Venture Capital's AI-Run Lettuce Farms Start To Go Bust

The pitch for vertical farming had all the promise of a modern venture capital dream: a new way to grow crops that would use robots and artificial intelligence to conserve water, combat food insecurity and save the environment. But after firms poured billions of dollars into these startups, pushing valuations into the stratosphere, the industry is now facing a harsh new reality: funding is drying up, profits remain elusive, and creditors are circling. From a report: AeroFarms last week became the latest, most high-profile example of the challenges facing the business, filing for bankruptcy after building a massive new facility in Virginia that drained its cash, according to court papers. Its collapse comes on the heels of lettuce grower Kalera seeking court protection in April. And in May, publicly traded AppHarvest, which operates high-tech greenhouses, received a notice of default from one of its investors, according to a regulatory filing. The company contests the default notice, but if it can't reach an agreement with its creditors, the firm warned it could become "bankrupt or insolvent."

"We really were in a hype cycle," said Vonnie Estes, vice president of innovation for the International Fresh Produce Association. Venture capitalists entered the scene in a frenzy, likening these companies to software firms, and expecting comparable returns. "There was a lot of money that rushed in without really understanding that this is actually just farming." Industry experts still say that indoor farming is a crucial piece of agriculture's future, especially as climate change spurs more destructive wildfires and floods. Nonetheless, the ability of vertical farms to carve out meaningful market share on a national scale could be years away, they note.

It's hard to compete

[rsilvergun]

with borderline slave labor and free water trucked in by taxpayer funds despite dwindling supplies. Just ask the Saudis with their Arizona Alfalfa farms (and I use the word "farm" loosely here since they're really just there to secure the water rights).

Stuff like this would make a lot more sense if we paid farm workers (who are keeping us all alive) a decent wage. I suspect as birth rates continue to drop it'll be harder and harder to get the refugees from drug violence that the US relies on and the refugees from war that Europe uses to grow our food though. I know parts of Europe have already started investing in labor saving farming techniques decades ago because they don't get enough of the war refugees.

Re:It's hard to compete

[DrMrLordX]

Okay, deport the "slave" labor and let the chips fall where they may.

Florida's doing that

[rsilvergun]

so that their governor can use "tough" stances to win a primary election. It's admittedly making a complete mess of their economy, but he's not really interested in his state's economy, he's interested in personal wealth & power.

I think the gradual decline in birth rates would make it manageable, but doing it all at once like Florida has is causing chaos. Kinda sucks to be a pawn in some meatball's election scheme.

Re:

[smooth wombat]

Okay, deport the "slave" labor and let the chips fall where they may.

That is exactly what has happened in Florida. After requiring employers verify the status of their workers, construction has ground to a halt [cbsnews.com] along with food rotting in fields [vox.com].

It will be interesting to see who gets the blame for this since obviously DeSantis will disavow everything.

Re:

[sarren1901]

All the farmers have to do is start offering competitive wages and people will be lined up to take the jobs. Charge more for the food. Why is this so complicated? Don't tell me people are unwilling to do those jobs. I went and picked grapes for two glasses of wine and some lunch for nearly 3 hours, so clearly it's doable.

Re:

[test321]

Charge more for the food. Why is this so complicated?

I can't talk for US, but the equivalent problem in Europe is producers don't control the prices. If you sell to large distributors / food processors, you sign a contract that saysyou will sell produce for X cents per kilogram, and you have zero negotiation power. With the values they impose, you can't pay wages that will attract local workers for the kind of exhausting work this is. Simpler people ask their grown-up kids or cousins to book vacation time so they can help you hand pick the cherries from the t

Re:

[sarren1901]

Oh I get that the US government is mucking around and things are made convoluted for a variety of reasons, but none of those reasons should be stopping farmers from following labor laws. We shouldn't have a shadow class of workers that then don't get the benefits that all other worker get.

The government shouldn't be turning a blind eye to abusive labor practices. We have laws and we should be following them. Letting companies continue to hire unauthorized workers is a disservice to the workers and a disserv

Re:

[caseih]

This is true in North America. Farmers do not dictate pricing at all. They can take offers or leave them. Yet the inputs needed to grow crops are also priced in a take it or leave it fashion.

Food prices have risen dramatically over the last three years and have made a lot of people very rich. But farmers aren't among that crowd. Farmers still can make a lot of money but it's spread very thinly and I think most people are quite unaware of how hard farmers actually work to make this money.

