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Posted December 29, 2010
Spend Your Time and Money Elsewhere!
I regularly read business books of various genres and was extremely disappointed in "The Vertical Farm". After a hundred pages that labor over the history of world agriculture and endless environmental rants, Dr. Dickson Despommier doesn't offer the reader even a shred of economic or cost and return data to substantiate the vertical farm. Nothing. After 256 pages, he simply closes his book by literally asking the reader to "suspend your own sense of reality and imagine along with me" of what could be. Holy smokes, sounds like Dr. Despommier has had some particularly fine success with hydroponic growing!
However, let's just do a back-of-the-envelope feasibility. The only economics presented by Dr. Despommier is the assertion that hydroponic farming can produce 10 to 20 times the crop output per acre than that of a traditionally maintained farm field. Let's run with that and assume an acre of Iowa farmland costs $10,000 or around $.25 per square foot. Assuming a median of 15 times the efficiency of the traditional farm, the hydroponic equivalent cost would be $3.75 per square foot, which will be our baseline comparison to solely the construction cost of the vertical farm. As you read through the book, no expense is spared in the vertical farm concept. It has at least the cost of a high rise office building shell (say, $75 per SF) plus essentially a hermetically sealed, clean room environment, tons of growing equipment, photovoltaic panels, and artificial illumination (easily an additional $225 per SF). Let's add land cost, design cost, financing costs, and other fees and the vertical farm is around $375 per SF compared to the Iowa farm equivalent of $3.75 or around 100 times more expensive before a seed has been planted! Assuming any financing entity would want an annual 15% return on total cost for the risk associated with this specialized facility and one adds a twenty-five year amortization of costs, the resulting annualized capital cost for the vertical farm is $71.25 vs. $.375 per SF for the Iowa farm land (a 10% return on land cost) or an annual capital cost that is 190 times more expensive.
But that is only the construction cost. Remember, we have to pay for the vertical farm's operating costs, which include labor, artificial lighting, the seed nursery, vertical transportation, and real estate, among others. There is no machinery for the vertical farm harvest. Everything is hand picked and maintained. Let's just assert that, in addition to the upfront capital costs and a return on those costs, it is 20 times more costly to actually grow and harvest crops from a vertical farm.
So, just as a ballpark, the annual capital costs and operating costs are 190 times and 20 times more expensive, respectively. Let's just theorized that the vertical farm cost premium is somewhere in between the two premiums, say, 40 times as more expensive to deliver bananas to your grocery store. As a result, the bananas that now cost you $.50 per pound will cost you $20 per pound! (Again, I would love to have more data, and after reading 268 pages of rants, you would think that I should, but none is presented).
In summary, "The Vertical Farm" does not meet the feasibility sniff test. Dr. Despommier is clearly a dreamer, as all futurists should be. However, let's offer up some ideas for solving our many (and well articulated by Dr. Despommier) environmental problems that have a modicum of a chance for seeing the light of day.
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