Join vertical farming expert Jim Pantaleo and the GroAdvisor team as they discuss best practices for planning and building commercial vertical farming systems in 2020.
Vertical farming is the practice of growing crops in vertically stacked layers by incorporating controlled-environment agriculture equipment to optimize plant growth. Tune in to learn about: – Reliable year-round production – How to remain unaffected by weather – Better space utilization – Minimizing water usage – Building an environmentally-friendly business – Ridding chemicals and pesticides – Reducing transportation costs – Improving energy efficiency and more
Announcer [00:00:02] You’re listening to the Greenhouse and Indoor Cultivation podcast presented by GroAdvisor. Tune in to learn strategies to grow your business, get the most out of your cultivations systems, and advance your horticulture career.
Brandon [00:00:17] Hello, growers and business owners. It’s Brandon and Will, your favorite podcast hosts for the Controlled Environment Agriculture Industry. I just wanted to tell you, if you haven’t heard yet, that we’ll also be launching guides, blogs and videos, at groadvisorworldwide.com. I’m really excited about it because we’re going to be giving people practical, tactical guidance instruction all filled with expert advice, not just from us here at GroAdvisor, but from other greenhouse and indoor farming experts. Each episode will show a new expert from traditional horticulture, cannabis, vertical farming, vegetable farming, system design. It’s going to be amazing. So if you want to learn how to scale your horticulture business and career from start to cultivation success, you’re going to want to tune in. Go to our website, like us on Instagram, Facebook, LinkedIn, and we already have a wait list. So join our newsletter so you can be the first to know when we released new guidance and strategies to realize your true growth potential. All right. I’m going back to doing podcasts and stuff. I’ll talk to you guys later. Thanks.
Brandon [00:01:17] Hello, growers. Thanks for joining us today for the Greenhouse and Indoor Cultivation podcast. Today we have Jim Pantaleo, indoor a vertical farm operator, an adviser speaking with us about best practices for vertical farming systems. So, Jim, thanks for joining us here today. You have quite the extensive resume. Why don’t you introduce yourself to our listeners?
Jim [00:01:36] Thanks, Brandon. I’m Jim Pantaleo. And for the last six years, I’ve been involved in indoor vertical farming, primarily indoor vertical farming. So growing food indoors, using only LED lights as photosynthesis. I’ve had a number of different roles in the industry over the last six years. Everything from, you know, writer, speaker to farm operator to conference chairman of Indoor Ag-Con, which is sort of the de facto gathering place for indoor vertical farming. Prior to that, I spent 20 years in software licensing. Half of that was Hewlett Packard. So I was a technology guy. And it’s been a journey. And I am looking forward to chatting with you today and sharing that journey with you and hopefully inspiring and helping other people that are listening to either make a change from what they’re doing now to absolutely getting involved in indoor vertical farming in terms of, you know, a career move. So it’s important and I’m happy to be with you guys to day. So thank you.
Brandon [00:02:56] Yeah. Thank you, Jeff. So let’s just get right in here. You know why you’re so passionate about the indoor farming industry and you came from technology for 20 years. You say you want to create positive change in the world. You see vertical farming as that future. What do you envision for the future of vertical farming? And why is this such an influential program, and industry right now?
Jim [00:03:20] So, as I’ve always said, when I started in this industry, the data scared me.