Our farm has one

Re:It's hard to compete

[caseih]

Are you honestly interested to learn how things actually work?

Unless a farmer has a way of selling directly to consumers, all farmers are price takers. We get bids from the buyers and we can choose to take them or not. That's it. Farmers have financial obligations, including to pay employees, so refusing to sell is not something they can do for long. All I can do is use futures to hedge against falling prices. If I'm not willing to sell at a particular price point that's my prerogative, but there will always be some farmer who needs the cash and is willing to sell. Add to that that farmers individual are competitors of sorts (and it's in the interest of the buyers to keep it that way). By the way this is true of all commodity markets.

There is a lot of money being made in farming and selling commodities but it's spread *extremely* thinly.

It's kind of discouraging how the general public has no concept of how the system works. As food prices have skyrocketed, very little of that money is passed through to farmers. True commodity prices have risen, but not to the same degree as food prices in the store have. And my input costs have about doubled from pre-pandemic until now. commodity prices certainly have not doubled.

Re:

[DraconPern]

If what you are saying is true, that the take price is so so so much lower than the price in the store, then why not sell direct to consumer by letting people buy directly from you and you ship directly to consumers?  You would be cutting out so much over head like warehousing, grocery store, wholesellers, etc. when profits are thin, the usual play is to go vertical integration.  Set up with stripe using their nocode solution and sell direct.

Re:

[test321]

why not sell direct to consumer by letting people buy directly from you and you ship directly to consumers?

Farmers do that ("Short food supply chains"), but it's a very limited amount that you are able to sell. Most volume goes to the food transformation industry. Only a small fraction of potential customers have access to or are willing to spend time to go to a farmer's markets.

Re:

[arglebargle_xiv]

Tried explaining that to a Retrumplican friend a few years ago who was vehement about throwing out all illegals, and farmers should just pay more and good God-fearing Americans would rush in to do the work, and the response I got was essentially "lalalala I'm not listening I'm not listening lalalala". What you're explaining is hard reality, not ideology, and facts can never be allowed to interfere with ideology. While in some cases it's true that people have "no concept of how the system works", in many o

Re:

[sarren1901]

There is a lot that's kept from the general public. I'm fairly certain if I had to slaughter my own food instead of buying it on a styrofoam tray that I'd likely be a pescatarian instead. I know I know, why hate on fish but I don't keep fish for pets. If the cow looked like my cat or dog I'd not eat it either.

I also imagine most of the real money in farming is done by huge corporations and not your typical family farm. As a family farm you'll likely lose out due to economies of scale but also because of oth

Re:

[spitzak]

Say what you will about DeSantis but he at least is doing what he says. Making it illegal to hire illegal immigrants is EXACTLY the right thing to do if you actually want to reduce illegal immigration.

Unfortunately most Republicans just lie, they know that businesses are relying on cheap labor, so they never prosecute businesses and instead concentrating on making illegal immigrant's life as painful as possible (as long as they don't actually leave), and occasionally raid the businesses, in order to drive d

Re:

[Bleak Morn]

if we paid

*we* Don't bring me into this, I already pay them a decent wage. I come from a long line of farmers. My uncle was a farmer, and I pay local farmers to grow seasonal crops for me as part of a local farm co-op. If you think paying more for everything will solve the problems, why not just do it? Literally nothing is stopping you. The reason farm laborers are not paid a lot is because it doesn't take a lot of training or talent to do the job - and the fruits of their labor are commodities that require tons o

Re:

[jythie]

Heh, doesn't take a lot of training, and political pressure to ensure they will not improve. Poverty is profitable when you live in a society where it is a moral failing and profiting off them is seen as being good.

Re:

[Pinky's Brain]

It can work for very high margin products in rich fag environments. Wasabi, winter berries, etc.

Competing with low margin products from arable soil not so much.

Re:

[eneville]

Oddly, there's an element of inverted reward when it comes to social value.

People who clean, get paid next to nothing, whilst professional sports people get paid millions. What actual value is there in playing a game, compared to cleaning up?

Farming is similar, we *must* eat, there's no way around it, those who farm for or protect us*, should be the most highly regarded.

* ok, some caveats, GPs, surgeons, they're normally paid reasonably when you don't take insurance or the other out of pocket expenses like

Re:

[Anonymous Coward]

Pro sports stars earn their employers millions. That's why they get paid. It has nothing to do with "societal value" and everything to do with wealth creation.

