The cost of technologies involved in indoor agriculture have dropped in recent years, setting this stage for a new type of industry in the middle of Appalachia.
Last month, Kentucky Governor Andy Beshear signed an international agreement involving 17 organizations, planting the seeds for a future of the agtech industry in the heart of the Bluegrass State. One of the organizations is the startup AppHarvest, which is building North America’s largest greenhouse in Eastern Kentucky. The ambitious plan unites a vast spectrum of public and private organizations, including a host of US and Dutch agtech companies, as well as the Dutch Ministry of Agriculture.
Needless to say, if a project aims to build a new agtech capital in the middle of Appalachia the Dutch certainly exist as a model of excellence in the industry. The small European country has long-since been heralded as a pioneer in innovative agriculture. During World War II, the Dutch endured massive food shortages and in the ensuing decades has become a global leader in sustainable agriculture and agtech solutions. Today, the Netherlands is the world’s second-largest agricultural exporter.
A fragile global supply chain
Overall, this signing represents a unified international partnership at a time when the warts of globalization are particularly apparent because of the coronavirus pandemic. Due to market disruptions, US producers have been forced to bury crops, plow edible produce into fields, and dump millions of gallons of milk per diem. In a matter of weeks, the coronavirus pandemic has shone a light on the fragility of international supply chains, especially the US food supply.
“Produce imports from Mexico to the US have nearly tripled in the last 10 to 15 years. And we’ve become very vulnerable to the different disruptions taking place in the food supply,” said Jonathan Webb, founder and CEO of the agtech company AppHarvest, a participating organization.
AppHarvest’s sprawling 2.76-million-square-foot farm is scheduled to open in Morehead later this year. Webb sees bringing outdoor agriculture indoors as a critical step toward regional food security.
“We need to use controlled environments, and we need to do it closer to markets so that we’re not having to truck a food six, seven, eight days on a semi-truck, or fly it around the world, get it on our grocery store shelves,” Webb said.
Aside from globalization trends decades in the making, there are other factors adding another layer of fragility to global food markets. Shifting regional weather patterns related to climate change are also changing the farmability of critical agricultural areas. Webb listed off the checklist of rain-starved areas from memory.
“We’re growing all of our fruits and vegetables in areas of the country that are drying up. California, drying up. South Southwest of the US, drying up. Mexico, much of it [is] running out of water. This is where we grow our fruits and vegetables,” Webb said.
To reduce the resiliency to global supply chain disruptions and enable farmers to gain greater control over these climates in these environments, Webb sees the shift to indoor farming as a necessary transition for the industry as a whole.
“So the climate disruption that’s taking place, is really not going to give anybody a choice. We’re going to have to bring our fruit and vegetable production indoors, we’re going to have to use less water and less land, we’re going to have to do it to where we can control the environment year-round,” Webb said.
While some parts of the climate are seeing record droughts and heatwaves, others are conversely experiencing record rainfall totals, setting the stage for sustainable indoor agricultural opportunities in new areas.
“Kentucky had a record amount of rain in 2018, with the most rain in state history. So to be able to run our facilities completely on recycled rainwater, again, talk about resiliency. We are not reliant on aging infrastructure of cities or city water, we’re able to do this with completely recycled rainwater,” Webb said.
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Farming with logistics in mind
There are also logistical benefits behind choosing Eastern Kentucky as a new agricultural hub. In recent years a host of global corporations have built major hubs across Kentucky. Webb posits a series of rhetorical questions, illustrating the proximal considerations alongside recent moves by major players in the logistics industry.
“Why are these logistics centers here? Because we can get to three-quarters of the US in a day’s drive. So why is Amazon putting that Prime facility in Northern Kentucky? Because we can get to New York, Boston, D.C., all over [to] St. Louis, down to Atlanta, up to Detroit, you can get to all these markets in roughly a day,” Webb said.
The right tech at the right time
While location is certainly a major factor, timing is also crucial. At a certain point, the cost of a new technology drops enough to enable cost-effective implementation at scale. The once hefty price tags associated with wind, solar, and lithium batteries have decreased substantially enabling widespread adoption and investments in these sustainable technologies. Webb’s experience in other emerging markets translates well to the current agtech innovation climate.
“I came from the energy world of building some of the largest solar projects in the US. And I’ve tried to equate controlled environment agriculture to really wind and solar, 10 to 15 years ago,” Webb said. “If you look at the renewable energy industry, the price of panels were plummeting. Prices were dropping while your efficiency’s going up. We’re seeing that happen with that indoor ag, and all the various components and technologies needed, that the price of the technologies are going down.”
Indoor agriculture requires large LED light arrays to enable year-round farming. In recent years, these costs of these necessary indoor agriculture technologies have also decreased, setting this stage for cost-effective implementation in a competitive market.
“The price of those lights are dropping, but you’re getting more micromoles out of the light, so we just hit a tipping point with a lot of the different technologies. If we’re going to be able to compete with cheap, outdoor, inefficient, and in many cases, dirty agriculture, then we’re going to [need to] be able to compete with that pricing,” Webb said.
Shift the economy from coal to food
These massive investments and international partnerships are enabling the region to diversify its economy with an eye toward the future. Coal production has largely dominated the economics of Eastern Kentucky for decades. In recent years, massive reductions in coal production have decimated economies around the region.
In the first quarter of 2016 alone, the number of people employed in the coast industry declined by nearly 22%, data released by Kentucky Energy and Environment Cabinet. At the same time, coal employment in the state fell to its lowest levels since the 19th century; 1898 to be exact.
At the moment, the technology is there, the infrastructure is being built, and the timing is right for opportunity. A region historically rooted in the coal industry is paradoxically positioned to construct an economy based around sustainable agriculture.
“We can now pivot from energy over to food,” Webb said. “We can build these large systems, and we can be an area of the country that’s known for supplying produce through indoor sustainable farming.”