ZERO Farms CEO Daniele Modesto speaks to Azeem Azhar about the role of vertical farming in the future of food.
Technology is making traditional agriculture more efficient, but farming still has its problems. It takes a huge amount of land and can be energy- and water-intensive. In addition, produce needs to be transported to customers, often over great distances.
Daniele Modesto, CEO of ZERO Farms, tells Azeem Azhar how building upward will be part of the solution for the future of farming and why his technology could be used to produce more than just food.
How AI and Genomics are Reshaping Farming – Exponential View Podcast, 2020 Zero Farms
AZEEM AZHAR: Welcome to Exponential View with me, Azeem Azhar. The world is changing at an amazing pace. We are entering the exponential age, it’s propelled by radical remarkable technologies. Now on this podcast, I want to explore the themes, topics, and questions that will help you make sense of it. Sustainable food production is one of the challenges that will shape our world, over the coming decades is our climate shifts and the global population continues to swell. Food producers and technologists will have to come up with increasingly efficient and resilient ways to grow the food we need. One method starting to gain traction is vertical farming. It’s growing plants in tall buildings or stacked shipping containers in very tightly controlled conditions. Vertical farming uses far less land, energy and water than traditional farming, at least in theory. And by perfecting conditions inside facilities, vertical farmers could produce higher plant yields. These methods have another huge advantage, they can be carried out anywhere with total precision. Imagine a world where you can grow lettuce in deserts or kale in city centers. Today’s guest is among the vanguard of the vertical farming movement. He’s the CEO of Zero Farms, an integrated Italian vertical farming company looking to help solve one of the world’s biggest problems. Daniele Modesto, welcome to Exponential View.
DANIELE MODESTO: Thank you, Azeem. Thank you for having me today. It’s a pleasure.
AZEEM AZHAR: I wrote about vertical farming in my recent book, Exponential. And one of the things that I have said, “high tech entrepreneurs have started to bring farming closer to where the food will be eaten. Urban vertical farms, popular in Japan and spreading elsewhere are unusually efficient.” And I describe how for the first time in human history, urban dwellers might be able to get their food from the city rather than relying on farms close or even further and further away. Is this how you see the vertical farming opportunity?
DANIELE MODESTO: Oh, that’s actually very true. And I would say that 20 years ago, an American professor started a vision of this idea, Professor Despommier at the Columbia University. And I’ve got to say that the promises vertical farming makes are very compelling. You’ve been ramping up all the advantages a few seconds ago, and I can’t say that I’m not in agreement. That’s the reason why I do exist. But there’s a problem, there’s a bottleneck. They are not just nice promises – you’ve got to deal with the numbers. And if you compare all the advantages you’ve been listing with the actual footprint, vertical farms that you occupy in terms of land, you end up with 30, 40, 50 hectares, and it’s really tiny on agricultural scale. So, you must have a problem somewhere.
AZEEM AZHAR: When I looked at the numbers a few months ago, the total value of produce from vertical farms globally was still below the $10 billion a year mark. And the global food industry is approximately 8 to 10 trillion dollars, sort of 0.1% of the market. So it seems to be a great idea that is taking quite a while to come to any sort of fruition.
DANIELE MODESTO: Yeah, I would say that the problem lies with sustainability. And we are not talking about the environmental sustainability in this case, we’re talking about financial sustainability. And the point is that, if you do compare vertical farms with technology advance greenhouses, like the ones you have in the Netherlands, the initial price for a vertical farm starts at about four times the maximum cost you do have for a greenhouse, in terms of a square meter versus square meter. This is a bottleneck. This is a huge bottleneck. It might be something that you could live with if the productivity of a vertical farm would be at least four times the productivity of a greenhouse, but it is not. And bottom line is that, they’re not sustainable.
AZEEM AZHAR: I mean, I suppose one important thing to understand then is the distinction between a greenhouse and a vertical farm. I mean, greenhouses, particularly high intensity greenhouses have tremendously changed the shape of agriculture to the extent that the Netherlands, which is such a small country by graphic area, is the sixth largest exporter of food in the world, driven primarily by high intensity greenhouses. Isn’t a vertical farm just a sort of internet, techy way of saying greenhouse?