Re:

[eneville]

Why though? You'd have thought people would be more interested and invested in food and health, or just things life depends on in general. Not much life depends on tennis.

Re:

[larryjoe]

People who clean, get paid next to nothing, whilst professional sports people get paid millions. What actual value is there in playing a game, compared to cleaning up?

There is quite a bit of economic value in professional sports, which supports many jobs, tax revenue, and GDP. There is similar value in concerts and amusement parks. Many will find no inherent value in those activities, and some will. However, the economic impacts are huge.

Farming is similar, we *must* eat, there's no way around it, those who farm for or protect us*, should be the most highly regarded.

* ok, some caveats, GPs, surgeons, they're normally paid reasonably when you don't take insurance or the other out of pocket expenses like student costs into account.

The reasonableness of one's pay is a deeply philosophical question. Doctors are paid a lot because (1) there is a notion that medical is very important in general, and the belief in that generality allows medicine to be practiced and

Re:

[Frank Burly]

The paradox of value (also known as the diamond–water paradox) is the contradiction that, although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market. The philosopher Adam Smith is often considered to be the classic presenter of this paradox, although it had already appeared as early as Plato's Euthydemus.[1] Nicolaus Copernicus,[2] John Locke, John Law[3] and others had previously tried to explain the disparity.

https://en.wikipedia.org/wiki/... [wikipedia.org]

Re:

[jythie]

The more critical your job is, the more political pressure there is to ensure you can't walk away from it. The more you make, the more replaceable you generally are since it doesn't really matter if you stop doing it.

Re:

[CAIMLAS]

You realize that these high-tech farms are also being massively subsidized to "create jobs", right? There are a lot of tax-funded free lunches with businesses, period.

One thing we can be certain of is that there will never be a shortage of people for those with power to exploit. That's just the way it is - always has been ,always will be.

Re:

[backslashdot]

Uh, your solution is, whether YOU like it or not, to increase food prices. Why else would an IT guy or retail worker quit their job to work on a farm? Do we really need more malnourished people? All your solutions involve reducing supply, and that always means some people are deprived.

Re:

[sarren1901]

Apparently US citizens literally "can't" do farm labor, clean houses or various other jobs that illegals seem to be perfect for. This is what I'm told by my state Democrats in California anyway.

It's pretty ironic if you ask me. The party that claims to care about workers rights but then they turn a blind eye to big agriculture essentially using undocumented immigrants as their work force. Republicans at least almost admit they don't give a shit about workers rights while they turn a blind eye to undocumente

Re:

[Firethorn]

I'm sure we can, it's just that the farms haven't accepted the cost in order to do so, and haven't been approaching the problem "smartly". IE they can't just recruit citizens like they did illegals but with a bit more money. The illegals are experienced and used to it.

To wit, they need to offer training, benefits, perks, and such in addition to the pay.

Re:

[fermion]

Yes, we all know you are mad at the Arabs for stealing your water so canâ(TM)t have a pool and garden in the desert? Have you thought of moving.

Re:

[jonadab]

It's more fundamental than that. The whole idea of vertical farms is inherently preposterous: let's take something that is normally done on cheap rural land using free energy from the sun, and let's do it in an expensive urban environment, in expensive tall buildings, in a way that uses a lot of electrical power, for no actual reason whatsoever except to be weird and "innovative". People have come up with a lot of really dumb business plans over the centuries, but this one is something special.

Hype cycle?

[liqu1d]

Why are people so adverse to just admitting stupidity.

Re:Hype cycle?

[Joce640k]

...seeking court protection

Whatever happened to personal responsibility?

We all know they bought mansions and very expensive cars when they were bilking people, and if we "protect" them they'll just do it all over again. These people need to be ruined for life.

Re:

[mobby_6kl]

Whatever happened to personal responsibility?

We all know they bought mansions and very expensive cars when they were bilking people, and if we "protect" them they'll just do it all over again. These people need to be ruined for life.

Personal responsibility is for you, the dirty peasant.

Re:

[arglebargle_xiv]

This is yet another story that needs to be prefixed with "Surprising exactly nobody...". Farming is, to a very rough approximation, growing as much stuff as possible as cheaply as possible. These tech-bro "farms" were based on growing limited amounts of stuff as expensively as possible. Apart from the pump-and-dumpers pushing it, how could anyone not see where this would end up?

