CEO of Plenty Matt Barnard at Web Summit 2018: Can indoor farming feed the world?

At the Web Summit 2018 in Lisbon, CEO of San Francisco-based AgTech startup Plenty Matt Barnard analysed the impact of geography on the food supply chain, explained the low level of digitization in the agricultural sector and showed how indoor farming helps to balance between efficiency and flavour. We wrote down the highlights of his presentation.

How to maintain a balance between efficiency and flavour?

Efficiency or flavour, scale or price — these are the fundamental trade-offs we face when growing plants in a traditional greenhouse. Michelin-starred restaurants and farmers that serve those restaurants, particularly in Mediterranean climates, have access to the best fruits and vegetables. It is, however, hard to find a farmer that serves both a Michelin-star restaurant and the largest grocery store in the world as there is a tension between the grocery store scale and Michelin star quality. Plenty aims to eliminate this trade-off and deliver the products that are tasty, can be produced in large volumes and come at a good price.

Right now a traditional field or a classic greenhouse use 100 times more water than Plenty farms to produce exactly the same crops. Plenty grows 100 to 400 times the amount that a field grows on the same unit of scale over the course of a year.

Another question is pesticides. Consumers don’t know that organic produce still contains pesticides made of organic compounds. Most of us have about 29 pesticides in our body at any given time. Plenty is able to control the growing environment and therefore does not need to use pesticides for the grocery store scale. Products without pesticides taste better, are resource efficient and have a longer shelf life.

Technology is crucial for scaling the vertical farming solutions

The plants that grow on the indoor farm need energy sources to grow. Today, Plenty spends 1% of what they would have spent less than a decade ago to buy the same light capacity for a farm. The same thing happened with IoT sensors that were not effective enough and too expensive only 5 years ago. Machine learning and artificial intelligence which the company needs to drive the plant efficiency while optimising for flavour was not effective enough 5 years ago and 100 times more expensive than it is today.

Why does agriculture have the lowest digitization among all the industries?

Agriculture is a business like any other: the more control you have over the business the more chances it has to be successful. McKinsey put together a chart, where they looked at a dozen industries in terms of innovation and digitisation. In this chart, agriculture is at the bottom, right underneath construction.

This is happening because farmers have to deal with an extreme amount of exogenous risk imposed on their business by the environment they cannot control. There is simply no risk budget left to spend on innovation. Farmers have to think of their business running for years to come and cannot focus on flavour. That is why iceberg lettuce is such a popular product: consumer trials show that customers don’t like iceberg lettuce, it doesn’t have any flavour or nutrition, but that stuff grows no matter what environment throws at it and gives the farmer the best chance of having a business next year.

By bringing the farm inside Plenty can focus on innovation instead of resolving logistical issues and dealing with the uncontrolled environment.

People tend to consume more fruit and vegetables as their income increases

As their income rises, people tend to want the same things: they want a diverse diet, they want to enjoy what they eat and be healthier.

Plenty drives the healthiest diets farther and further down the income levels. To achieve this goal, it is important to make fruit and vegetables last longer. Plenty extends the shelf life of green groceries by cutting time and distance in trucks and planes and removing warehouses out of the picture. Plants are exposed to a controlled temperature range and are therefore less stressed.

Consumers with lower income rarely buy perishable goods as they cannot afford to throw them away in a few days. Once perishability is removed from the purchase consideration, people will start buying nutrient-rich food more often.

How does geography impact modern supply chain?

Fruit and vegetables like a lot of light and not much heat, which means they grow most efficiently in Mediterranean climates and there only 5 of those in the world.

With 7.5 billion people today and rising income — about 3 billion people moved into the middle class recently — we don’t have a way to serve that demand without either farming more marginal land or bringing another mode of production in the food system. Indoor agriculture is going to help unleash that capacity. This is very impactful when you look at where the people live: most of the 3 billion people that have moved to the middle class live in Asia. Given that all the Mediterranean climate zones are far away, where is that food going to come from?

In our modern supply chain food has to travel thousands of miles and weeks to get to where people live because the sun imposes costs on where we grow, when we grow how long our growing season is, how long we need to store the food, which crops we can grow, whether or not they have any taste, whether there’s any nutrition left in the crop by the time it gets to people. These are the trade-offs that the sun imposes and Plenty is working to strip those constraints out of the food system.

We need 390m additional hectares of agricultural land by 2030

Food and agriculture administration of the World Bank calculates how many calories need to be added to the food system between now and 2050. To reach that goal, we need 390m additional hectares of agricultural land by 2030. To feed the world population, we either need to go for more marginal land and drive up the cost of our land, food and water or and another mode of production.

We don’t have a calorie problem in the world today so much as we have a calorie distribution problem and a nutrient problem. One of the ways to get perishable nutrients to people faster is to simplify the supply chain. This is one of the key steps to provide people with better tasting food for less money.