DANIELE MODESTO: It is not. While both vertical farms and greenhouses are an implementation of what you might call control environment agriculture, vertical farms are enclosed environment. So they are full independent systems or ecosystem, where you can actually drive the growth process in a very precise way. Think about lighting conditions in a vertical farm, you might be in a position to control, in a very detail way, the amount of light you feed the crops, while in the greenhouse, you rely on where you install the greenhouse. So you can place a vertical farm, literally everywhere in the planet, you can’t do that with a greenhouse.
AZEEM AZHAR: So that’s the critical to stay ancient, right? So within a vertical farm, what you’re trying to do is control all of the growing parameters that a particular plant needs from the lighting, the temperature, the nutrients, the degree of stress and strain you apply on the plant. Whereas in things like irrigation based open farming or greenhouses, you actually only get to control a small subset of the parameters that determine how well a plant grows.
DANIELE MODESTO: That’s correct.
AZEEM AZHAR: How do you know what a plant needs?
DANIELE MODESTO: You know, I’m a biologist, so I might sound not so romantic, but plants, they do need things that you can basically describe with the recipe. And it’s science that’s saying what goes into that recipe. So you need a very precise amount of light, you have a very precise amount of macronutrients and micronutrients, a very precise amount of water, very precise temperatures and humidity. And you can build the matrix of those parameters. If you can run multiple experiments in parallel, where you can cross the parameters in many different combinations, you end up with understanding what works best. That’s a very nice bit about vertical farming. It’s predictable, 100% predictable. You name the recipe, you keep on applying the recipe, you keep on getting the same outcome. Also because you don’t have external contamination like pesticides, you don’t have any kind of external influence like bugs, like the weather. So the recipe is nailed, you’re going to have the same outcome all over a year in every place of the planet.
AZEEM AZHAR: So the ultimate goal is to get to that degree of control, and therefore you have sort of industrial engineering, in a sense. When it comes to the plant, you know what goes in, you know what’s going to come out and at what point in time. How far away are we from that in reality?
DANIELE MODESTO: Well, in reality, you can do that. The problem is that, if you invest too much money into setting up the farm and you are going to be also spending a lot of money to operate that, the produce you get from that vertical farm, they’re going to be very expensive. And you’re going to end up with the crops on the shelf that are priced two times what you might be paying for organic crops.
AZEEM AZHAR: This raises a few, the sort of interesting questions. Because you are controlling the environment, so you know what this industrial process is going to look like. And yet, we also know, roughly speaking, what the costs are to grow plants in fields or in greenhouses. And right now, as you point out, it’s more expensive to do it in vertical farms than not. So the first question is, why is it more expensive? And the second question is, well, at some point, you must feel that you’re going to get the price down, or you’re going to produce a much better product.
DANIELE MODESTO: Vertical farms, they are expensive, because the capital expenditure is at least four time as much as the most advanced greenhouse. Because you are putting there a lot of technology, LEDs, there are a lot of computers. I mean, they are expensive structures. Then it is also very expensive to operate them because you don’t need just farmers, in this case – you need engineers, you need software developers, you need agronomists, very expensive professionals. And even though there’s a trend, which is static automation to the vertical farming set up, it’s a very tricky trade off. Because you might add automation, but then your CapEx expenditure is going even higher. So finding the right balance mix is the key. Otherwise, you might decide, I mean, you’re going to lose money for the next years, just because you are trying to figure out how to rectify the financial. This is what happening around the planet, especially in America. That explains why the overall amount of crops grown in vertical farms are so tiny compared to the potential market that you might have with a different position.
AZEEM AZHAR: So let’s try to understand what goes into a vertical farm that makes it expensive and complicated. Could you break down for us, what a Zero Farms farm looks like?