Re: Hype cycle?

[SuperDre]

This isn't stupidity, it is necessity. But the problem is that it requires years and years to recoup the investment, while technology moves forward, which means the companies starting this won't recoup their investment because others are using cheaper technology to do the same. As a society we should keep investing money in this if we want to survive, just like lab grown meat. Food is a big necessity and farming out in the open is getting less and less yield due to climate change (wether it's the fault of h

I still believe in container farms

[Baron_Yam]

They're very efficient if done correctly.

Closed water cycle, they can be powered by (relatively) broad spectrum solar because plants only need a specific wavelength of light LEDs can provide using a fraction of what rooftop solar can collect under almost all circumstances. Being sealed up 99% of the time, insects aren't an issue so pesticide use is zero. Because it's an artificial environment it can run on whatever cycles the plants can tolerate for optimal growth. Put in a little planter / picker robot and excluding occasional maintenance, humans don't even need to go inside.

You put raw material in and get plants out, any time of year, anywhere. How can that not be worth continued investment until we get it right?

Re:

[DrMrLordX]

If you've got the dosh, go fund it. Current investors are burning out.

Re:

[Bleak Morn]

You can always tell the people who have no idea how to do something because they say "if done correctly", yet are not notable for doing it correctly themselves.

Re:

[Baron_Yam]

You can always spot the self-important idiot who snarks at a post while missing the part that makes their comment stupid - it's not like my whole post was about trying to get it right and acknowledging that we haven't yet.

Your post added absolutely nothing to the conversation except your attempt to put me down to feed your ego.

Re:

[lsllll]

That's like saying how can manufacturing steel in the U.S. be such a bad thing if it saves on transportation and creates jobs? It doesn't matter. At the end of the day if Mexican iceberg lettuce is cheaper, you're done for, unless you put artificial limits and obstacles, life tariffs, on import, or taxes on water usage in California.

Re:

[sarren1901]

NAFTA (and whatever we have now) is really quite anti-worker. It's not a mistake. As you mention, we should be placing taxes on natural resource use but instead we have perpetual water rights and the owners can sell the food to the highest bid in the entire world. Water should be treated as a national resource but that wouldn't be very business friendly and USA is all about business. Any benefit to the local population is incidental in our system.

Re:

[CAIMLAS]

I think the problem is when you involve AI and robotics. That's when it gets costly, and it seems like a bit of a pipe dream to me.

The cost model there really doesn't scale: a large containerized/greenhouse operation will, once setup, not take too many people to maintain. The hard work of setup is roughly the same regardless, and the savings from using AI and robotics only saves very minimal amount of human work.

On one hand, you've got hundreds of thousands of software and hardware to monitor everyt

Re:

[Anonymous Coward]

How can that not be worth continued investment until we get it right?

Plenty of other countries have no problems making vertical farms and CEAs viable, workable and profitable. Maybe it's just the way the US is trying to do it: throwing tonnes of money into AI and robotics to have automated farms instead of just farming to produce product.

Re:

[fermion]

My dad returned to farming after retirement. If he grew lettuce, he would have made nothing you need to grow real cash crops. Another change is the disappearance of the local grocery store. He was able to negotiate a fair price for produce. The store received fresh picked produce delivered to them. The consumer recieved fresher product than they otherwise would have. Everyone won.

Big box stores needs to convert on location in each city to vertical farming they need to contract to firms like this who can

The Age of Cyberpunk

[Qbertino]

Reading the news of the last few years it increasingly feels like experiencing the real life version of a Neal Stephenson, Cory Doctorow or William Gibson novel. This newsreel and the general topic of it feels like it jumped straight out of such scenarios, just as many other incidents these days.

Very weird indeed.

Re:

[CAIMLAS]

I think of this same thing every time I read any article anymore on technology, AI, farming - you name it.

It's like a subplot in a game like Cyberpunk 2077 or Deus Ex, or like you said, a story from the likes of William Gibson, et al.

I don't think that just means I'm old now. There's definitely a dystopic feeling to what's going on.

You're kidding!

[93 Escort Wagon]

You mean automation isn't free? I am shocked. SHOCKED!

"actually just farming"

[XXongo]

"There was a lot of money that rushed in without really understanding that this is actually just farming."

Got it in one. Do people get rich by running small farms, yes/no?

