Crucible Moments Keep Exposing the Harsh Truths About the Controlled Environment Agriculture Industry

Last year challenged the commercial horticulture and controlled environment agriculture (CEA) industry in almost every way possible. Whether greenhouse, vertical or indoor production of fresh produce, or other specialty crops, 2024 erased the excitement around new technologies that were supposed to change the way we consume and cultivate fresh produce.  

As you read, remember what a crucible moment is:
A crucible moment is a challenging situation or experience that forces you to confront your character, values, and identity, leading to a transformative change or a pivotal decision that shapes your future trajectory; essentially, a moment of intense adversity where one’s true nature is revealed and tested, potentially leading to personal or professional growth and development.

The year was essentially a reset — another crucible moment for the industry. Everything we saw in 2024 seems to indicate we are going back to the way things were 5-10 years ago.

• Investor-led and backed start-up companies are disappearing.
• A handful of the largest companies again control the controlled environment agriculture industry.
• We are back to high volume and low margins agriculture business philosophy.
• Growth in the total production area is stagnant. Focus is on consolidation.
• Locally grown and sustainable is no longer part of the leading discussions.

So what does all this mean?

We must remember that growing crops in controlled environments using hydroponic technology and supplemental lighting is not new. As I shared on Urban Ag News many times, this industry is no less than 40 years old in the United States. The U.S. represents one of the smallest acres of production area in North America, as well as in much of the developed world.

“Going back to the way things were” simply means that we have reverted back to where we were before all the vertical farming and ag-tech hype started. We are relying on a few dominant players to control the industry’s future, while other hyper-niche operators do business in markets too small for the big companies to compete.  

Going back also means we have fewer choices in technology, as the traditional companies seem to have been successful in protecting their ivory towers. Additionally, going back means that besides less competition, there’s now less drive for innovation as the return on investment was not there.

Is this all bad? Not at all — it never is.  

The only way this is all bad is if we stop fighting for improvements in our industry that allow consumers choices, at a reasonable price, produced in a manner that mirrors their cultural, dietary, ethical and budgetary needs.

So what should we learn from 2024? What should we take into 2025?

Make every day the same.

Successful horticulture and agriculture businesses are seldom exciting. It’s a sad but true fact. (I could make the same argument for many industries that have been around as long as agriculture.) Success in our industry is about the ability to excel in monotony. 

As farmers, we are in a high-volume, low-margin business, and our ability to be profitable depends on being consistent every day. And the drive to consistency is where ag-tech really fits in. Whether that consistency is using supplement light from LED grow lights to keep light levels uniform enough to drive production. Or using sensors to collect data so growers can better claw back those small percentages of loss. Or using AI and machine learning to help manage cost.  

Technology in our industry can not be seen as revolutionary as much as it should be viewed as insurance. The ability to ensure that every day is as close to the same as we can afford to make it.

Spend and invest like farmers.

Historically, there is a fixation on cost up and down the supply chain in agriculture and commercial greenhouse horticulture (and it seems like it may always be this way). The last 5-10 years in CEA changed this. For a period of time, we tried investing like tech companies (which makes sense because the change was led by tech-trained investors.) This may prove to be one of our most costly mistakes, as investor-backed companies failed to perform and industry veterans and critics are now in a position to say, “I told you so.”

It’s important to remember that we all contribute in some way to selling fresh produce. It’s also important to acknowledge that while the prices at the grocery store went up, this does not always mean the price to the farm went up equally or at all. We can discuss why in a different article, but for now it does not matter because this is something we cannot immediately change.  

For now it is important to realize that we are in a cycle where “farms” need to see value in their investment. Manufacturers also must understand that much of their technology investments should be seen similarly. What sets the technology apart is the industry experience a manufacturer shares with the farm and the ability of the technology to reliably increase yields or decrease operational cost in a cost-effective manner. It might just be this simple.  

What won’t lead to success is farms bearing the full weight of either launching a technology or teaching technology companies how to design and use their products, only for those companies to capitalize on the knowledge gained. Too often, these companies turn around and sell to new customers who end up competing directly with the farms that helped them vet and improve the original concepts.

To be the change makers we once hoped to be, we must learn how to invest in technology that sustainably grows our industry. At the same time, we must understand that our industry needs to change and only working with the lowest cost producers or suppliers will not get us there.

Someone new must lead the discussion going forward.

Now that the first tech wave crashed, who will once again excite our industry? Who will encourage new blood to come in? If we still need “investors” (which most believe we do), who will convince investors that our industry is still worthy?

As a person who has made tons of friends in this industry, this might be my biggest concern. In the past year, three of my closest friends left the industry or are planning to leave.  

The reasons? They vary by person, but they all come down to the same issues:

1. A lack of opportunity, whether financial or social.  

2. A realization that this industry is hard. It also does not pay well (especially when considered on an hourly basis).  

3. A realization that the perceived opportunities to change the world or the community will be a slow grind — where gratification won’t always be immediate, measurable in dollars, or easy to see or experience.

These are all people who didn’t enter the industry for quick profits or personal gain. They had a genuine desire to make a difference.

If we don’t find a way to keep talent in the industry, we know what will happen. A handful of large companies will control everything we eat. Nothing will change. (One can easily argue that this is where we find ourselves today.) 

Yet if we still believe in what motivated us originally, then now is not the time to quit. We must evaluate the mistakes we made, accept the facts, and quickly create new plans and change.  

But this leads to the question, who really wants new leaders? If we look at the companies currently doing well, it appears they are not concerned with being leaders. And why should they? They seem to be concerned with turning a profit. Which, after all, is the reason businesses exist (to return a profit to the shareholders or to the owner), right?  

We seldom see leadership from these companies at industry tradeshows, on podcasts or on panels. When we do, they are busy working on operations or supporting their customers that purchase large volumes of produce.

Which leaves us with a handful of questions…  

Why are they leading? What do we want our leaders to do? Who are they leading? Why are they leading? What are they leading? What do we expect the outcome to be?  

Now is the time to focus on what we learned and the truths we can rely on.

We know the story of a local, sustainable farm resonates throughout the supply chain. We now can confirm a segment of consumers values fresh, locally grown produce — and when consumers demand it, retailers follow. We’ve seen proof of this as people consistently vote with their wallets.

We also know people want to believe in stories of opportunity and community. Again, the evidence is clear: When companies went public, people invested in those ideals.

But at its core, this is still farming. No matter the crop — whether tomatoes, peppers, cucumbers, strawberries, leafy greens, culinary herbs, ornamentals, or cannabis — every farm and every business supporting farms must be grounded in the current market realities of those crops’ economic value.

This is the story we need to get better at telling because it reflects the industry’s reality. And those are the businesses we need to get better at operating.