DANIELE MODESTO: Okay. So let me tell you a story. When I started looking into these vertical farms, I tried to put together a vertical farm just by sourcing equipment from the market. So I started looking into LEDs, you need artificial light to replace the sun. So the most expensive item you have in a vertical farm. Then you need the fertigation system, which is, say the heart of the system that feeds the plants. You need support, you need to source many different things from many different vendors, and you end up becoming a system integrator. So you’re actually portraying stuff which is not conceived to work seamlessly together. You get different components from different vendors, and it is logical, you end up with functional overlaps. You put there more than what you might need.
AZEEM AZHAR: You started with a design specification or an architectural plan for what needed to be in the vertical farm for each of the different steps from LED lighting to hydroponic systems and robotic systems and heating and cooling. And you went to the market and said, “What are the different components that we can buy to put all this together?” And you are some kind of orchestrator or systems integrator, and what you discovered, there’s lots of overlap between these components, which I guess is increasing the cost. But I also wonder whether you’re actually getting what you need to deliver the exact recipe that you know your plants need.
DANIELE MODESTO: Obviously, if you put together equipment coming from different vendors, you are not control of your solution, so you’ve got to rely on the degree of control you are allowed to have when you’re portraying stuff. So, you miss the possibility to control the system the way you wanted, but at the same time, you also lose control of the financials. And I tell you, plants, they don’t need that much to grow. So the point is that, again, you are investing a lot of money, which you will never recover. So at that point, we realized that it was impossible to make it work this way. So we had to become a technology company. We had to become owner of our own technology. And instead of sourcing from the market, we decided to start a very long path, five years, because you don’t want to create just a piece of equipment, you want to create an ecosystem of components that had been seen conceived to work gather. So you got to take away all those functional overlaps and streamline the system. You take out all what is not necessary, and I think we did it. We’ve been creating our own lighting solution, our own fertigation solution, our own HVAC solution. Most of all, our own software solution that drives all the equipment and makes them work seamlessly together. We put artificial intelligence on top, and that’s what we believe. My work, we are [inaudible 00:13:55] works that we are not selling to anybody. We decided to grow with our own tools and that’s the way we see financials behaving the right direction. And let me tell you a story. When I was envisioning this project, I was kind of spending most of my time abroad. And I was keen to go back to Italy to develop a project. And I thought that this new agriculture, which nursed with technology, is at home in Italy. And I tell you why – we’ve been missing, as Italians, the digital wave of innovation We’ve been late. But this way of innovation, which applies to agriculture, it’s not just digital. It’s digital plus physical. So you must rely on a manufacturing environment. And Italy is still the second manufacturing economy in Europe, so we have access to do skills around the corner, literally. As Italians, we are recognized to be… I mean, I don’t want to say that when it comes to food and agriculture, Italians they are a grander, but for sure, we might be credible. Because it’s about something that is, if you want, attached to our DNA.
AZEEM AZHAR: I think it is reasonable for you to say that we associate Italy with food. But I’m also curious about the role of soft software and machine learning in this entire system. You hear a lot about, that within vertical farming, one of the things that you’re doing is you’re reducing the crop cycle because you are able to grow throughout the year, rather than just during a growing season and that generates more data, and that helps you learn more. And you can run experiments in parallel, because you can change conditions in different places. To what extent is that actually something that you’ve experienced within Zero? And can you give us an example of the kind of adjustment that you have made as a result of being able to feed this data through a learning system?
DANIELE MODESTO: Yes. I will give you an example, but I’ve got to tell you something first. The reason why we decided that we had to go to bet heavily on software, is simple if you want. Humans, they make mistakes. And these systems, I mean, we grow hydroponic. Just to give you an idea, if you lose control for a few hours, they die. There’s a very good chance you’re going to lose control if you rely on workers. Because the number of parameters they should be governing – they are simply too much.
AZEEM AZHAR: So essentially, the software is there to keep the conditions within their parameters and be very, very precise with it, rather than to learn from what’s going on today?
DANIELE MODESTO: Yes. It’s not that simple as in might sound, because we’re talking about living things. Plants, they are leaving things, so it’s a dynamic equilibrium. So, it is not that easy to keep it where it has to be. Then another thing that you might consider is that, you’re talking about very complicated machines with a lot of pumps, a lot of hydraulic components. So also predictive maintenance, which is what you can do with software is really key. Because you start recognizing patterns, you can teach the artificial intelligence to recognize patterns that are saving you a lot of money, because you can understand when things start to behave poorly before they break.