Re:

[lsllll]

Obviously corporation-run farms do, or they wouldn't be running. Individual farmers? It probably varies, but the average seems to indicate they do pretty well [usda.gov].

Re:

[timeOday]

"Hey everybody, you know that herbicide that kills all the weeds? I figured out a genetic modification that makes crops immune to it. What do you think?"

"Meh, that's just farming!"

Re:

[Bleak Morn]

no

The smallest farms in the world, like the one on the ISS, is also the most expensive. It's a research farm aimed at merely spicing up the astro-diet. They're a long way from sustainability.

Re:

[CAIMLAS]

Yes, people get very well off "just farming" - versus being a wage slave.

Those 'getting rich' approaches don't scale. Scaling is usually a mechanized scaling approach: you can make money selling milk from a half dozen cows you milk by hand, but get the mechanized milker and you need to have a farm of 100s of cows to just pay for the loan.

Lettuce is not particularly profitable. It sounds like a fun research project - lettuce is one of the easiest things to grow, grows quickly, and requires very little input

Re:"actually just farming"

[Mspangler]

" Do people get rich by running small farms, yes/no?"

No. As the son of a small farmer who gave it up as hopeless long ago, no. Economy of Scale is not your friend.

Even the small pot farms are going broke.

Either you accept the large scale farms that can keep prices down (which makes an efficient but brittle system), or you subsidize the small farms so they can stay in business (the French model) or you accept a $2 egg as normal. (that is each, not per dozen.)

Given high food prices reliably cause revolutions, the last option seems very unlikely.

Re:

[93 Escort Wagon]

Either you accept the large scale farms that can keep prices down (which makes an efficient but brittle system), or you subsidize the small farms so they can stay in business (the French model) or you accept a $2 egg as normal. (that is each, not per dozen.)

Or you start raising your own chickens. Maybe people can sublet small sections of those buildings formerly being used for automated vertical farming...

Re: "actually just farming"

[SuperDre]

There just isn't enough room for people to have their own chickens or grow vegetables. And living near someone who has a couple of chickens, it's not fun living conditions by the noise they make alone and let's not forget the health issues. Also a lot of people are just incapable of caring for the animals or plants.

Gardening is hard

[gweihir]

At least if you want to grow something worthwhile.

{Insert "idea" here}

[devloop]

Eco friendly, robots, AI optimized {insert "idea" here}.

1.2 billion valuation on 2.5 million sales (before expenses, debt servicing, taxes, R&D costs).

Pardon my ignorance...

[paul_engr]

...but what does the AI do in this scenario, other than give stupid people with money boners?

Re:

[RazorSharp]

They probably just mean "algorithm." If you want that VC money, it makes sense to wildly exaggerate. If this was 15 years ago they would talk about doing it "on the cloud" because there was a remote server somewhere.

Robotic farming is the future

[ac2022]

Robotic farming is the future of farming, when it happens we are going to see large super corps purchasing farmland around the globe. The fact that some lattice farming startup failed does not mean anything.

Re:

[RazorSharp]

I agree that robotic farming is the future, but I disagree that they will buy large swaths of farmland. They'll do what these lettuce farmers were attempting to do and go vertical. Hell, vertical farming without robots would already be more economical if we didn't heavily subsidize traditional farmers. No one gets more welfare than farmers (except maybe Elon Musk).

Flowers

[istartedi]

I could have told them right from the get-go to look at flowers. Flowers? I'm talking about what you buy at the florist, not what you smoke. A large percentage of flowers for the US market are grown in Central and South America. [800florals.com]. As you might guess, labor cost plays a part as well as climate. Some are still grown in California and Florida but that probably has something to do with it being an entrenched industry as well as climate and similar labor conditions, migrants from other countries from which t

The phrase isn't

[fredrated]

"For all intensive purposes" it's "for all intents and purposes".

Re:

[RazorSharp]

*whoosh*

VC funding for commodities ... smh

[Omega Hacker]

IMO unless you're looking at a full order of magnitude cost reduction in the making/growing of a given commodity, throwing VC-level finding at something is just throwing money away. VC funding is only "reasonable" for disruptors. The various tech bubbles also bear this out - one or two companies with VC funding for e.g. mailorder pet supplies is fine, but when mailorder pet supply companies themselves become a commodity, it's game over. Bubble collapses, VC's lose their shirts (darn), and a lot of people lo