This website is part of the AGR1110, Introducton to AgriFood Systems course at the University of Guelph, Canada. For further details, contact Prof. Manish N. Raizada (raizada@uoguelph.ca).
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Graeme Li, November 26th, 2019
Table of Contents
Part 1: Introduction
Identifying the Problem
Project Proposal
Analysis of the Leafy Green Market In Canada
Part 2: Overview of Technologies Associated within the Industry
Introduction to Controlled Environment Systems
LED lighting
Hydroponics
Vertical Farming
Artificial Intelligence
CO2 Enrichment
Part 3: Viability of Controlled Environment Agriculture
Market and Environmental Viability
Marketing Strategies
Part 4: Conclusion – Looking towards the Future
References
Part 1: Introduction
Identifying the Problem
It is without a doubt that climate change is real. Experts have estimated that we are currently on track for a global increase of at least 2 degrees Celsius globally by 2100 (IPCC, 2014). Internationally, it is also expected that natural disasters such as floods and droughts will increase (IPCC, 2014). Globally, food scarcity will increase (IPCC, 2014). In Canada, climate change is expected to increase agricultural yields in the near future (Agri-Food Canada, 2014). The growing season is expected to be longer, allowing Canadian farmers to increase output of nearly all commodities (Agri-Food Canada, 2014). What could be devastating to producers in Canada is the decreased predictability of weather patterns in Canada (Agri-Food Canada, 2015). It is expected that Canada will not avoid the increase in droughts, resulting in some years that may have decreased harvests (Agri-Food Canada, 2015). In addition, it is expected that there will be an increased prevalence of pests and pathogens in crops, which could further decrease field yields (Agri-Food Canada, 2015).
To avoid this, Canada, along with other countries must take action. The 2017 Paris Agreement, signed by Prime Minister Justin Trudeau, affirmed Canada’s commitment to keeping global temperatures below 2 degrees Celsius by reducing Canada’s greenhouse gas (GHGs) emissions 30% by 2030 compared to 2005 levels (UNFCC, n.d.) (Environment and Climate Change Canada, 2019). Although Canada’s agriculture section only accounts for 8.2% of total national GHG emissions (Prairie Climate Centre, 2018), it is still important that new methods of farming are found to further decrease GHG emissions. If simultaneously, it was possible to avoid pest, pathogen and drought risk that climate change is predicted to create, would that not be useful as well?
Project Proposal
Companies in parts of the USA that face similar problems have already begun innovating. An excellent example of this is New Jersey based company Bowery Farming. Bowery, along with the other companies, utilize a system known as controlled environment agriculture (CEA). They claim their system can grow leafy greens using 95% less water, zero herbicides and pesticides, all while producing 100 times more product per square foot than traditional methods of farming (Fain, 2017). The system is also completely indoor, eliminating dependency on weather patterns and limiting contact with pathogens (Fain, 2017). Their production facilities are also based in cities, delivering to customers within a range of only 50 miles from the production facility, meaning the produce is both super fresh and there is a significant reduction of CO2 emissions from the reduced distance between producer and consumer (Fain, 2017). Harnessing this farming system, Canada has the opportunity to be completely self reliant when producing leafy greens, including in the winter, all while reducing agriculture’s impact on the environment and climate change.
Analysis of the Leafy Green Market in Canada
Leafy greens are plants that have edible leaves and/or stalks. Typical leafy greens in Canada include vegetables such as lettuce, arugula, spinach, bok choy and kale (Government of Canada, 2015). Leafy greens also include the baby versions of these crops, which are harvested at an earlier date than the mature versions. They can represent a key part in a healthy diet, providing essential vitamins and nutrients that are recommended in Canada’s Food Guide (Health Canada, 2019).
In Canada, the vegetable market in 2018 had a combined total farmgate value of over 1.2 billion dollars (Stats Canada, 2019). Of this, lettuce makes up almost $83 million of Canadian farmgate value (Stats Canada, 2019). Despite this, Canada continues to run net trade deficits in vegetable trading. In 2018, Canada had a vegetable net trade deficit of $1.659 billion (Agri-Food Canada, 2019). Lettuce continues to be Canada’s top imported crop, with $442,558,000 worth imported in 2018 (Agri-Food Canada, 2019). This indicates a clear market space for Canada to grow more leafy greens for itself.