AZEEM AZHAR: It’s such a fascinating area. I want to turn though, to the question of the actual food themselves. So what we’ve seen from vertical farms today has been a focus really on salads, sort of watercresses and lettuce, occasionally tomatoes type of thing. What will it take for the, sort of the palate to widen and for vertical farms to reach other types of plant foods?
DANIELE MODESTO: Let me say that, you should see things from a slightly different perspective. Vertical farms might be considered a platform. You don’t need to apply them just to food, you can grow bio-pharmaceuticals in vertical farms, you can grow bio-materials in vertical farms, you have many different applications. If it comes to food, it would be silly to say that you might be growing one day potatoes in a vertical farm, it doesn’t make any sense. Vertical farms in addition to lettuces and leaf greens – so they might be nice for herbs, for micro-green stuff, for strawberries, for young plants, for sure they can be working in combination with greenhouse to grow young plants. But I don’t see vertical farms in the future growing soybeans or-
DANIELE MODESTO: Wheat. No, I don’t think so. No, not the [crosstalk 00:19:16].
AZEEM AZHAR: One of the things that we do see is a lot of natural variability in foods, and that’s part of the beauty. And one of the problems with modern industrial farms with their long supply chains is that the foods are optimized for oxidative stability, right? Can they stay alive as they travel from Spain to the UK or from… An avocado travels 5,000 miles in the US, as opposed to being optimized for the diversity of their flavors. And in this highly industrialized mechanism, is there a risk that we end up in a kind of a monoculture? We simply hone in on the particular variants that works best in the factories you’ve built. But also a monoculture in the sense of efficiency trumping diversity, when we think about what we want to put on our plate?
DANIELE MODESTO: It’s a very good question, but I would say that it’s kind of counterintuitive in this case. Because if you think that seed companies, they are spending years to add resistances to their crops, in order to make them survive in open field, to fight the existing bonds. And then think about the vertical farm as a protected environment. You don’t need to add those resistances to the crops, so they are basically much more natural than they would be if you grow them in an open field where you are exposed to diseases. And let me add something more, again, you don’t need to wash those crops. So you usually lose a lot of taste because you are washing those poor leafy greens with aggressive chemicals. The fact that when you grow in a vertical farm, the crops are so clean, you don’t even need to wash them, you can eat them immediately, I mean, it gives you very tasty crops.
AZEEM AZHAR: So in a way, you’ve got this configurable production line that can be for different types of crops, but actually interestingly, you point out that you’re willing to stress and strain them in order to maintain their sort of flavor and nutritional value?
DANIELE MODESTO: Absolutely, yes. And you can use many tricks. The organic compounds that are basically defining the taste of your crops, they are heavily influenced by light. If you nailed the right light recipe with the right wave lengths, you can influence that taste. And you also increase the taste.
AZEEM AZHAR: When I look at pictures of vertical farms, the founder of the company is always bathed in a purple light. Tell us a little bit about the biology of the light and the way in which we should understand that.
DANIELE MODESTO: Yeah, the reason why you oversee vertical farms in purple is because, when you have to create the replacement for the sunlight, you want use just those wave lengths that are effectively used by the plants, blue, red, purple spectrum. But it’s not that simple, because science tells you that many different wave lengths play a role in the plant growth. It’s really about, maybe the light recipe, and this is fascinating: the same plant with different light treatment gives you very different results.
AZEEM AZHAR: Can you give us an example of what different outcome you get from a different light?
DANIELE MODESTO: Sure. Absolutely. Let me give you an example with basil, which is beloved plant by Italians. And we’re growing basil to make pesto sauce for the food industry. And the very same basil, the very same seed with the very same nutrient, you treat it with, let’s say, blueish, purplish light. You treat it with white light, you get a totally different flavor profile. And you can recognize that if I ask you to smell the difference, you could recognize the one which has been growing with white, the one that has been growing with purple. And the purple makes it, I would say, rich.
