LONDON: OneFarm, the UK based vertical farming company has launched the ethical investment crowdfunding platform, of a tradeable Debenture Offer to raise a minimum of £4.0m and up to £6.7m to fund the build of a large scale indoor vertical farm in Newmarket, Suffolk. The offer is launched through Abundance.
Key Points on One Farm
· The regulated Debenture forms part of a funding package totalling £14.2m
· OneFarm will utilise innovative technology that provides one of the most efficient, flexible and environmentally friendly forms of crop production at scale
· The funding will enable 6,400sqm of vertical growing space to be constructed.
· Around 400 tonnes of vegetables and herbs including lettuce, spinach, rocket, basil and coriander as well as high value and very tender micro versions of broccoli and kale, to be grown every year.
· Produce is grown 365 days a year and harvested when ripe
· Produce is monitored continuously in airlocked towers so it can be grown pesticide free. It therefore does not require washing, enabling a far longer shelf life.
· Through advanced LED technology and modulated crop exposure OneFarm expects energy usage to be 50% less than other vertical farms.
· Phase 2 of the operation will add another 6,600sqm of growing space, giving a total of 13,000sqm providing approximately 1,000 tonnes per annum of vegetables, herbs, and microgreens.
Key Points on the Debenture
· Investors will earn 9% a year before tax and capital repayments over the life of the 7 year debenture
· The Debenture is open to all investors, private, corporate or institutional
· The Offer is open from 08 March 2022 to 30 April 2022.
· Further details about the Debenture Offer and Abundance are available at https://www.abundanceinvestment.com/
Commenting on the launch, OneFarm CEO, Mira Merme, said: “After 5 years of intensive agri research, scientific investigation, and taste trials it is wonderful to finally launch our funding offer. We are very excited to embark on our mission to produce and sell to local populations a secure, affordable, nutritious, environmentally sustainable and most of all an utterly delicious food supply that can meet all year-round demand.”
Indoor vertical farming is one method of controlled environment agriculture. There are different technologies used but the key principle is growing plants indoors in vertically stacked layers and using LED lighting.
The type of crops currently grown tend to be small and sensitive leaf vegetables, such as microgreens, herbs and leafy greens, that can be grown on thin growth trays, and which benefit from a protected and controlled environment.
It is a relatively young industry in the UK, particularly compared to countries such as the US, Germany, and France where it is becoming a significant element of the food production mix. Significant investment has however recently been committed in the UK to projects that are now under development.
Enhancing energy efficiency has been key to the industry progressing. The level of energy consumption and related carbon emissions were a concern for the early indoor vertical farms. However, the improvement in LED lights and the ability to focus and recapture energy has increased energy efficiency. Access to renewable energy for the main power source has increased sustainability. Both these factors have increased commercial viability.
We champion this farming method as a way of producing and selling to local populations a secure, affordable, nutritious, and environmentally sustainable food supply that can meet all year-round demand and reduce the need for imports. We will grow in-demand crops that can’t easily be grown in the UK and so won’t disrupt current local supply.
The plants in our indoor vertical farms will grow quickly because of the innovative technology we will use that optimises the light, particularly by selecting the optimal light spectrum, to give the plant exactly the energy it needs to grow. This means quicker growth cycles and consistent yields throughout the year, even in winter months.
Our indoor vertical farms are also highly modular and automated compared to other controlled environment production methods which means that:
• A larger variety of plants can be grown at the same time and there is greater flexibility to change the crop mix to meet changing customer requirements. This is not the case in most other production methods that are generally set up to only grow a limited number of crops, ie. “monocropping”.
• Operational risks are reduced as there is minimal contact between crops themselves and it is easier to protect them from harmful pests and pathogens from the outside environment.
Once we have established our first large-scale indoor vertical farm our aim is to roll out a number of similar farms across the UK in order to further establish the industry and its ecosystem.
Our future plans include the production of other vegetables and fruits that aren’t able to be easily grown in the UK, including vine crops and root vegetables.
Microgreens, herbs and leafy greens
Consumer behaviour in the UK has been shifting towards a more vegetarian diet predominantly due to the environmental and health issues associated with producing and eating meat. This has led to an increase in demand for leafy greens and in particular microgreens and herbs which are essential ingredients that enhance flavour and nutrition (they contain a number of vitamins, minerals and antioxidants) in plant-based food.