Leafy greens have some problems associated with producing them. When grown in soil, they may be contaminated with Salmonella and E.coli (Government of Canada, 2015). They may also be contaminated if improperly stored (Government of Canada, 2015). Many of these contaminated products are imported, typically from California (CFIA, 2019). This lengthy transport distance leads to significant GHG emission. In total, transportation makes up 28% of Canada’s GHG emissions (Prairie Climate Centre, 2018). Reducing this sector is crucial to combatting climate change in Canada (Prairie Climate Centre, 2018). Canada also faces the obvious problem of winter, which prevents it from producing leafy greens outdoors in the winter. Despite this, only 1% of greenhouse space is used to grow lettuce in Canada (Figure 1), leaving Canada without it and other leafy greens produced in the winter. This further indicates a need for Canada to produce its own leafy greens, all year round.
Figure 1: Harvested area of greenhouse vegetables by commodity – percent share, 2018.
Source: Figure from Agri-Food Canada (2019). Data from Statistics Canada (2018).
Part 2: Overview of Technologies Associated with the Industry
Controlled Environment Systems
The production system such as the one Bowery uses and the one proposed by this report, is known as a Controlled Environment System (CES). Although CES technically encompasses any indoor agriculture, recent upgrades in multiple technologies have enabled it to become viable even in warehouses. The system revolves around controlling every variable that’s important to the plants that are being produced. This includes the light, which is now uses the latest technology of light emitting diodes (LEDs). The plants are also fed by hydroponic systems, allowing them to use very little water. In order to produce as much as possible, vertical stacking of crops is also used. Artificial intelligence (A.I.) is now beginning to play an important part in modern CEA. Other important aspects include regulation of the CO2 levels in the facility. As CES are used indoors, the weather outside does not play a factor in growing conditions. This allows crops to be grown year-round, even in a Canadian winter.
LED Lighting
A key part of growing any leafy greens is lighting. Leafy greens require light in order to drive photosynthesis. This allows the plant to grow by adding sugars and building up its structure. Solid state lighting uses LEDs that are much more efficient in creating light than traditional lighting sources such as gas or filaments (US Department of Energy, n.d.). LEDs are already surpassing all other sources of lighting in measurements of Photosynthetic Photon Efficacy (PPE), a measurement of useable photons for photosynthesis per energy input (Figure 2). Using these lights allows indoor farms to operate without access to sunlight. With other lighting technology, the lower PPE created a much less economically viable case for farming leafy greens indoors. However, due to this increase in efficiency, companies are now beginning this transition to this form of consistent controlled lighting. Bowery Farms, along with other industry leaders, use purely LED lighting in their facility (Bowery Farming, 2019) (Aerofarms, 2019). Using only artificial lighting also allows uniform growth of plants throughout the whole system, as lighting can be spaced evenly in comparison to natural light. This is especially important in vertical farming, where other columns and rows of plants above and beside would block the lighting for other plants.
Figure 2: Best-in-Class Photosynthetic Photon Efficacy (for Horticultural Lighting Products).
Source: US Department of Energy (2017).
In addition to this, LED lighting also allows for plant nutrient profiles to be changed (Lefsrud et al., 2008). Recent studies are showing that different spectrums of light trigger the production of different plant nutrients and plant hormones (Lefsrud et al., 2008). As LEDs can output different ranges of colours, the lighting spectrum used could be modified to increase the level of nutritious compounds such as lutein or β-carotene of these greens. This could create “ultra-nutritious greens” that could be sold at a premium to consumers.
Hydroponics
Hydroponic systems rely on feeding plants in a soilless medium with water and dissolved inorganic nutrients (Sambo et al., 2019). Hydroponics offer several advantages over traditional, soil-based agriculture, especially in CES. They use significantly less water than traditional agriculture as essentially no water has to be wasted in certain systems (Sambo et al., 2019). Lettuce can be produced using 95% less water than its soil-based counterpart (Barbosa et al., 2015). Hydroponic produce also uses no manure in production. This eliminates a major point of contamination in leafy green production (Solomon et al., 2002). Hydroponic lettuce has also been found to be just as healthy as its organically grown produce (Caradang et al., 2016). Use of hydroponic system is also essential in CES as replacing soil further complicates the logistics of the system.