AZEEM AZHAR: So you could in fact have, as a retailer, you could be selling a mild basil and you could be selling a richer basil, and you are able to meet the demand appropriately, by deciding what light to bathe the plants into when they are growing.
DANIELE MODESTO: If you’re knowing the right recipe, you can also reproduce very specific conditions that are making very special props recognizable, because they are attached on a small village. You might be exporting the recipe instead of exporting the crop themselves.
AZEEM AZHAR: That’s actually really interesting. So you’re able to find a particular local recipe, a basil or a cress or something. And you can take those natural growing conditions and turn them into the sort of algorithmic recipe that a vertical farm might need, and then be able to produce those locally. And just out of interest, I mean, is that something that you’ve actually explored that you could imagine being able to say to, I don’t know, a basil grower in Calabria, we can take this and make this a global brand?
DANIELE MODESTO: Let me give you an example. There’s a small spinach, which is growing in Venice, really in Venice. And it has a unique flavor because it grows with very salty water. And if you reproduce the right amount of salt in the nutrient solution, at that point, you unleash the possibility to explore that recipe, also where crops will never arrive. So you could create the same recipe in the United States in Northern Europe. I tell you, we are not competing with the farmers, because there’s no way they could get the crops over there.
AZEEM AZHAR: Because of course, what you’re doing is, you are able to, in some way, broaden the accessibility of particular flavors and flavor profiles. And potentially… I mean, I just wonder what that means for your business model. I’m getting a sense that you are thinking less about homogenization, but more about variety and being able to support variety on the other end. Now, if the design of the technical platform enables that variety, the business model also needs to enable that variety. So how does this technical capability of being able to say, let’s take this Venetian spinach, or let’s take my mythical Calabrese basil. How does that play into your business model?
DANIELE MODESTO: Okay. In a couple of words, we are considering ourself as a technology company. So, Zero is basically building the technology – is basically investing resources and perfecting the technology is investing resources is needing the recipe. So, to basically add to the portfolio of possibilities, even more on a daily basis, then we don’t sell this technology. We set up our own farms around the planet with partners, and instead of making our profit out the technology, we say, let’s set up the farm, let’s explore the technology, let’s generate revenues by selling the crops, by selling the bio-pharmaceuticals, by selling whatever we grow in our farms. And obviously we don’t do that alone. Now we do that with partners that are coming from the industries where we want to develop these opportunities. We are taking care of making the technology perform smoothly. They take care of the sales. So we are actually incentivized to improve our portfolio of IP, which includes the recipes. Cause we give to the partners more possibility. You get to the marketer with winning ideas, and as we are making money together with them, it’s a kind, it’s a kind of win-win collaboration.
AZEEM AZHAR: So when you say you make money together with them, does that suggest a joint venture structure for the way you do this?
DANIELE MODESTO: Yes, there are joint ventures in which we also co-invest financial resources to set up the farms. So we bring the technology at cost, we co-invest part of the money and they have to bring the financial resources on this side and the market channels. We don’t know how to sell, like you say, the Middle East, or to sell strawberries in North America or to sell bio-pharmaceuticals in Europe. Our partners are supposed to bring this kind opportunity together with the part of the investment.
AZEEM AZHAR: How do you differ from the many other vertical farm companies there are? There are some others in Europe, there are some in Japan in particular, but in the US there’s a number, a couple have even gone public.
DANIELE MODESTO: We deem ourselves a B2B company. We are focused on technology and operating the farms while… Especially North America, you have several companies willing to bring their own brand to the market. So, I mean, I don’t want to make names, but all of them, they have their crops on the shelves while we believe that it’s not nice to bring the crops on the shelf, it’s on our partner. It might be a retailer. It might be a distributor, but we are thinking that the way to unleash scale in this business is to establish partnership with the players that already have the market channels available. So conceptually in Italy, we are building a very large setup and we are completely focusing on private label. So the retailer tells a story and the retailer tells the consumer about the advantages of vertical farms. We are totally focused on making the technology work and optimizing it in order to make it possible, to position the crops at least at organic prices level. I believe you’re giving the opportunity to the consumers to purchase and even I use standard and organic at a similar price point. We should be winning.
