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The Retail Resurgence

The future of food is being farmed in a warehouse down the road

The pandemic has forced us to reconsider our supply chains, and the lettuce of tomorrow might be grown in your neighborhood rather than in a neighboring state.

The future of food is being farmed in a warehouse down the road

Rows of kale being grown at Eden Green.

Photo: Eden Green Technology

Do you know where your lettuce comes from?

Before the supermarket, I mean. It would've been on a truck from a distribution center, or some other warehouse. It probably flew on a plane from Arizona or Mexico or somewhere else more temperate, where it also was probably processed before it left the farm. Even outside of a pandemic, that's a lot of touch points.

But there's a growing movement to reclaim spaces in cities and towns across the U.S. to grow produce locally, using farms that fit in anywhere they can. Companies like Eden Green Technology and Bowery Farming are aiming to use technology to create a network of distributed microfarms that can supply communities with the produce they need locally.

Early on in the pandemic, grocery stores were ransacked by people concerned the goods they needed wouldn't be restocked anytime soon. Retailers weren't prepared for the crush, and even after new or accelerated pivots to ecommerce, problems persisted: If everyone needs to be socially distanced in a distribution center, or if someone tests positive at a processing plant and an entire shift needs to quarantine, it becomes that much harder to keep shelves fully stocked.

For produce that can only be grown in certain climates, the challenges became even more severe. In March, borders around the world closed, and international trade became much harder. Even getting produce from one side of the U.S. to the other was tough; on top of a pandemic, the country is experiencing a shortage of truckers. Some grocers turned to whatever outlets they could to source things for their barren shelves.

For Whole Foods in the Northeast, the answer was Bowery Farming. The company's nearby vertical farm in Kearny, New Jersey, allowed it to deliver products right to the store, rather than a distribution center. Prior to the pandemic, this path wasn't particularly economical for Bowery, the company's chief revenue officer, Carmela Cugini, told me. But after Whole Foods' distribution center was having pandemic-related issues, it was the only approach. "At one point they said, 'Hey, ship us anything you have,' because their shelves were empty," Cugini said.

This likely won't be the model that Bowery follows moving forward, but having full control over what's produced in each farm allows it to be nimble in uncertain situations. "Being in a [direct sales] world is very, very expensive, and it's not always cost-efficient," Cugini said. "But when you have things happen, like it happened with a pandemic, it definitely is a lever we can pull that really helps serve that community as well as the retailer."

In the past, Bowery has shifted its production schedules to meet retailers' demands. The company's vertical farms can grow produce twice as fast as traditional farming methods, using a fraction of the water and space they need.

Right before the pandemic hit, there was a nationwide arugula shortage, and retailers came to Bowery with a request to switch to the peppery green. "Because of the way we farm, we could adjust the trays in our system, and we were able to meet their demand and grow more," Cugini said. "Because our crops turn pretty quickly, it makes our supply chain not only safe and pretty much on-demand."

Most urban vertical farms have the ability to be installed in small facilities, at least compared to traditional farms, and in most cases, they rely on machine vision and sensor technologies to monitor the health of the crops. In normal times, this means high-efficiency, high-yield crops, and in a pandemic, it also means that few people have to come into contact with the products before they get to the end consumer. Bowery, like others, doesn't use pesticides in production, and claims its process is so clean that consumers don't even need to wash the veggies before eating them.

Other vertical farms see a more radical future for the way we source and buy our produce. For Eddy Badrina, CEO of Eden Green Technology, the traditional ways of shipping goods all over the U.S. is beyond repair. "The cracks in the supply chain are so large that they can't be pushed back together," Badrina said. Eden Green's farms can be harvested between 11 and 13 times a year, and require about the equivalent of two households' worth of water to run in about 65,000 square feet. It's looking into rolling out farms wherever it can: parking structures in Dallas, the roof of a distribution center it services and even airport parking lots. The company is looking into making its farms work in smaller structures that could be even closer to a dense urban core.

Some of Bowery's produce on their shelves. Photo: Bowery Farming

With the pandemic forcing everyone home, it's led far more people to cook more meals than usual. Not only has that shifted how produce needs to be packaged — far less for restaurants and other out-of-home settings — but also what's being consumed. "You're already starting to see a shift in the distribution chain," Badrina said. "The McLanes and Syscos of the world, they're trying to link up with smaller farmers and brokers, because they're anticipating a decentralized model as well."

For Badrina, the belief is that local communities, perhaps even sponsored by municipalities or states, could run their own vertical farms, potentially even working with delivery companies like Uber or DoorDash to get orders directly to consumers in the future. What's so different picking up an order from a greenhouse than a restaurant, Badrina asks. For him, there's a future where the grocery store is completely disrupted out of existence: With the rise of delivery services like Amazon's Prime Now (and its new custom-built Whole Foods ecommerce order fulfillment centers) and others spurred on by the pandemic, there's little reason to step foot in a grocery store anymore. "The only things that grocery stores have left to stand on is freshness," Badrina said.

And if your greens are now being produced in a facility that aims to be as clean as a semiconductor lab and at your front door far faster than they could be coming from the other side of the country, what else would you need from the supermarket? "They're not going to compete on mops and flowers, so if the grocery stores don't figure it out first the Amazons will — and if the Amazons don't figure out first, the DTCs will," Badrina said.

But for now, much like cashierless grocery stores and robot package delivery, vertical farms are still a technology very much on the horizon. Bowery's products are available in roughly 650 stores in the U.S. (although Cugini said that number should rise to 1,000 by January), and Eden Green is still scaling up in Texas. There are other companies in the space, such as Square Roots, Iron Ox and AeroFarms, but there are roughly 40,000 stores in the U.S. that sell groceries. Badrina said that he expects in the next three to five years to see a truly decentralized network of local vertical farmers spring up ("It only takes one or two years for investors to realize the cash flow opportunities," he added), and Cugini agreed the pandemic has been a catalyst. "When the pandemic hit, it absolutely shined a light on the importance of what we bring, and has accelerated the pace in which our category is growing," she said.

That being said, it doesn't seem like the grocery store is going to be disrupted into oblivion, at least anytime soon with the current infrastructure we have in the U.S. If you're making tacos for dinner at 6 p.m. and you realize you've forgotten the cilantro, are you going to wait two hours for a Prime delivery, however long the next Uber would take to get to the store and back, or are you just going to pop down the road to your local grocer?

The Retail Resurgence

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