Jim [00:03:28] And when I say scared, I mean at a like a visceral level, when you think about the data. And so the data is, and when we talk about indoor vertical farming, everybody sort of sings from the same hymnal, is that there are seven billion people on the planet today. By 2050 and another 30 years, there’ll be another three billion. So that will top out at about 10 billion. And then here’s the scary part in that 70 percent of all arable farmland on the planet today is gone, unavailable, either built over or simply not not there. 70 plus percent of all available potable water goes toward – potable, maybe that’s not the right word – but water goes towards agriculture. In 2050, upwards of 80 percent of human populations will live in urban areas. And then you pile in all the stuff that we’ve just talked about with a supply chain, food miles, you know, over usage of pesticides. Well, again, lack of water resources, all of those scary kind of, you know, areas of our future that sort of drove me into understanding how I could help. And how I could help is knowing that indoor vertical farming will never be an answer to current modern agriculture or large scale corporate farming, if you will. But we could get to a point where we would be able to supplement modern large scale farming. And when you look at what’s happening over the last six months with COVID And you think about supply chain constraints and you think about food security and insecurity, it just all makes sense. But we’re at the very beginning of it. I know that. And we’ve got a long time to go until it’s proven. Make it real in terms of, again, that supplement to large scale agriculture. But I got into this, you guys, by my fear; essentially, I was afraid. I was afraid for myself and I was afraid for my children.
[00:05:58] Yeah, especially during COVID-19.
[00:06:01] And the era that we’re living in, it really does create the climate where vertical farming is a great solution for saving some of the supply chain, bringing produce closer to the neighborhoods through which they’re served. When a lot of people think of vertical farming, they think there’s so much infrastructure that goes into it. How could that make sense over outdoor farming? But they don’t realize all the infrastructure that goes into delivering the produce. And it’s massive as well.
Will [00:06:32] Right. I think there’s really no no doubt in my mind that vertical foremans really critical to the future. And Jim, I’m curious, you know, when I think of vertical farming and working with our clients, typically, you know, things always come back to cost considerations about all the other costs associated with it. You know, you’ve got your costs of, you know, your farming systems, your electricity, other resources. Jim, how do you think about the cost associated with vertical farming, especially when compared to that of, you know, greenhouses or outdoor agriculture?
Jim [00:07:14] Yeah, so you’re you’re spot on in that cost is a primary challenge today for indoor vertical farming. There is an equation that is used by many academics, and that is what is your yield based on your per kilowatt hour charge? And if that per kilowatt hour charges a nickel or less, you’re stoked. You’re happy. But right now that that equation of what is your yield, how much product can you get based on your per kilowatt hour, usage is really critical. Everything else that you that I’ve that I would tell you right now is all secondary to that. And the everything else is: you got it, lights, labor, energy, water, building costs, consumables, etc, etc, etc.. So all of that ties into the critical equation of how much can you grow based on the kilowatt hours that you have to pay for. And then again, ultimately, and what I just said, actually, you could wrap that up into a little bow of a of a COGS analysis. So your cost of goods sold analysis, which is “How much money is going into to create this plant and to sell this plant?” And again, everything from again, labor, energy, lighting, etc, etc, building costs, insurance. So… it’s… You’re right, it can be solved, some people are doing it well now, some people aren’t. You are looking at a failure. I’m a failure. I’m a two time failure. Through no fault of my own, I like to say. But I have been part of two farms that are no longer.
Jim [00:09:20] And when you are when you experience failure, you learn a lot. You learn a lot.
Will [00:09:29] Absolutely. Are there are there certain? Just a quick follow up Jim. Are there certain areas of the country or certain areas of the world where your per kilowatt hour makes more sense? And just really quickly, are there companies that come to mind that are doing it especially well?
Jim [00:09:47] Yeah. So, you know, I haven’t really studied that, William. You know, that’s a great question. But clearly, where you have low energy prices is where you want to set up shop. And then, of course, the other thing is, that when we’re talking about indoor farming, if we’re not talking about containers, we’re talking about buildings or structures, again, where there’s no ambient light coming and no natural sunlight. Right. All of your photosynthesis happens through LED lighting. But I can say that the first farm that I was a part of, one of the critical errors was that the building, although a great building, was leased, and it was in a very… I’d say a high income area of Southern California. And so when you look at perhaps some of the big farms today and where they are, I mean, you look at the Big Three: Bowery, Plenty, and Arrow Farms. You know, Bowery and Arrow Farms are in in New Jersey, in Newark, which is traditionally an area that has been challenged in a number of levels.