AZEEM AZHAR: I’m curious about how you see vertical farming alongside other food tech innovations. There’s a lot being made of lab grown meat, cellular agriculture, precision fermentation. Do you see those as a very, very distinct approach?
DANIELE MODESTO: No. I believe that the very similar approach, because we’re still dealing with what you might be calling control involved farming. Instead of farming a plant, you might be farming bacteria, you might be farming [inaudible 00:31:03], but the principles and the conceptual framework is the same. So, that’s exactly one of the direction where we want to expand our technology reach. My vision is that, we’re not just a vertical farming company, we want to become a farming company. And also precision fermentation as a kind of farming.
AZEEM AZHAR: And the theory behind precision fermentation is that, we can take that towards growing meat alternative proteins, but also potentially into growing meat based proteins in sort of bioreactors or fermentation tanks.
DANIELE MODESTO: That’s correct. And if you consider, we’re talking about bioreactors here, and also plants might be considered bioreactors. I mean, you consider that there’s a technique called molecular farming that is used to grow plants that are expressing of seeds or recombinant proteins. And to produce them… As [inaudible 00:32:10] to producing them with bacteria bioreactors. So plants, they are vegetable bioreactors. So you see, we’re talking about very similar conceptual framework.
AZEEM AZHAR: From a practical business perspective, it’s quite different, right? Because you have to figure out how to buy the bioreactor, who to buy it from, how to control it, what chemicals it needs. You need to reconfigure your internals of your vertical farm, because you are replacing a little plant, the size of my arm, with a bioreactor that might be a 10,000 liter tank.
DANIELE MODESTO:In the details it is different, but not that far, because instead of controlling, you still have a software framework, you still have a fertigation system, which is actually controlling the composition of your bioreactor media, the same way it is controlling the nutrient solution for plants. So, not that different.
AZEEM AZHAR: I’d love to just turn maybe to some of the projects that you’ve got planned, and maybe we picture the vision of them. The one I’m most interested in is the one you’re doing with Carlo Ratti.
DANIELE MODESTO: When we met a genius architecture, which has been suggesting to create the first farm scraper in the planet, which is basically a building with a facade, which is a big vertical farm, we had to put together to connect the dots in a very different way. Because, it is not exactly a warehouse you can convert into a vertical farm with second layers. It requires a totally new design. We did that because we strongly believe there’s a new domain, which is opening on the edge between architecture and agronomy. So this is a kind of vision for the future of Yuba Landscape.
AZEEM AZHAR: Yeah. I mean, I’ve seen couple of photos of your farms on a site in Italy, and it just looked like a massive black box.-
AZEEM AZHAR: But, is that what all vertical farms are going to end up looking like?
DANIELE MODESTO: No. Modularity is key, so you want to be able to choose the strategy that works for every single project. For instance, you might be in a position to retrofit existing buildings, to recover them, to adapt the technology to existing spaces. You might be willing to go for a large greenfield project where you just go with prefab solutions. The bottom line in both the cases, you must be able to execute quickly, because time to market is a key success factor. So we’ve been designing our technology in order to be able to set up a pharma in a couple of months. So you want to move the complexity from the site where you’re setting up the pharma, to the factory. So you assemble your component to the factory, you bring them to the final destination, you just connect them together. You are very flexible and you do whatever the market wants. You can also scale up the capacity, as long as you meet additional demand. You don’t need to face all the risk in the beginning.
AZEEM AZHAR: Let’s go to that question of modularity. Because I think modularity is one of the real drivers of cost declines in technologies as a whole. And my rationale for it goes as follows, cost declines come through learning effects. In other words, you figure out exactly what the specification is, you figure out how to do it better, you figure out how to integrate it better. And learning effects arise as a consequence of the N-th one you build. The more you build, the further down the learning curve you are, the more you’ve learned. How does modularity play into your need to bring prices down? Is that actually effects that you see was that a design decision you took?
