So You Want to Build a Farm
PART 1
We are back after taking a couple weeks off for summer vacations. Yes, we are feeling relaxed. Thank you for asking.
While our content will vary week-to-week, we wanted to answer our number one question from entrepreneurs, friends, family, and inventory… Where do you start? Well, maybe it’s the second or third question. The first is usually, what’s CEA? But we find that most of our prospective and current clients are wondering how they start their project. What’s the first step and what are the first conversations they need to have.
During our first few meetings with a client, we only want to understand the first 1-5 years of business— these are often the most critical years— where most, if not all, of the construction takes place, the bulk of hiring occurs, and funding is secured. We often discover that many of our entrepreneurs and founders are new to the industry. They have a great idea, they have a building or an opportunity/partnership, but they aren't entirely sure what’s next or how to navigate the process of building their farm. Beyond the five years often are the biggest and most ambitious dreams and plans, which are far more realistic and obtainable with a stronger foundation (sometimes literally) and a better understanding of what they are doing, where they are doing it, how they are doing, and most importantly, why they are doing it. And while we love to see the big picture and keep dreaming and planning, we have a laser focus on those early years and those early days of the project.
In part one of this series, Jessica Shoemaker, our Chief of Cultivation, shares a step-by-step guide to building your farm and where to start. Where are clients have found success and learned from missteps and failures.
“The process of growing anything is easy. You have a seed and you give it soil— a medium— and water, nutrients, and light and it grows and you harvest it. But you are generally not in control of all of those things. What’s great about controlled environment, is that you have a better capability to work to control those things, and keep it in a way that plants want and will be more likely to grow, taste better, and look good without the negative consequences you often see with soil farming like wind or sun damage, insect or disease pressure. Outside you are at the mercy of nature and that can be challenging.”
1. Know how to grow or find a co-founder who does.
If you’ve never grown a plant hydroponically, there’s going to be a steep learning curve to starting a vertical farm, or a container farm, or a greenhouse… it doesn’t matter. If you’re growing hydroponically, you need to know how to grow under those conditions and/or hire someone who does.
2. Do your market research.
You need to know what you’re going to grow and sell and who you’re going to sell it to. We find this is one of the top things people come to us with: they don’t know what they are going to grow and how they are going to sell it. And more importantly, they don’t know what they can actually grow or the limitations of each system. Some systems work better for different types of crops, as much as we believe that every system is for every crop, it’s simply not true.
We’ve seen pervasive messaging in the industry where growing is super easy, you can control it from your phone, you can harvest and sell your crops in a short amount of time, and there was a ton of money to be made without really doing things. It felt like segments of the industry were being dishonest because if you’re farming indoors or out, you’re gonna get dirty and it’s hard. Also, the tech companies (tech or tech suppliers) have convinced a lot of people you can grow anything in any system, although it might not be economically viable, but you can still grow it. This feels like a lot of people who were interested in the industry were being set up for failure.
Loose leaf salad mix and basil are great first crops because everyone wants them. A salad mix is ready to go, chefs and customers like the convenience of a pre mixed salad is what we’ve heard from retailers to food service. Everyone can use basil, everyone likes it, and it has one of the high profit potential.
3. Be realistic and understand the realities of what you’re doing.
The process of growing anything is easy. You have a seed and you give it soil-- a medium-- and water, nutrients, and light and it grows and you harvest it. But you are generally not in control of all of those things. What's great about controlled environment, is that you have a better capability to work to control those things, and keep it in a way that plants want and will be more likely to grow, taste better, and look good without the negative consequences you often see with soil farming like wind or sun damage, insect or disease pressure. Outside you are at the mercy of nature and that can be challenging. But I want to really emphasis that CEA gives you greater control, but it doesn’t give you complete control. The thought that we are in controlling all of those aspects— the light, the wind speed or lack of wind, water, and nutrients— we think we are in control just because it’s called controlled environment agriculture but that’s where we are somewhat fooling ourselves. It’s still hard even when you’re in an indoor room giving the plants light, water and nutrients, but you can forget some of the basics or forget to account for some of the changes plants will experience. Plants still need movement, lights produce more heat, which increase the temperature, and HVAC is really designed for humans, not plants. Just because we think we are taking care of those and may understand a piece or an aspect of what we are doing, we made not have experience managing or controlling everything. Growers often don’t have HVAC experience, or you might be a facilities or finance person, and may not understand the consequence of all of these details and components.
Know the importance of why you’re doing this.
4. Go shadow someone.
Go shadow someone who’s doing it. Go find any type of agriculture that is related to what you’re and go see what’s it like. This experience will show the realities of what it’s like to grow, manage, and maintain your operation. You need to know what it’s like to grow the crop and then how to sell the crop. Due your due diligence.
5. Get your project funded and know the expenses.
Understand the financials and how much work it’s going to take, and who is going to fund this expensive project is critical to your sucesss. We don’t really talk about the costs or expenses of these projects; we don’t even talk about the companies that have failed and how much they’ve lost, and it feels like a disservice to everyone trying to get up and running. While there are so many contingencies, If I had to give someone a number, I’d say $250K per 5,000 sq. ft. is a good place to start. Maybe… and that’s a very lean operation. $250K gives you super lean team— you are not getting the best tech and you’re probably doing some minor retrofitting— you’re not optimizing things. That’s enough to keep your room food-safe and your plants healthy, this will not cover the cost of a big renovation to an abandoned building.
If you’re able to double the initial investment, your next round might mean doubling your capacity, expanding your footprint and buying the building next you, or expanding into a different type of crop that can be more profitable, diversifying your outlets, or make some upgrades to the existing technology, container, or building. Everyone is so different and their market is so different, but after three years you’ll know where to go, what to do, and how much it costs.
See you next week for part II.
-Jessica & Team