Jim [00:11:11] South San Francisco, where Bowery excuse me, were Plenty, is not the lowest rent income district, if you will, but it is an industrial city. In fact, if you fly in the San Francisco airport, you’ll see on the side of the mountain, says South San Francisco, the industrial city.
Jim [00:11:29] It’s in huge letters on the side of the mountain. Brandon, you know, this being in Northern California, guy. But, you know, having said that, I think that there’s a lot more to this in terms of where folks set up shop, which is a whole other discussion when we talk about some of the larger retailers in our country, the guys that are down in Bentonville, Arkansas, for example. Or when we talk about Plenty, we talk about the fact that they are in part of the Whole Foods family. And just across the bay in Emeryville, there is a Whole Foods distribution center. And so how much sense would it make to grow your food so close to that disti center and then ship it right over and away you go in terms of distribution to West region Whole Foods stores, for example. And it’s not a lot of SKUs. It’s not a lot of crops, maybe three or four. You know, some basil, perhaps chives, maybe some spinach, whatever they’re growing there at Plenty. And so those kinds of things make sense in terms of buildings. But to your point, William, you absolutely 100 percent need to be in areas where it’s beneficial for you, where there are tax benefits and low, low rents and all the other things that come into play.
Brandon [00:13:00] I hate to hear you say that you think you are a failure Jim because you’ve done so much. But I am interested in walking through those facilities. What’s it like? You know, I mean, you you’ve seen probably the good and the worst. What is it like in these facilities and day to day operations? And tell us a little… Give us a picture of some of what that looks like.
Jim [00:13:22] Yeah, it’s fantastic. It’s fantastic. My first farm was in a 30,000 square foot building. In it in the form factor that we grew in was a small portion of that. So maybe about six thousand square feet. And it was floor to ceiling, about 20 feet up. And I have some videos on my LinkedIn profile, if anybody cares to see that. But their urban produce system was fascinating in that it was a system that was like a dry cleaners. So when you go to the dry cleaners, your shirts and your pants are like hanging in there on a track and that person plugs in where your clothes are. And it swings around. This particular system was like that. And it was really cool. It was huge. We were able to load thousands, literally thousands of plants onto it. We harvested more than a ton of product a week. It was fantastic. I’m so sorry and sad that it’s not still in existence. And there are a number of reasons why. But when you’re talking about growing into large scale commercially, you know, it’s not for the faint of heart. And you have to be ready to deal with the biology of it all, including, again, you know, tonnage of product. And so that was my first foray. The second farm was even bigger. And that was an experimental farm out in Las Vegas called Oasis Biotech. Oasis Biotech was in a 215,000 square foot facility about five miles from the McCarran Airport and very close to a number of really key Las Vegas produce distributors, which was the plan of action for that. There were some challenges with the building. There were some other challenges. And I’m also sorry that that operation is not still operating. But, you know, again, we learned so much from failure, you guys and I could speak at length about why they focused on Las Vegas. Certainly, I would love to see farms come back to Las Vegas. Clearly, when we talk about COVID, we know that restaurants are super strained. I can tell you that one of the primary reasons why Oasis Biotech’s set up in Las Vegas is that you have 43 million unique visitors every year. At least you did. So the the modus operandi was to engage with key produce distributors in the valley in the Las Vegas Valley, fed those 43 million eaters and visitors who would stay at places like the Bellagio or the MGM or the Venetian. And so still a very, very smart thing to do. And I’m certainly hoping somebody will continue to focus on that. But again, you know, you guys, if you’ve read this story of and I’m not comparing myself to this guy at all, but Abraham Lincoln failed atlike everything he ever did, you know, starting with getting his bar exam. He failed the bar exam, try to be a senator, fail being a senator, tried being president, vice tried, failed at that and kept coming back and coming back. So that’s really kind of the lesson I think I take from these failures is that you learn a lot.
Brandon [00:17:13] Certainly. Yes. Well, I’d love to see a picture of I’d seen the insides of these facilities.
