Vertical farming is gathering momentum around the world as consumer demand requests eco-friendly food grown with smaller carbon footprints.

The evolving method involves stacking soil on shelves and growing food indoors in a controlled, high-tech environment – think a greenhouse meets a warehouse.

It’s estimated industry could be worth as much as $A16.78 billion globally by 2026, according to Allied Market Research.

Associate at JLL Energy & Infrastructure Advisory Peter Davies said using LED technology and hydroponic systems to grow vegetables was making it possible to move farming into densely populated urban areas.

“The main advantage of vertical farming is the increased crop yield that comes with a smaller unit area of land requirement,” he said.

“It’s also very topical right now with the disruption from COVID-19 pushing countries to look for ways to be more self-reliant, not to mention growing consumer awareness over food miles.”

Vertical farm growing lettuce

The hydroponic lights help grow the lettuce

Is there demand for vertical farms?

Mr Davis said there was a large investor appetite for vertical farms with multi-million dollar investments given to startups looking to scale up production.

Berlin start-up Infarm, which aims to deliver the required instore tech to supermarkets, also raised $A131 million from venture capital investors.

“A few years ago, there was a first wave of start-ups who had varied levels of success but not all of those concepts thrived,” he said.

“It’s a similar path to that taken by independent breweries getting locally-made, premium-priced products on the supermarket shelves in recent years.

“The supermarket gets added appeal as a more in-touch retailer, while the start-up gains valuable exposure.”

Mr Davis said supermarkets around the glove are partnering with vertical farms in response to environmental concerns and changing consumer preferences.

“Producing crops in controlled environments is fast becoming a major component of the grocery sector’s carbon-cutting efforts,” he said.

“Supermarkets are eager to reduce their carbon footprint by getting closer to their end consumer, as we’ve seen more broadly with the growth of last-mile logistics.”

A worker inside a vertical farm

Vertical farms are supposed to create better growing conditions.

Cutting out the middle man

Other vertical farming firms, such as Paris-based Agricool which produced its first box of strawberries from shipping containers in 2015, are selling direct to consumers.

Such locally-grown food credentials are a big part of its appeal, with energy and water savings also a factor for eco-conscious consumers.

“People may be willing to pay a premium for fruit and vegetables which come with benefits such as a lower reliance on pesticides than mainstream produce,” says Davies.

“There’s been a focus on high value crops such as salad leaves and herbs such as basil and dill, in part because of the high initial outlay required on technology, from hydroponics to aeroponics or even aquaponics, where nutrient-rich wastewater from fish tanks is filtered.”

With vertical farms having high operational costs for inspections, maintenance and harvesting, sustainable energy is also a must-have.

“If the energy source is not clean then this undermines the whole proposition,” he said.