Urban Farming

Description

The global agriculture has a high environmental impact (30 per cent of global emissions). This is mainly the case due to long supply chains. Currently, the average distance travelled for agricultural products is more than 2,400 km (Urban Farming in the City of tomorrow, 2018). Using an Urban Farming approach, this distance can ideally be reduced to less than 10 km. This offers a new attractive option for a decarbonised food distribution system. In addition to this, securing urban food and resource supply is increasingly becoming a challenge, especially in heavily populated cities with limited access to surrounding agricultural areas. Thus, food produced within urban areas offers various opportunities for cities.

There are different types of urban farms, e.g. differentiated by the location of the farm (such as rooftop, window, greenhouse, balcony, container, indoor or vertical farming), differentiated by the method of farming (such as hydroponic, aeroponic or misophonic farming) or differed by the people cultivating the plants (such as community, institutional, commercial or personal farms).

The following information gives a general overview, but mainly focuses on indoor and vertical farming.

Market Potential

The market for urban farming is a rapidly emerging market. According to forecasts, the expected Compound Annual Growth Rate (CAGR) between 2016 and 2022 is expected to be 27 to 30 per cent. In 2013, the market volume of vertical farming was $403 million and research analysts projected it to grow to $1.97 billion by 2020 (Garden Culture Magazine, 2016).

The costs of urban farming exceed conventional farming in the initial investment, as well as the running costs. Within a survey conducted by Fraunhofer IAO, 16 urban farms were interviewed - 46% of them invested more than €5 million in capital costs. Opposingly, the survey shows that 50% of farms invested less than €3,000 per m2 (25% less than €100). The sources of the fiscal measures varied widely. The following graphic shows different models of investment and the share of the urban farm interviews which used the respective models (Urban Farming in the City of tomorrow, 2018).

According to a study about business models of urban farming in Spain, Italy and Germany, there are three main types of business models currently available:

• Lowcost specialisation: one or very few products and services that are locally missing
• Differentiation: mostly focused on short supply chains such as direct sale arrangements with very few intermediaries (e.g. canteens or restaurants) or new forms of customer participation (e.g. rental-field concept, courses)
• Diversification: for example- linking cultural heritage or gastronomy with local production

The business models of urban farming are mainly not cost-driven but instead consider societal and environmental aspects (Business models in urban farming, 2017). Similarly, the findings of Aubry and Kebir (2013) state that a mass market orientation to bring down costs is no longer sufficient for agricultural activities when acting under urban environments with associated societal demands.

Vertical farming can increase the profitability of urban farms as the area is used more efficiently. According to the survey conducted by Fraunhofer IAO, 65% of the respondents indicated that they operate their urban farm on more than five growing layers (Urban Farming in the City of tomorrow, 2018).

A possible obstacle to the profitability of urban farms is the high energy demand because of the fact that many farms use artificial sources of light. The overall demand is very variable and depends on the type of technology, the scale and the products of the urban farm (Urban Farming in the City of tomorrow, 2018).

Supporting Factors

Technical development:

The increasing technological development in controlled-environment agriculture (CEA) increases the competitiveness urban farms against conventional farming methods. Technologies used widely are, for example, controlled irrigation, heating, ventilation and air conditioning (HVAC), water recycling, temperature, humidity, brightness and color sensors as well as ICT platforms (Urban Farming in the City of tomorrow, 2018).

Urban growth:

Especially in developed countries that are suffering from continued urban sprawl and loss of peri-urban agricultural land the potential market of urban farming is steadily increasing. 

Micro climate improvement:

A further motive for the support of urban farms is the environmental impact on the local area. Vegetation can help increase humidity, lower temperatures, introduce more pleasant odors to the city, capture dust and gases from polluted air through deposition and capture by the foliage of plants and trees and soils, help break wind and intercept solar radiation, as well as create shade and protected places for the citizens.  

Government Initiatives

On the European level, there are currently barely any governmental programmes to promote these initiatives, increase awareness and drive the transition to urban farming. Challenges such as inadequate existing rules (or lack of appropriate rules designed to foster the development of this sector) and legal issues (e. g. organic labeling and European Novel Food Regulations) need to be tackled (Urban Farming in the City of tomorrow, 2018). In particular, marketing initiative and policy integration, such as raising awareness around environmental concerns and wide public participation in urban development could support the evolvement of urban farming in European cities (Urban agriculture and sustainable cities, 2000). Besides the direct political support of urban farming, the support of research is needed to increase efficiency, reduce energy consumption and thus ensure the economic and environmental viability of such projects (Urban Farming in the City of tomorrow, 2018).