A Bearish 2023 Lies Ahead For Indoor Farming?
iGrow News
Providing actionable information and insights regarding the AgriFood Tech industry.
This is part of our Sunday Newsletter sponsored by AgriHub Inc. & AmplifiedAg® , consider becoming a free or paid subscriber here to access the entire version as well as the other editions.
Good morning readers, since last Friday, two vertical farming companies have stopped activities and many indoor farming companies have entered restructuring programs in the hopes of decreasing their cash burn rate and becoming profitable.
From a macro perspective, there are still no signs of a slowdown in the inflation rates as central banks continue to hike their interest rates further pressuring companies that have incurred variable-rate debt. It is expected that the failure rate of projects or companies in the overall CEA market will accelerate in the months to come and that companies will enter restructuring programs.
Indoor Farming Stock Performance This Week
Indoor Farming publicly-traded companies have had contrasting weeks, while some companies’ stock went up others continued their downfall.
The first company, AppHarvest hasn’t progressed in the last 5 trading days trading at USD 1.90 a share at closing on November 3rd compared to USD 1.91 a share at the opening on Friday 28th October. Nonetheless, the company announced the opening of its 3rd CEA facility in Somerset, Ky. set to grow strawberries and cucumbers. They also started distributing their harvests to distributors. They now operate about 165 acres of CEA facility as the company starts the planning of their 4th farm in Richmond expected to be operational by year-end. The growth should’ve sent the shares up but perhaps traders are awaiting the results of the company to be published on November 7th and whether the company will be able to build on its previous quarter's performance and progress.
Next, Local Bounti lost 9.52% in its stock performance over the past 5 trading days closing at USD 2.66 a share on November 3rd. The company announced the second closing of its planned share issues following the PIPE financing agreement where proceeds will be used for general corporate purposes. Similarly to AppHarvest, the company will publish its results on November 10th where investors will be looking at the progress the company had in its Earnings per Share as well as revenue performance.
Finally, Edible Garden AG Inc. continues its downfall losing 20.52% of its value over the past 5 trading days now trading at USD 0.52 a share. The company will release its financial results on November 10th which will determine the future of the company as a listed company.
Macroeconomic Updates
This week’s been marked by interest rates decision from the FED & the Bank of England as most investors were looking for what lies ahead of them and the scale of the future interest rate hikes to come.
In the United States, the FED has raised interest rates by 75 bps reaching for the first time in nearly two decades a 4% interest rate. FED Chair, Jerome Powell said that interest rate hikes will ease in 2023 and will remain at that level until the inflation rate reaches 2%.
The Bank of England has had its biggest interest rate hike to date with a 75 bps hike reaching 3% and potentially with other hikes to come in 2023 as the Bank of England warns the country is already in ‘prolonged recession’.
Raising interest rates increases pressure on indoor farming companies already under greater financial strain from the inflation rates experienced. Indeed, indoor farming companies that have incurred debt at variable rates are the ones that suffer the most as their monthlies will increase over time and tighten their margins. These will force companies to seek ways to decrease operational costs companies have and while for some, these measures will suffice, a number of companies won’t have any other option but to file for bankruptcy.
This Week in Indoor Farming
The current macroeconomic trend is affecting the financial performance of most indoor farming facilities. While greenhouses appear to be less affected, vertical farms throughout the world are incurring increased losses and a number of companies were forced to cease all activities.
Recommended by LinkedIn
Earlier this week, Netherland-based company Glowfarms announced ceasing its activities after an ultimate funding round failure as reported by Vertical Farm daily’s Rebekka Boekhout. The company stated that ‘external pressures’ linked to the macroeconomic environment (raising energy costs) have overtaken the team at Glowfarms as they couldn’t find sufficient funds to survive for the foreseeable future. Last weekend, news spread that Pittsburgh-based Fifth Season shut down and even if we can suspect the macroeconomic pressure led to the closing of the business on Friday as reported by bizjounral.com, no official reasons were communicated by management.
These two companies join another vertical farming company failure, French-based Agricool earlier this year even if the latter was then bought back by VIF systems. Another indoor farming company, Plantise has also announced ceasing its operations in the Netherlands as the company expected unbearable energy costs and an increase in wages and minimum wages.
The entire industry is affected by the current market conditions as illustrated by the recent layoffs initiated by leading companies, InFarm, CubicFarms, or Iron-Ox as they envision becoming cash flow positive/break-even. Another company, Kalera PLC has had to divest some of its assets in order to accelerate its path to profitability and is now under threat of being de-listed from NASDAQ.
The MIGAL Galilee Research Institute (MIGAL), a regional mega-R&D center supported by Israel’s Ministry of Science and Technology, announced that its researchers have more than quadrupled the postharvest life of cucumbers – from two to nine weeks – using a “smart” sequential treatment protocol suggested by its innovative AI (Artificial Intelligence)-based algorithms.
The study, “Algorithmically-guided postharvest protocols by experimental combinatorial optimization,” was carried out over 18 months by MIGAL’s Postharvest Innovation Center under the leadership of Prof. Ofer Shir, an Associate Professor of Computer Science at MIGAL and Tel-Hai College, and Dr. Dan Gamrasni, Postharvest Research Associate at MIGAL and Tel-Hai College.
“It remains shocking to know that a full third of the produce grown today continues to be wasted, even as farmers intensify their struggle to increase yields in the face of climate change and urbanization,” commented Dr. Gamrasni. “The aim of our research is to help reduce waste across the global food supply chain while enhancing the efficiency of existing agricultural processes and resources.”
The MIGAL team’s algorithms used an AI system to investigate the combinatorial search space of postharvest cucumber treatment models, learning the fruit’s response to variations in timings, ordering, and activation levels of certain operations. At the end of the process, a single multi-stage treatment protocol was selected for testing in MIGAL’s fields and laboratories.
Prof. Shir continued, “In launching this project, we hypothesized that a ‘smart’, algorithmically-guided combination and sequencing of existing produce treatments could multiply their preservation effect, significantly extending fruit and vegetable shelf-life after harvest. However, the results we achieved were much better than we had expected: our protocols more than quadrupled the shelf-life of cucumbers, keeping them fresh for a full nine weeks.”
Other News
Events To Attend
Articles To Read
MAWINFINITYART at MAWINFINITYART.STUDIO (CONTEMPORARY MOMENTIST ARTIST 👨🎨
2yJust learning 💡 #learning #life #artlife #foodtech #future