Leafy greens is a broad ranging and well-known category of produce that covers plants with edible green leaves such as lettuce. The 90,000 tonnes of bagged salads sold (mostly by supermarkets) a year in the UK is an indicator of the large size of the market.
Microgreens, such as rocket and baby kale, are the young, tender greens of vegetables that are harvested when they are approximately 1 to 3-inches tall. Herbs cover a wide range of fragrant herbaceous plants with leaves and soft stems, such as coriander and basil.
We believe that our approach to sustainability means we will have the most efficient and sustainable way of delivering our produce to consumers compared to any other current large-scale crop production method that we have researched. This takes into account our full life cycle carbon emissions, in particular overall energy consumption, reduced transport and use of fertilizer, the elimination of pesticides and land tillage, and reduced food waste.
First generation indoor vertical farms have a high energy usage mainly due to their less efficient LED lighting that replaces natural light. Glasshouses on the other hand often require significant energy to heat or cool down and maintain their climate, and are often powered by gas.
The next generation technology we will use means that we will use 50% less energy compared to most other controlled environment solutions that use only artificial light. By the purchase of renewable electricity (mostly from the grid) and using some on-site renewables we will further reduce our emissions at this stage.
Our model saves energy in a number of the other aspects of the lifecycle too. Namely a reduction in transport due to our close location to customers, our minimal crop losses during production and reduced wastage during distribution and consumer use.
Being indoors, we can also modulate when plants grow during their 18-hour light cycles and so use electricity at night to help the grid and when it is cheaper.
Any nutrients required by plants to grow are obtained in the form of minerals which might be organic or synthetic fertiliser. The production of some synthetic fertilisers (‘toxic fertilisers’) can create significant carbon emissions. Agriculture accounts for 80% of the world’s nitrous oxide emissions, mainly from the application of nitrogen fertilisers. Nitrous oxide is 264 times more powerful than carbon dioxide in forcing temperature increases over a span of 20 years. We will not use any such synthetic toxic fertilisers and we have a plan in place to completely exclude the use of any synthetic fertilisers altogether. The organic nutrients we use will be supplemented with algae-based bio-stimulants so that we have a sustainable and local source of plant nutrition.
Transport and supply chain security
Transport emissions vary depending on where the product is grown and how it is transported to the end users. Approximately half of the vegetables, herbs and leafy greens consumed in the UK come from abroad. These imports were valued at over £2.5 billion in 2020.
Furthermore, inconsistent weather resulting from climate change is increasingly causing crop loss and disrupting food supply chains. This can cause dramatic price increases and shortages on UK supermarket shelves. Systemic shocks such as Brexit and Covid-19 further exacerbate these issues.
Locally produced food can help to mitigate these supply chain issues and reduce transport emissions. Our farm is located in Newmarket, which is centrally located in the UK and close to London, providing a perfect location for transporting our produce to a wide variety of customers and retailers. From discussions to date with our potential customers, we know that their distribution centres will be under 100 miles away.
A major challenge facing the global food sector is water shortage. Each person in the UK indirectly uses 4,645 litres of water every day. Over 70% of that water is from agricultural products and around 76% of the freshwater consumed in the supply of fresh fruit and vegetables to the UK is withdrawn overseas, often in countries where water resources are under pressure and drought risks are high. The supply chain is particularly exposed to water risks in Spain (where a significant amount of our vegetables are imported from to the UK). The reduction and reuse of water for growing crops is becoming a key driver in future food production methods.
Our farm will be highly efficient in relation to water supply due to a fully closed loop system that makes a higher degree of water recycling possible. Only the water within the produce will leave the farm.
We expect to use approximately 95% less water, the equivalent to saving over 130 million litres each year compared to the same production in open field agriculture.
An estimated 1.6 million tonnes of food harvested is wasted before it reaches the shops in the UK. This is due to losses in the field from weather incidents or pests, mechanical damage, post harvesting handling, storage and transportation and tightening specifications by supermarkets and consumers. Of the produce that does make it, a significant proportion is then thrown away as it goes past its shelf life. According to the government’s waste advisory body, WRAP,
40 percent of the bagged salad bought in Britain every year is thrown away. That’s the equivalent of 37,000 tonnes or 178 million salad bags.
