Saturday, May 21, 2011

Building Greenhouse Farms on Urban Roofs - Cash Crops Under Glass and Up on the Roof
When Lufa Farms began selling produce to customers in Montreal in late April, it signaled what could be the beginning of a tantalizing new era in the gastronomic fortunes of that Canadian metropolis.

In all but the short summer season, the availability of fresh, locally grown fruit and vegetables has been little more than a pipe dream for Montreal residents.

But Lufa Farms, founded by Mohamed Hage and Kurt Lynn, turned an unassuming office rooftop into a 31,000-square-foot greenhouse that grows tomatoes, cucumbers, peppers and other produce year-round and is a working example of a developing trend known as urban rooftop farming.

... The advance of hydroponic growing techniques and innovative, cost-effective greenhouse systems, together with increasing consumer desire for organic produce, has redefined the term locally grown and spurred entrepreneurs to create a variety of greenhouse technologies and business models.

The Lufa Farms model is to sell directly to consumers through a co-op. Other urban farms are forming partnerships with supermarket chains by building large greenhouses on supermarket roofs and selling their produce to the store below.

A third concept, called vertical farming, involves growing food in skyscrapers or even warehouses using artificial light and organic growing materials. In theory, a 30-story, one-square block farm could yield as much food as 2,400 outdoor acres, and with less spoilage because it would travel less distance, according to Dickson D. Despommier, a Columbia University emeritus professor of public health and microbiology and a leading proponent of vertical farming.

TerraSphere, a unit of Converted Organics with offices in Surrey, British Columbia, and Boston, designs and builds vertical farm systems and sells its lettuce and spinach through Choices Markets, an organic grocery chain in western Canada.

... A crucial question remains: Can rooftop farmers make a profit?

After four years of developing the business, building the greenhouse and refining growing techniques, Lufa Farms has started delivering baskets of produce to local subscribers: $22 for a six-pound basket and $30 for a basket weighing about nine pounds.

With more than 400 customers signed up and more joining daily, Mr. Lynn ... says Lufa Farms can enroll a thousand customers, break even this year and reap a 15 percent profit in the future.

... A land-based farmer is restricted to a 24- to 28-week growing season while a rooftop greenhouse can produce year-round.

The capital costs to get started are higher for rooftop farms — from $1.2 million to $2 million to find a building and set up a greenhouse — but the operating costs are much lower. That is because rooftop farms require less labor, land, water, fertilizer and heavy equipment and because they all but eliminate shipping costs by selling to the local market. The result, proponents say, is a fresher, tastier, longer-lasting, more nutritious product.

Most rooftop gardens use hydroponic cultivation, a water-based growing system in which no soil is required, nutrients are carefully controlled and natural pest control using insects is favored over pesticides. These greenhouses extend the already popular green-roof concept, using recycled water and lowering energy consumption in the buildings upon which they sit. Lufa Farms says it has saved its host building 25 percent in heating costs since it completed its greenhouse.

Rooftop farms can command a similar or slightly higher price for their produce, but the biggest advantage for Lufa is that its urban location means it can attract more customers and deliver more than a thousand baskets of produce a week, compared with 200 to 300 for a typical land-based co-op. The company’s business plan calls for rapid expansion to more rooftops in Montreal and other cities with similar climates.

New York has 14,000 acres of unused rooftop space, according to Laurie Schoeman, director of New York Sun Works, a nonprofit group that promotes the use of rooftop greenhouses. Rooftop gardens abound in New York, but without an enclosed greenhouse, the growing season is limited. Ms. Schoeman said that if all of these unshaded rooftops installed greenhouses, the resulting produce could feed as many as 20 million people in the New York metropolitan area.

It is tempting to wonder why it took so long for rooftop farming to emerge. Part of the problem in Montreal was that there was no zoning for agricultural buildings, which meant that getting the permits required for Lufa Farms took time and intense negotiation with the city. Finding a suitable rooftop also took time....

... The rise of the locavore movement in the past decade began to change attitudes and desires. Rising gas prices sent transportation costs soaring, and consumers became less willing to buy mediocre fare.

In 2006, BrightFarms opened as a consulting business for rooftop growers. It advised Gotham Greens, a New York-based company that recently built a 15,000-square-foot greenhouse on a Brooklyn rooftop with the intention of producing more than 30 tons of vegetables, fruit and culinary herbs a year for sale through local grocery stores, farmers markets and restaurants. Gotham Greens expects to begin producing crops this year.

More ambitiously, BrightFarms recently created a business model and started building its own rooftop farms. Instead of embracing the co-op model or selling to restaurants, it decided to specialize in making exclusive deals with supermarkets to build and operate farms.

Paul Lightfoot, chief executive of BrightFarms, said it could build a one-acre or 43,560-square-foot rooftop farm for about $2 million. BrightFarms has signed up eight supermarket chains around the country, including three of the largest 30 national chains, he said. Four of the farms are under construction.

Mr. Lightfoot predicted each farm would generate $1 million to $1.5 million in annual revenue, and that he would sell produce for similar or even lower prices than traditional farms. He says he expects his gross margins to be extremely attractive because the company’s business model eliminates farming’s biggest expense, shipping.

For a traditional farm, he said, it is not unusual for lettuce to travel more than 1,500 miles over five or six days to a supermarket shelf, which can cost as much as $1 for a head of lettuce that will sell for $2....

“Our plan is to achieve $100 million in revenues by the end of 2015 and $1 billion by the end of 2020,” he said.

Because the rooftop farm concept is so new, a true profitability picture will not emerge for a couple of years, said David Furneaux, a venture capitalist based in Waltham, Mass.... He says a direct-to-consumer model “has the potential to be extremely profitable, generating 25 percent net income for this type of business.”
by Glenn Rifkin
The New York Times www.NYTimes.comMay 18, 2011

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