DANIELE MODESTO: I would say that this is a pillar around which we built everything. Because since the beginning we thought that you might be also increasing the scale of your farm, but you’re still building a one off. So instead of building a big farm, we decided that we would go for an industrial system to build vertical farms. So we’ve been focusing on creating all the items of an ecosystem. Let me give you an example. The LED lights, they are one [inaudible 00:36:53]. They are self-standing object, which has been designed to work together with the other, but they are self-standing. So if now we replicate 200,000, 2 million times, the object will just get optimization on that iteration process. The towers, they are a big object, a big self-standing component. We have towers of many different configurations, but the towers, they are the same all over the planet. So we build them at factory level and we always iterate the same configurations. So if we need to change the configuration because a new opportunity comes, okay, we do that and then it gets added to the library. But we just repeat standardized objects. And that’s the only possibility you have, if you want to squeeze an optimization over time.
AZEEM AZHAR: Pardon me, how big are these modules, both in terms of their physical dimensions, but also in terms of their, what they can produce?
DANIELE MODESTO: I mean, you can start from a very small farm, which is result of the configuration, which might be well retrofitting an existing building. It is 50, 100 tons per year, you can scale it upto 3000, 4,000 tons per year. Just to give you a reference, the system we are building right now, it’s very big pharma. It’s a distributed farming capacity in a district, we call it the Future Farming District and the overall capacity is in the range of 3000 tons per year. Leafy green or the micro-greens, and over the next few months also berries will be added to the range. I can tell you it’s enough to supply 2,500 shops. It might sound a lot, it’s not a lot, because the market is absolutely huge. But, you want to see those installations like regional hubs. They might be suitable to provide what the market requires for three, four big cities.
AZEEM AZHAR: So when we look at vertical farming and all that you’ve learned over the past few years, do you see it as an evolutionary step from where we were with high intensity greenhouse based farming and the things that preceded it, or do you think that it is a distinct quantum paradigm shift of how we sort of approach producing food?
DANIELE MODESTO: No, I don’t think it is an evolution. I think it is a different paradigm, which is an additional possibility we have to fulfill specific needs. So, I don’t see vertical farms replacing greenhouses. Absolutely not, it’s impossible. It’s an additional tool we have and I see a future in which you are going to have advanced greenhouse, you have vertical farms, you want to have also, the combination of the two working together. But absolutely, no way to replace greenhouse. My only point is, if you look at the 500,000 hectares of greenhouses and 30, 40 actors of vertical farms, there’s room to grow. So also, if we are looking at 10%, 15% of the crops growing in vertical farms in the next 30 years, we’re talking about a hundred thousand of hectares of vertical farms that might find space on the market.
AZEEM AZHAR: The key point the analysts tend to look for is that crossover point. The point at which the typical consumer doesn’t need to make an economic decision, or rather doesn’t need to make an economic trade off to buy the new technology. So thinking about that same model, when we look at vertical farming, where do you think that cross over point is, from basil or salad leaves that are grown in vertical farms, being cost competitive or cheaper than the alternatives that are on supermarkets?
DANIELE MODESTO: I believe we can do that also right now, if you crack what I call the sustainability equation and you do that, not just with a good piece of technology, maybe high yields, you manage to lower CapEx and OpEx, it’s not enough. I believe it’s a combination of things and you need to consider that we as technology companies might be in control, just a part of that equation. Let me elaborate a little bit on this. In order to bring down the prices, you need to have also some proper fuel for those farms. You need to feed them with electricity, which has the right price. So you want to be running just on renewable energy. That’s what we do in Italy. We’re setting up the farms where we have hydroelectric power. And we feed directly… I direct electricity into the farm, it’s cheaper, it’s cleaner, it’s also financially sustainable. In addition to that, in order to reach the rise price level, you got to rely on retailers, they got to play a role on that. We don’t want to invest our resources in creating a new brand, in telling a new story, in explaining a new standard, the retailer can do that. And as old, the communication tool will have to be persuasive with the consumers. So if you put together, right use of technology, the right fuel and the right electricity, clean electricity, and a committed retailer, then I believe that we can reach that democratic status also now. And we do that in Italy, which is the worst place in the planet.