Jim [00:17:20] You know, oh, I have some I’m not happy to share.
[00:17:24] Yeah, well, or drop a link on my on the transcript of this for viewers to take a look. Sounds good. But yeah. You know, I mean, you hit on a lot of the major benefits, you know, year round production, unaffected by weather, space utilization. I mean, the list goes on and on. So for those looking to start a vertical farm or foray into this exciting and very entrepreneurial business, you know, what are some of the factors that they should look out for? Maybe some of the failure points that you’ve come to realize.
Jim [00:17:56] Yeah. Great. So great question. So when starting a farm, I always like to say you absolutely have to prove the building and then you prove the crop. And that could take a little while. And when I say prove the building, you must make sure that all your environmental controls are in line with the actual crop and the plant that you… If you have any failures, if you will, of energy or if there’s any issues with water, with your dosing systems. You know, again, with environmental controls in terms of heat, humidity, et cetera, air flow, all those areas are really super important in terms of proving the building first. And, you know, investors don’t really like to hear that it could take six months to a year to prove a building, but it’s actually true. We’re talking about biology here.
Jim [00:18:58] We’re not we’re not it’s not like you can just whip it out and suddenly have, you know, a solid crop that is grown in volume consistently with amazing flavor and quality. That’s just not going to happen. So when talking about starting a farm, my advice and recommendation is always start small. You know, I’ve been a part of some multimillion dollar operations. I don’t really want to talk to your audience, gentlemen, about that.
Jim [00:19:37] As much as I want to say, good God, if you could find 5000 square feet and you’ve got a good water source and you can handle the electricity and you know that you’re close to potential customers. Whether, again, those were things like I spoke about earlier, about produce distributors, those folks that distribute to hospitals, restaurants, hotels, et cetera. And again, knowing the restaurant portion of this equation is struggling right now. But on the other side of that, are things like retail. Who who are your big retailers nearby, as well as one of the biggest revenue sources that folks in indoor vertical farming today I don’t think focus on at all. And that is product based growing. And when I say product based growing, I want you to think about if you’ve had a Naked Juice green machine product, that’s a PepsiCo product. The green machine is a actually it’s a it’s a powderized product of influence. But PepsiCo own Naked Juice. Naked Juice, procure raw inputs from indoor farmers. And I would put myself in that category and those inputs go into end products that are bottled. And so I think that when you talk about revenue sources, folks need to think about not only growing for a shelf in a grocery store or a plate through a distributor or restaurant, what have you, but also for a product in a bottle. And we know that when you talk about folks like Odwalla, V8, Coca-Cola, Bolthouse Farms, again, PepsiCo and many of their brands, these folks are clamoring for clean, consistent, excellent product and excellent product inputs in volume. And when we talk about product inputs, I can share with you that the product that we sold was wheat grass. So wheat grass is a totally unsexy product. But it grows really quickly and it is part of an input of many of the drinks. There are other ubiquitous inputs that can be grown in indoor farms for product based growing, and they include things like parsley, alfalfa, kale and spinach along with wheat grass. And so I challenge anybody listening to just go to a store and grab a green drink and look at the ingredients and you’ll see wheat grass, parsley, alfalfa, kale, spinach. They’ll be on that list and you can grow that all day long, starting as a small operation. Building those relationships with product companies or again, retail, or again, food distributors. And that’s the way to do it. But there’s a lot more to this, you guys. There’s a lot more to it.
Brandon [00:23:01] Well, you say that we grasses and sexy. But, you know, I remember back to Jamba Juice and I think Jamba Juice really made their company quite large from the wheat grass shot. And it really became popularized at that time.
[00:23:15] Jamba Juice was also a customer of ours and they were a great customer. They have been sold to another company. Jamba Juice has fantastic distribution centers, and they’ve got a really solid group of franchisees. So Jamba Juice is a franchise. And so, here in the western region, all the way up to the Alaskan border, down to the Mexican border. You have Jamba Juice franchisees that if you walked in to a Jamba Juice, well, they’re kind of closed now, aren’t they? A lot of them are in malls, but our wheatgrass would be there. They would cut you off a three ounce portion, they’d cold press it in front of you and give you a little slice of lemon. And away, you go. They were a fantastic customer. So I want indoor farmers and those that really want to get into this industry to think about that product base growing those kinds of entities.