Vertical Farming
Vertical farming is the production of produce on a multi-level system. Although it creates logistical problems figuring out how to provide resources to plants, it also allows much more productivity per square foot of land. In urban areas, it is essential to incorporate into farming operations due to the increased price of land.
Figure 3: An example of how vertical farming combined with LED lighting and hydroponics can look.
Source: Bowery Farming.
Artificial Intelligence
Although generally an underused technology in the agriculture industry artificial intelligence (A.I.) stands to play an important part in CEA. Several prominent researchers are predicting it will be instrumental in the development of precision agriculture systems such as CEA (Rolnick et al., 2019). As current CEA company Bowery Farming explains: “Holistically, the (A.I.) system is responsible for everything from controlling growing conditions, to farm automation, to how and when farm work gets carried out. With the level of granularity our system affords, we can apply AI to do things such as test, productionize, and scale crop recipes.” (Bowery Farming, 2019). All these benefits can be brought to every new production facility at very little cost. In addition, every new harvest adds new data to the software, allowing ever increasing perfection of the conditions required to optimize growth of the leafy greens.
CO2 Enrichment
While farming in indoor environments, CO2 enrichment is standard practice. It has been found to increase yields of nearly every C3 plant (including lettuce and other leafy greens) by increasing the uptake of CO2 instead of oxygen by the enzyme Rubisco (Dong et al., 2018). In addition, it can also increase the nutrient profile of lettuce (Becker and Kläring, 2015) (Dong et al., 2018). It is without a doubt that this technology will also need to be deployed in CEA to increase yields. It may also need to be combined with ventilation in order to ensure CO2levels remain consistent in every single level of the vertical farm.
Part 3: Viability of Controlled Environment Agriculture
Market and Environmental Viability
Although a full financial analysis of CEA is beyond the scope of this report, several indicators can be taken from the developing US industry. Multiple CEA companies have raised over $100 million (Bendix, 2018) (Wang, 2017). Clearly, investors believe that there is potential for these companies to become lucrative businesses in the US market, and there is no reason to expect Canadian market should be any different. A key advantage of CES is their scalability. As the system is completely indoor, it is independent of conditions that affect typical agriculture, such as weather and soil profile. However, it does use significant amounts of power. For the early stage of this technology, it is also essential that it is close to a large urban population. This is in order to take full advantage of the economy of scale by building large facilities that only large populations can support. It will also allow the continued gathering of data via the A.I. system to continue improving efficiency in yields. This means choice of location is more dependent on population and power costs. Later in the development of CES, it is reasonable to expect that systems can be scaled down, thus allowing companies deploy production facilities in smaller and smaller urban areas. Already, some CEA companies that aim to produce food in Canada’s northern region exist, although their technological capabilities are limited in comparison to larger, city-based facilities (Growcer, 2019).
Figure 4: Average Large Industrial and Residential Electricity Prices (As of April 2018).
Source: National Resources Canada
Canada has 3 cities with populations over 2 million people (Stats Canada, 2019). Toronto ranks largest with 5,429,524 people, Montreal second with 3,519,595 and Vancouver third with 2,264,823 (Stats Canada, 2019). All 3 of these have large population that are suitable for this early development stage of CES facilities. Comparing industrial electricity prices, Montreal ranks lowest with industrial electricity costing only 5.64 cents/kWh (CAD) (Figure 4). Vancouver comes a little higher at 7.03 cents/kWh (Figure 4). Toronto electricity rates are substantially higher at 12.03 cents/kWh (Figure 4). In New York State, industrial electricity costs an average of 7.60 cents/kWh (CAD) (U.S Energy Information Administration, 2019). These prices indicate it would be economically advantageous to establish CES facilities in Montreal and Vancouver first, as their industrial electricity prices are lower than New York, where facilities are already established and seem to be economically feasible.
