Editorial view: Will crops of the future grow in SEZs?

Vertical farms vow to change the food supply chain of cities around the globe. First and foremost, by fixing some of the main perils of traditional agriculture: soil overexploitation and contamination, water intensity, distance from consumers, and, obviously, seasonality.  If greenhouses have partially done the trick so far, vertical farms are taking a step further by locating high-yield, highly efficient farms right at the doorstep of consumers living in urban areas. 

The industry is in its infancy, and companies are scrambling to find workable and profitable business models. Some are growing crops vertically, others horizontally; some are betting on scale, others on micro-installations. Beyond differences, they all share the same enthusiasm. Vertical farms can save up to 90% of water compared to traditional agriculture; their yields are exponentially higher than arable land and even greenhouses; and they can be located inside any building as close as possible to final customers, thus dramatically shortening the supply chain and its environmental impact.

A detail though – vertical farming is costly. Switching arable land for a property in London or New York is hardly a bargain. Besides, upfront investment in lighting and ventilation equipment is high. The cost of operations – mostly electricity and labour – is also high. That is where special economic zones come into play. Finely-tuned incentives typical of SEZs can reduce the cost of land, equipment and electricity, as well as reduce taxes like VAT and even corporate income taxes. This would give vertical farmers extra financial breathing room to make it work, particularly in the current stage where technology and business models have yet to be refined.

Policy-makers in countries with extreme land or weather conditions, which import most of their fresh food supplies from abroad, would have a strong food security argument in favour of SEZ incentives for vertical farming. Think of the Middle East, for example, or city states like Singapore with barely any land available for agriculture. Likewise, their peers in countries with ambitious sustainability targets could go down the same road. However, it is not just about food security and sustainability. The development of the agriculture technologies involved can flourish in SEZs focusing on vertical farming, laying the ground for broader agritech clusters.

Vertical farms are springing up across the globe. The sector is expected to grow at an annual 24.6% through 2026, according estimates by research company Allied Market Research. With 68% of the world’s population projected to live in urban areas by 2050, and the erosion of agriculture soil expected to continue because of climate change and overexploitation, securing stable and sustainable food supplies to city dwellers will be at the top of the priority list of policy-makers across the globe. Vertical farming has the potential to achieve that. SEZs have the key to unlock that potential.