AZEEM AZHAR: Sorry. Did you say the worst place in the planet?
DANIELE MODESTO: Yeah, it is. It is for vertical farmers, I’m saying. I mean, I love Italy, but you get to consider that, we got to compete with the traditional sector and Italians they are creative, but they are not innovators at all. So they are very reluctant to marry new standards.
AZEEM AZHAR: Well, also proud heritage of food, of course.
DANIELE MODESTO: Yeah, sure. They see us as heretic, because we’re growing with computers, we’re growing with science instead of growing with your gut feeling,
AZEEM AZHAR: You are selling your products or products produced through your farms in Italy now. So if listeners want to go somewhere to sample them, where do you recommend that they go?
DANIELE MODESTO: Oh, we have our retailers in Italy, I can recommend retailers where they can find them. And they’re going to be soon also out of Italy, because we are starting projects in Middle East right now, which is the place where vertical farms are the only possibility to grow things.
AZEEM AZHAR: So one of the benefits of farms is the controlled environment that you provide, which means that really, you could grow any plant anywhere. So you could take a plant that thrives in tropical conditions and grow it in the north of Norway. You could take a plant that enjoys sort of wetter British weather and grow it in the heat of the Middle East. Well just help us understand how you think the geography of all of this might play out over the coming years.
DANIELE MODESTO: Sure. I think that there are obvious answers, like you want to bring these technologies to Middle East because when you are in a position to save 95% of water, and you can also rely on cheap electricity. I mean, Middle East is an obvious destination. And we’re going to do that. But you need to understand that also in Northern Europe, getting crops grown in Southern Europe, that they travel thousand of miles on a daily basis. So I would say that Northern Europe is one of the most interesting destination, especially because consumers, they understand the standard. They are kind of sensitive, it’s just not about the quality of the crops, but also the environmental impact. And then the key market by definition is North America.
AZEEM AZHAR: And I’m curious about the… The Middle East is a tiny market, so what’s the appeal there?
DANIELE MODESTO: It’s not time at all. Just, let me give you an idea. Saudi Arabia, 30 million consumers, 9 million in the UAE. And you know that they’re importing crops from Europe by air freight. I mean, it’s costing more or less two years to bring one kilo of props from Europe. And with two years, you can actually grow stuff in a vertical farm. So it doesn’t make any sense, you rely on import when you can grow yourself and pay less.
AZEEM AZHAR: Could you take us out, 20 or 30 years, if your vision of vertical farming takes hold, if the technologies come down in price and it spreads, how does life change? How does life change for the 80%, 90% of us who will, by then, be living in cities?
DANIELE MODESTO: So I think, there going to be a perverse with technology, but there going to be a perverse horizontal technology applied to many different fields. So prices cost will be optimized, their application will be absolutely normal, also in urban environments. As I said, you’re going to have a new kind of architecture, which is contaminated by agriculture and vertical farms. They are sitting on the edge between these two domains, agriculture and architecture. So I think you should be looking at beyond the notion of vertical farm. You should be looking at control environmental agriculture, where you drive plants to do what you need. And if we perfect the science, it’s going to find many application in our daily life. More than you might expect.
AZEEM AZHAR: Daniele Modesto, that’s a powerful vision. Thank you so much for speaking today.
DANIELE MODESTO: Thank you. Thank you very much. It has been a pleasure.
AZEEM AZHAR: Well, thank you for listening. Now, if you enjoyed this conversation, I’ve spoken to a lot of people in this intersection between biology and machine learning and technology. You can go back through the archives and find my conversation with Mike Zelkind, the CEO of 80 Acres Farms, another vertical farming company, or a number of conversations with people, looking at this intersection between biology and machine learning, such as my recent discussion with Reshma Shetty of Ginkgo Bioworks, or my discussion with Vijay Pande of Andreessen Horowitz. To stay in touch, subscribe to my podcast or my newsletter at www.exponentialview.co. This podcast was produced by Mischa Frankl-Duval, Bojan Sabioncello is our sound editor, Fred Casella, the executive producer. Exponential View is a production of E^Pi+1, Limited.