Environmental
From an environmental perspective, Canada is a prime location for CEA. When considering environmental impact of CEA facilities, most consideration should be given to the source of electricity production, as that is the main environmental impact that could be created by these systems. If a facility were to be powered by electricity produced by fossil fuels, it would almost certainly be more detrimental to climate change than conventional agriculture as the power consumption is much greater in CEA. With this in consideration, British Columbia and Quebec stand to be excellent choices for the establishment of new CES facilities. Quebec only emits 1.2 g CO2/kWh (Figure 5). Meanwhile, British Columbia only 12.9 CO2/kWh (Figure 5). This is principally due to the high percentage of hydroelectricity present in both provinces. In 2016, Quebec generated 99.8% of its electricity from renewable sources in 2016 with hydro producing 95.2% (National Energy Board, 2017). BC produced 98.4% of its electricity from renewable resources with 85% of it being from hydro (National Energy Board, 2017). Ontario lags behind these provinces, with only 91.7% of its electricity generated from clean energy sources. Nuclear makes up the bulk of this power generation, representing over 33.7% of total provincial power output (National Energy Board, 2017). This translates into a significantly higher emission output of 40.0g CO2/kWh (Figure 5).
In comparison, the state of New York produces only 29% of its electricity from renewable sources (U.S Energy Information Administration, 2019). This translates to 199.1g CO2/kWh emitted (U.S Energy Information Administration, 2019). This means that current CES facilities in New York are most likely burning fossil fuels and emitting significant GHGs to produce their vegetables. This would not be the case in cities such as Montreal or Vancouver and even Toronto, where clean energy is comparatively abundant. Therefore, environmentally it also makes sense to have CEA in major Canadian cities such as Toronto, Montreal and Vancouver.
Figure 5: Greenhouse gas intensity of electricity generation by province and territory.
Source: National Energy Board
Marketing Strategies
Several strategies could be used to potentially increase sales of leafy greens produced with CEA. The product could be considered higher value than traditional agriculture for several reasons. For example, the leafy greens produced in this system have no need to be washed. In the soilless conditions it was grown, there is no risk of dirt of contaminants on the product. There are also no pesticides or herbicides applied to the product, a desirable trait for many consumers who prefer their produce to be free of such perceived dangerous chemicals, due to concern about the environment and on their health. Both of these qualities are advantageous for consumers who will no longer have to wash produce, saving time and, in the case of restaurants, money. The produce could also be marketed as hyper local when production facilities are extremely close to their produce vendors, such as restaurants and grocery stores.
Other initiatives based on reducing overall carbon footprint and environmental damages could further be implemented into the business model. With the vast amount of land no longer needed to produce agriculture products, land could be bought by companies with the intent to maximize carbon sequestration by planting appropriate species. Converting agricultural land to natural grasslands or forests can increase the rate of carbon sequestration, further reducing Canada’s GHG emissions (United States Department of Agriculture, 2017). Alternatively, land could be bought to be transformed into clean energy production facilities, such as solar or wind power.
Part 4: Conclusion – Looking towards the Future
Although CEA has come a long way, there is still very far to go, especially in Canada. Through reducing land usage, transport emissions, pesticide and herbicide use, it is clear that growing this industry is essential to further reducing GHG emissions for Canada. Establishment of CEA companies from the USA that have access to A.I. and capital is most likely needed in order to grow the industry in Canada. Alternatively, Canadian born companies need to be developed fast in order to match the fast pace of their American counterparts. Additionally, further research into more efficient PPE LEDs would be helpful in order to bring down operation costs of these facilities. Furthermore, in order to continue mitigation of climate change, facilities should always be paired with clean electricity sources. This report recommends further developing clean energy in Ontario, in order to decrease emissions from the electricity that can power these facilities. Additionally, more of these facilities are needed to increase data input for AI technologies to analyze and perfect the growth conditions for leafy greens. This data pool can also be increased via collaboration in between CEA companies, a move that traditionally in business that does not happen but should be incentivized due to the urgency of climate change. Further refinements in facility automation will also decrease the need for human labour and decrease costs, further increasing economic viability for this technology in other locations. Once refinement of the technology has been completed, it can be expected that it will be exported around the world, to anywhere with enough clean energy to power such a system. With it, water scarce countries could increase their food security, never again having to worry about supply of nutritious leafy greens. In the future, it may also be feasible to grow even such staples as wheat and other grains, as there really are no barriers other than water and power input. The technology will be part of the future of agriculture in the face of climate change, and it would be a shame if Canada were not to be a part of it.
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Controlled Environment Agriculture 