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Podcast Episode #317
Real Estate Investing News

Farms Move Into Grocery Stores

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Learn > [REN #317] Farms Move Into Grocery Stores

Published: July 31st, 2017

It’s a new concept for retail real estate. A German company is hoping to put a farm in every store to provide customers with the freshest possible produce. “Infarm” has already had success with a pilot farm in Berlin and it’s now partnering with Germany’s largest supermarket chain to get more of these micro-farms in operation.

Infarm is a small Berlin-based startup that’s developing a modular vertical farming system that will allow the growing of food inside stores, restaurants, and other customer-oriented locations. It solves that “last mile” problem where transportation can chop days off the life of fresh produce, and provides a “zero mile” solution because customers can literally pluck their own produce.

The Infarm website says it could also eliminate the need for a sizeable quantity of dedicated farmland. It says: “If every city on the earth could grow just 10% of its produce indoors, it would allow us to take 340,000 square miles of farmland back to forest.” Benefits of this include less carbon emissions from delivery trucks, and more trees to absorb the carbon dioxide that’s already wrecking our atmosphere.

Yes, it’s very idyllic, but with the kind of world-wide environmental issues that we face today, major changes to business models and lifestyle choices are needed. Infarm could be one of them. The Infarm website says: “The ultimate goal of farming is not the growing of crops, but the cultivation and perfection of human beings.” So there you have it. The indoor farming idea will promote a more ecological and healthier lifestyle for us all — if it catches on.

Microfarm of the Future

What does this micro-farm look like? Imagine a small glass hydroponic greenhouse with lights, irrigation, and sensors that communicate the status of the garden to internet-based administrators. Plants are lined up in stages as seedlings so there are always some plants ready for harvest. When they are more mature, they are moved to the outer parts of the growing area. Customers who want fresh produce will then enter the greenhouse through a door, and pick what they need for dinner that night.

It’s not an entirely new concept. TechCrunch writes that Japan was an early pioneer for indoor farming in giant warehouses. That was due to its large population and limited land for agriculture. However, it writes that Infarm’s approach is much different because these farms are not set up in giant out-of-the-way warehouses, but in customer-facing locations like grocery stores. They are modular so they can be installed easily and size-adjusted for the needs a store’s customer base.

The modular aspect of Infarm’s approach also gives it flexibility to expand into places other than grocery stores and restaurants, such as shopping malls, schools, hotels, and who knows, maybe even hospitals as an improvement to the dreaded “hospital food”. Expansion is also possible in locations where certain crops would never grow outside due to the climate.

Infarm Sprouts in the Living Room

Brothers Erez and Guy Galonska created the company from an idea that sprouted in the dead of a German winter. They also enlisted the help of Erez’s girlfriend Osnat Michaeli. According to an article in Agritecture, they created their first prototype in 2013 as a living room garden. In just one month they had “a jungle farm of delicious greens”. That was in February, with freezing temperatures and lots of snow outside, but they had fresh vegetables.

Erez Galonska told Agritecture: “We wanted to share the magic of growing with everyone, and to create the tools for an urban farming revolution.” Just last year they made that dream come true. They put their first vertical farm in a Metro Cash & Carry store in Berlin. It was a pilot, and now they are reaching for the stars.

Erez says: “We did it with Metro Group, which is one of the biggest wholesalers in Europe, and now we are facing very big demand from other supermarkets that want to do the same.” Infarm is now partnering with Germany’s largest supermarket chain, EDEKA, to get these small farms up and running. It also announced its first “vertical farm-to-table restaurant” four months ago. It’s called Good Bank, in Mitte, Berlin.

Michaeli said in TechCrunch: “Our eating habits have created a demand for produce that is available 35 days a year, even though some varieties may only be seasonal and/or produced on the other side of the globe… The food that does survive the long journey is not fresh, lacks vital nutrients, and in most cases is covered in pesticides and herbicides.”

Precision Farming

Michaeli described the operation in TechCrunch as “precision farming”. She says it creates ecosystems that provide exactly what each plant needs to flourish. They are monitored remotely by systems that can provide just the right light spectrums, temperatures, pH levels, and plant nutrients for each plant type. Alerts can also be issued when plants are ready for harvesting. Plants that are ready will be moved into a more accessible position for customers.

Investors are also taking notice. Infarm raised more than $5 million recently to expand its operation. Investors apparently like the efficiency and flexibility of the Infarm system including the cloud-based control and monitoring of farms and the creation of a farming network without the need for giant warehouses. They also like the machine learning ability of the Infarm system to perfect the growing parameters and the ability to grow fresh produce in regions that wouldn’t typically support those kinds of crops.

Erez said to Tech Crunch: “When we presented our idea three or four years ago, people looked at us as though we had lost our mind.” It sounds like they persevered and are not looking back. He said to Agriculture: “We envision a future in which cities become self sufficient in their food production. Our solution is made of small hyper efficient farms, spread across the city, right where people live and eat. These indoor farms eliminate waste and the need for transportation, reducing significantly the impact on our environment. Our approach is to build these farms in unused spaces inside buildings, rather than building new structures.”
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Kathy Fettke

Kathy Fettke

Kathy Fettke is the Co-Founder and Co-CEO of Real Wealth Network. She is passionate about researching and then sharing the most important information about real estate, market cycles and the economy. Author of the #1 best-seller, Retire Rich with Rentals, Kathy is a frequent guest expert on such media as CNN, CNBC, Fox News, NPR and CBS MarketWatch.

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