Brandon [00:24:17] Most growers and most industries should think on a product basis. You know, you see well in a controlled environment, it’s obvious, you can control everything from a light spectrum to every other input variable and you can end up with more highly nutrition crops. You can target specific nutrients potentially by adjusting spectrum of your lights, and that can create value and your end product. On the cannabis side of things, you know, if you’re making CBD versus THC products, that should be thought about, everything from strain selection down to the extraction methods and so forth. So I think in many industries they should be thinking product based.
Brandon [00:24:58] You mentioned the restaurant industry as well. You know, I’ve seen restaurants. I think there was, a it was a Michelin chef at a restaurant up in California in the Sonoma region, was working with a local grower who had a greenhouse’s in adjustable spectrum lighting to increase or to change the flavor profiles of various herbs, culinary herbs, and other crops to have a unique differentiation in their dishes.
Brandon [00:25:25] You know, and I think that’s brilliant. And I think really everyone from a small to the large guys should be thinking that way. But I’m happy that you brought that up.
Jim [00:25:34] You know as well as I do of being a former lighting guy, that the notion of tweaking a spectrum in order to tweak a plant or a flavor is critical. I would take it a step further, however, Brandon and I would go into seed and get down to the germplasm, if you will, if you want to be a plant nerd with me for a moment, in that that’s where we need to be in indoor vertical farming. Just like they are, you know, with field farming in that seed, there’s seed created today. And for many, many years, that is somewhat… Choose a pest resistant or a drought resistant seed or, you know, what have you. I mean that you know, one of my favorite stories is when we talk about seed and plants and how we can go from like one part of our humanity and where we are in the in the time spectrum of agriculture, you know, go back 60 or 70 years to Dr. Norman Borlaug, who, as you might know, won the Nobel Peace Prize in 1970 for his work in the 1930s and 40s and 50s in China and India, creating a dwarf wheat plant, because at the time, the only wheat that could be grown in those areas was a taller wheat that would blow over in the wind. So Balrog comes along and creates this dwarf wheat plant and literally, literally saves the lives of millions of people, hence the Nobel Peace Prize.
Brandon [00:27:28] What are some of the best practices you see that you would recommend for these growers?
Jim [00:27:33] Yeah. So when we’re talking, about if we’re talking about what I’m doing with Indoor Ag-Con and how we’re trying to bring people together, there you know, we’re really talking about a whole gamut of of disciplines. You know, everything from A.I. to robotics to, you know, sensors, computer learning, all of this super, super cutting edge areas of farming, which, of course, you’ll see, pardon the pun, growing a lot in in greenhouse farming. And again, when we think about fields farming and what’s going on in field farming with A.I., how does that transfer to indoor vertical farming? You know, simple things. Again, I mentioned sensors. You know, how dry is it in this particular part of the farm in terms of the soil? Do you need to amend that? What are issues with, you know, the plant in general? But as we look at indoor vertical farming, all of those areas of technology are huge. And we touched on lighting. We well know some of the strong lighting companies, horticultural lighting companies on the planet today are doing some really amazing work. But I just feel like it’s if and then again, to pivot, if you don’t mind. You mentioned the work with Indoor Ag-Con. So I am I’m the content chairman of Indoor Ag-Con. I’m a speaker wrangler. Indoor Ag-Con was purchased a year and a half ago by three really great people that are looking to kind of spread increased awareness and really build Indoor Ag-Con to sort of the premier gathering place among this industry. You know, sadly, COVID put a kibosh on our event in Las Vegas this May. They have pivoted to have online events called Indoor Ag-Conversations, which is cool. And we’ve been bringing in a lot of industry folk to talk about everything from food safety, to folks like Arrow Farms and their journey, to again next week, having a bunch of guys that have worked in space crop production from NASA and elsewhere.
