Avoid Indoor Ag Pitfalls
Indoor agriculture is a rapidly growing industry, with the vertical farming market projected to be worth $3 billion by 2024 (Resource Innovation Institute, 2021). The cannabis industry is also thriving in the United States, with 77% of Americans living in a state where cannabis is legal in some form and sales reaching $31 billion in 2022 (New Frontier Data, 2022).
However, despite the growth of these industries, only 53% of vertical farms reported reaching profitability and 42% of cannabis operators reported turning a profit (Global CEA Census Report, 2020; U.S. Cannabis Business Conditions Survey Report, 2021). There are several factors that contribute to these low rates of profitability, including poor business planning, underfunding, and mismanagement.
To avoid falling into these traps, it is crucial for indoor farmers to conduct thorough market research and develop a solid business plan before launching their farms. This includes carefully considering their location and customer base, as well as the cost of utilities and real estate. For example, it is important to assess local demand for farm-to-table produce or cannabis, as well as the pricing outlook and branding opportunities for their crops. Additionally, cannabis growers must navigate complex regulations and limitations on cultivation licenses, as well as fluctuating taxes and operating costs.
Investing in the appropriate technologies and systems necessary to control an agricultural environment is also critical for long-term success. While it may be tempting to cut costs in the beginning, this can result in higher operating costs, system retrofits, or crop failures over time. Successful growers prioritize understanding their plants’ biology and investing in the appropriate technologies to operate effectively. By doing so, they can increase productivity, reduce operating costs, and ensure long-term profitability.