Our wastage is purely plant residual roots and substrate which we will use to make compost or sell to local biomass processing factories to be used in anaerobic digestion plants. Our highly controlled growing environment also means that we can manage the growth of our produce, harvesting to precise demands from our customers. We also reliably grow high quality produce that means there is less waste from rejected produce. As the food is pesticide free, our produce does not need to be washed before sale. This significantly increases shelf life both in the shops and at home.
Land use and structure
How land is used and the efficiency of the process on that land are important environmental considerations. It is estimated that as much as 72% of UK land area is already dedicated to agriculture.
The stacking of growing trays in layers vertically within indoor vertical farms means it is the most productive and efficient farming method per m2 of land used.
Each square metre in our indoor vertical farm can grow enough produce to meet most of the average vegetable needs of one person every day of the year. Our 10-floor farm, once both phases are built, can feed the vegetable needs of approximately 13,000 people from a land area just under the size of a football field. It would take approximately 45 times more space to produce the equivalent amount by open field agriculture. Building indoor vertical farms within vacant buildings or structures on brownfield land that would otherwise not be suitable for food production can free up arable land for crops that cannot yet be grown indoors or potentially allow the land to be rewilded for carbon sequestration instead.
Carbon is emitted in the process of building the facility structure (for example in producing the materials used). However indoor vertical farms can be located within existing and roofed buildings than can be retrofitted (such as the warehouse we are using).
The vertical space is also more effectively used enabling smaller structures that take up less space. This invariably means that indoor vertical farms can be located closer to urban areas.
Our first farm will be located in an existing warehouse in an industrial estate close to Newmarket in Suffolk. The site has been selected due to its proximity to large population centres in East Anglia and London and the customer and retail hubs that support them.
The building covers approximately 6,529m2 (just under the size of a football pitch) and will be able to house a vertical farm with a maximum 13,000m2 growing area.
The warehouse has recently been renovated and fitted with solar panels, which will provide part of the electricity to power the warehouse within which our indoor vertical farm and offices will sit. We have worked with UK Power Networks, the distribution network operator, to get approval to upgrade the grid connection at the site. The upgrade works should complete by October 2022 and enable us to purchase 100% renewable energy for our electricity requirement.
Who are buyers will be
For the first year of operations, we intend to sell our produce predominantly to supermarket retailers and other larger demand customers such as catering and food service groups and home delivery recipe box providers. Our supply proposition is very compelling:
· We can supply a variety of products to match customers’ demand throughout the year under direct long-term contracts with fixed prices. This is unusual in the market currently. While most advanced glasshouses can supply consistent and year-round produce at volume, these facilities grow mainly single or a minimal variety of crops and therefore typically contract via wholesalers which adds costs.
· There is a shortage of UK homegrown supply in our main produce lines
· Our technical innovation and ability to provide crops to precise specifications for taste, texture and appearance.
· Our crops have significantly extended shelf-lives, particularly compared to washed products.
· The local production and provenance as well as low environmental and carbon footprint, including zero pesticides, which has become increasingly important for supermarkets and to consumers.
We believe we will become a new category of produce due to our strong ethical, environmental, sustainable and plant characteristics.
How we make money
We expect to obtain revenues by selling our produce across a number of customer channels. The drivers behind the revenue we can generate are as follows:
Yield and required quality – our ability to grow the produce to the volumes required by our customers. We estimate that we will be able to supply around 415 tonnes (depending on size of initial fund raise) of produce a year from Phase 1 of the farm. Our confidence
in our ability to produce these yields and required specifications comes from testing of crop yields at the Intelligent Growth Solutions’ demonstration site, the research performed by OneFarm BV and testing performed by our main seed supplier.
We are confident that we will be able to quickly ramp up the production in the farm as the growth towers come online and to meet the demand shown by the potential customers that we are currently in discussions with. Nevertheless, to allow some contingency while we get used to the systems, we are assuming that our monthly production levels will only be 75% of full capacity from month 10 to month 12 of our first year, 85% during our second year and only in our third year will we have ramped up to producing at full capacity.
Price – based on the positive assessments carried out by our potential customers to date and the relationships formed we have been provided with indications of the produce mix, volumes, prices and payment terms required. The pricing indicated for each type of produce is consistent across our discussions and is in line with expected retailer margins. It has also confirmed our price competitiveness.