Σόνια Λο
Read her LinkedIn bio and you’ll quickly see that Sonia Lo is not your traditional CEO. A farmer, chef, angel investor and mother of two who speaks seven languages and holds a third degree black belt in Tae-Kwon Do, Sonia Lo is the only woman to have served as CEO of a major vertical farming company (Unfold). He also serves as an executive board member at urban-gro, an integrated professional services and design firm focused on the CEA market. He brings decades of combined agriculture, technology and business experience to the board.
Greenhouse grower Senior Editor Brian Sparks recently sat down with Sonia to learn more about the future of controlled environment agriculture, including vertical farming.
Brian Sparks:When you look at the vertical farming industry here in the US, what do you see in terms of the types of growers that are out there and the potential of the industry?
Sonya Lo: Based on what I’ve seen through sources like Pitchbook, the vast majority of vertical farms funded today are either in Northern Europe or the U.S. Asia started with vertical farming about 20 years ago and then had a wave of bankruptcies due to inefficiencies. Once LEDs started to become cheap and efficient, vertical farming as we imagine it today, with fully artificially lit stack racks or vertical planes, was commercially possible.
That said, the vast majority of verticals are in a strange no-man’s land where they receive venture funding for a real asset: new technology. But their income is agriculture income, not technology. This is a disconnect that the industry will have to address, whether it’s franchising its technology, selling component technology, or something that would generate sales beyond product sales. I think the tipping point is maybe a year or two away. Larger farms have economies of scale in terms of automation and the various pieces of infrastructure used in packaging that will allow them to be profitable. This profitability is so important that you are otherwise using an extremely expensive form of venture capital to fund physical infrastructure. At some point, you need to create a return for venture capitalists.
Sparks: Where do you think the opportunities lie in this market?
Sonya Lo: The easiest way I like to think of it is urbanization. Let’s say it’s a city and you have four concentric circles bounded by the distance from that city. The first circle is what I call a microfarm: Something grown at home or in a nursing home, something grown for personal use and maybe a few friends. I think most of what goes into homes is likely to become furniture. People don’t really understand that these products are quite difficult to grow and need care. You might have a super harvest and then the next one will be three cards. If that happens, they’ll probably throw a sweater on top and join the exercise machine in your wardrobe.
The second concentric circle is 25 to 50 miles, and I think of it as kind of a mini farm, and the mini farm is 25,000 to 50,000 square feet. The designs are still being worked out, but I think this can be a game changer if the energy part of it and the automation part of it can be worked out, because it allows you to bypass the “I have to pick early or it won’t travel” problem.
Then I think you get into the 250-400 mile radius where most of today’s players are. They are in that radius because they want to be able to be within the USDA definition of local. They want to be within easy commuting distance, but they’re also focused on cheap energy. This is where you start to have real head-to-head competition between the kind of high-tech greenhouses that are relatively new and the larger-scale vertical farms. I think both have their pros and cons, and it’s going to be a matter of who is better capitalized and who has better operational excellence.
I think at 400+ miles, you really get into a competition between open field and huge inland farms. These growers have huge yields and excel at growing a high quality crop. I don’t think we’ll see a shift away from open field production or anything like that, but I do think there will be changes and competitive advantages in indoor growing from new genetics entering the market.
Sparks: When it comes to collecting data and using that data to make informed manufacturing decisions, what are the possibilities for this part of the industry?
Sonya Lo: I think every vertical farm collects data in some form, whether it’s just monitoring temperature and relative humidity, or the nutrients you’re putting into your fertilization system.
The next step is to collect many very tiny data points about leaf shape, color and quality. I think this is all in the works right now, but you have very vague information because no one wants to share it.
I’d like to see a shared platform where everyone feeds their data, identifies the type of structure you’re growing in, the type of development you’re doing, and other information that doesn’t reveal your secrets. I believe it would help improve the flow of capital in the industry because it creates transparency for capital providers. Unfortunately, I think we are a long way from that.
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The Four Concentric Circles of Controlled-Environmental Agriculture
Brian D. Sparks is a senior editor for Greenhouse Grower and GreenhouseGrower.com. See all author stories here.
