production. What might work for Silicon Valley companies, flogging yet another groundbreaking bit of software nobody needs, doesn’t work where nature calls your bluff.
Because, for instance: a feature of the Silicon Valley model is that the cost of the next sale tends towards zero.
Take an app in the Google store.
If somebody downloads that software from there, it costs the seller/maker of the app nothing. If we’re selling carrots then every carrot produced needs water, sun, effort. You can’t get by on bankrolling the office alone if the numbers don’t add up out in the field.
Economies of scale can of course bring unit costs down, but not so far that they tend towards zero.
Information can be multiplied for ever. If I’ve got a recipe for a dish, I can pass it on to you (by publishing it on a blog, say). And I’ll still have that recipe. And so on for ever.
But if I cook the dish there’s a limited number of portions. And scaling up is far harder and dearer because, for instance, to do twice as many portions I’ll need a bigger pot, and to cook in that pot I’ll need a gas ring burner (low, wide, for cooking in big pots), and to double the shopping.
Software is instant, you click and you’ve got it. Lettuce has to be delivered on time and in the right kind of transport, refrigerated lorries and such.
And if the app in the google store doesn’t sell there’s basically no cost of production. If I’m left with a massive pot of soup I’m in the shit.
Same for the farmer who doesn’t sell his lettuce. Or can’t get it to the customer on time.
Problems with getting the product to the customer don’t exist where the product is digital and the customer can download it in a second from anywhere in the world. With lettuce that won’t fly.
As if nature herself was calling hypercapitalism’s bluff.
The kitchen is my space for lifestyle medicine.
I'm not a dietitian or a doctor – I'm a chef, and a member of the Polish Society of Lifestyle Medicine. Nutrition is essential to a modern kitchen, and that's nothing new: working from Hippocratic dietetic principles was part of a cook's craft centuries ago. At Rude Kitchen I tie that tradition to modern science — and to lifestyle. Read more about how I bring cooking and lifestyle medicine together on the About page.