Jim [00:30:06] So. Part of that vibration for me is to really keep the focus for the wider world on those areas.
Jim [00:30:18] Again, if it’s technology or people, but also the other thing that I’m really wanting to focus on also, it’s kind of laying this out there from much humanistic perspective. You know, we’re we’re three dudes right now talking, but there are a lot of really amazing women in indoor farming right now. In fact, I put together a panel couple of weeks ago called Women in Ag and had some just amazing women. So there’s a lot of areas that I really want to help push forward, and I’m super lucky to be able to do that. And it’s been a it’s been a really fun journey. And so many voices out there, so many voices. And I just want to give those guys a platform.
Brandon [00:31:03] Absolutely. Yes.
Brandon [00:31:05] Well, you know, you’ve really touched on a lot of points there. You know, I think when it comes to systems integration, we’re no strangers to that. You know, we offer the lighting, the racks, benches, fertigation, control systems, working with Argus, integrating Argus and some other lesser known control systems like Microclimates and Century IQ over at Surna. You know, everyone has their place. There’s certainly a lot of exciting new technology out there. So from a technology perspective, supply chain, humanistic, anything that you spoke about, it’s all interesting. You know, where do you see this industry going in the next 10 years? You know, is this. Is this a century away? Is that 10 years away to a really to a real scalable level?
Jim [00:31:52] Yeah, we’re 10 years branding for sure. Or less. Much less than I really want to point out something that was in the news today, is a really interesting gentlemen that you may may know. His name is Victor Verlarge. Victor Verlage for the past seven or eight years has been Walmart’s main driver of engaging with indoor vertical farms in the United States. Why? Because Walmart has something like forty seven distribution centers around our country and they would like nothing more, kind of like the Plenty Whole Foods scenario we talked about earlier, than to cut their supply chain and have a certain amount of the SKUs or product come from a farm extremely close to them. And so, Victor Verlage, actually, this week it was announced that he’s leaving Walmart and he’s going to work for 80 Acres Farms, the Cincinnati outfit run by Mike Zelkind and others. And so when you think about supply chain, when you think about the biggest, strongest retailers in our country, what’s happening in terms of movement engagement, collaboration… You know, there’s an indoor farm in Cleburne, Texas, called Eden Green. Eden Green is literally across the street from a Walmart distribution center.
Jim [00:33:30] So when you think about the next five or ten years, and you think about really, really how these farms can get down and get going with the supply chain, these are the kinds of things that you have to think about, whether it’s Plenty at Whole Foods or whether it’s Walmart. And then Victor leaving Walmart and going to work for an indoor farm, 80 Acres. It’s all part of it. So I, I really feel that in the next five plus years, you’ll see these kinds of movements. Certainly you’ll have well-funded farms like the Big Three, but you’ll also have smaller farms that will do great things also, some of them I’ve mentioned today. And I just really feel that, again, as I’ve always said, and anybody will tell you this, is that indoor verical farming will never be the answer to all Ag. They will only be a supplement. And as we see what’s happening again with COVID in terms of supply chain, it can be a really fantastic supplement, especially when we talk about food safety and supply chain.
Brandon [00:34:39] I agree. I couldn’t agree more.
Brandon [00:34:43] Well, Jim, I have to say, I really appreciate your insight. There’s been a lot of good information on this call. You know, I’m going to be dropping some links here for those that scroll down on the page or go to groadvisorworldwide.com and check out this podcast.
Brandon [00:34:58] We’ll have some links of photos and resources for everybody. And I really appreciate you coming on, my friend. This has been great. And we’ll talk more soon.
Jim [00:35:07] Thanks. Brandon. I really appreciate it. William, my pleasure. You guys are doing great work. Thank you very much for having me.
Will [00:35:13] Thank you, Jim. Thanks for being here.