“There are two major developments impacting the North American and especially the US market,” said Thomas Larssen, chairman of CEAd. “The larger, dominant players continue to expand their operations, not only through their own organic expansion, but also through the acquisition of smaller growers. Given their presence in the market and their ability to produce large, consistent volumes of fresh produce, this trend is logical. However, it is also true that consumer awareness and demand for greenhouse products are increasing sharply. We see room for more growers to sell their products online, especially as crops grown in open fields are replaced by crops grown in greenhouses where fewer resources are needed. are necessary.”
Second, external investors are entering or expanding their presence in the CEA market, Thomas explains. “Venture capital, private equity and family businesses are all making significant amounts of capital available specifically for CEA [Controlled Environment Agriculture]. These dollars come with an increasing need for strict due diligence requirements to gain access. Experienced, professional support is essentially mandatory to build a business the right way.”
“Finally, it is worth noting that we are also seeing sharply increased numbers in long-term permit applications in areas where this was never an issue before,” says Thomas. “In the past, it was sometimes simply a matter of owning land, providing a handful of documents and drawings and building a greenhouse on the site, without any assessment requirements being imposed. Now we have to deal with permit applications that sometimes take months, along with the detailed stringent environmental assessments. It is important to understand how to correctly answer the questions from these regulators to keep projects moving.”
Growing spinach in a high-tech greenhouse in the UAE (Image: CEAd Inc.)
Currently, labor is one of the biggest challenges for growers. “Greenhouse growers, like traditional horticulturists, still require manual labor for certain activities such as harvesting and packaging. These jobs are not always seen as desirable in the production region,” says Thomas.
“While labor challenges are increasingly being solved by advanced automation, it does require more capital to fully realize a project. This leads to another point: as the availability of investment capital for controlled climate production continues to increase, demands potential owner investors a level of financial and business knowledge equivalent to the technical challenges of designing a regionally appropriate greenhouse.
As a result, there are a few farms, especially in North America, that have significant influence due to their size and volume. Given this enormous scale and market presence, growers who want to compete in the same markets need facilities of a larger size and at a low cost per square meter, in order to compete on a unit price basis. And finally, climate change is increasingly impacting energy costs, which are often the largest production costs.”
Taylor Mantel & Thomas Larssen during GreenTech this year
When it comes to new projects, CEAd sees a significant difference in the time it takes for a shovel to hit the ground compared to ‘the past’. “Technical assessments take longer, often because customers need a deeper analysis of which crop(s) they want to produce and also want to consider varieties within each crop type. Integrating the right technology package to support Growing, picking and packing adds complexity as we need to be sure that any growing or logistics system can support the very high yields we are seeing,” says Thomas.
“We are also seeing lenders demanding more detail and due diligence in the capitalization process. While there are still supply chain issues impacting the availability of certain key cash components, we are finding that once projects are formally underway, maintaining an accurate timetable for commissioning and final handover is less of an issue.”
Addressing the challenges
“When it comes to tackling the industry challenges, our long experience and extensive network within the CEA sector is our greatest asset for our customers,” says Thomas. “We also maintain strong links with our current and former customers and what they have achieved from the facilities we have designed for them. This has created a vast portfolio of knowledge across a wide range of climates and regions. That is why we never start a project from scratch , but with a rich history of lessons learned to draw on, so that new ventures have a better chance.”
According to Thomas, models and feasibility studies are at the core of CEAd’s design consultancy work. “We go well beyond climate modelling, as this alone does not indicate the full value or potential of a project. We can always advise on the perfect location and climate for a crop, but the reality is that customers often come to us with a specific parcel in mind, which usually represents the best economic opportunity.”
Part of their services is mapping the economic benefits of a crop in a specific region. “This includes analyzing the competition, market prices, trends and sometimes even arranging off-take agreements. We then deliver a model of the technology required to produce a specific crop (or crops in the case of catch crops) and the most profitable outcome to support the long term. Simply put, we always first look at the use case, including financing, operations and the market(s) available to our customers.”
“Getting back to climate modeling, our horticulture-specific application of computational fluid dynamics is one of the most powerful tools we use to project and model the active climate around the crop, that is, the canopy and the movement of conditioned air around it “This is part of how we continue to develop our knowledge and help our customers achieve high quality and yield.”
To complement their design services, CEAd also offers a range of post-construction services. “We have heard clearly from both customers and investors that hedging risk in a project is becoming increasingly necessary, which is why we offer a suite of additional services we call APIS,” says Thomas. “APIS is designed to reduce or eliminate common errors that can occur when starting new operations. For example, APIS Commissioning services ensure that all critical greenhouse systems are functioning properly and meeting design parameters. Our horticulture-specific maintenance program ensures to maximize equipment life and minimize downtime. We also offer a software solution known as APIS IGM (Industrial Greenhouse Management), designed to automatically or manually track and report on successes and operational challenges. Above all, we believe that APIS IGM is a differentiator in the industry because many suppliers focus on crop-level information, while we focus on business intelligence through actionable and insightful reports,” concludes Thomas.
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