The current macroeconomic trend is affecting the financial performance of most indoor farming facilities. While greenhouses appear to be less affected, vertical farms throughout the world are incurring increased losses and a number of companies were forced to cease all activities.
Yesterday, Netherland-based company Glowfarms announced ceasing its activities after an ultimate funding round failure as reported by Vertical Farm daily’s Rebekka Boekhout. The company stated that ‘external pressures’ linked to the macroeconomic environment (raising energy costs) have overtaken the team at Glowfarms as they couldn’t find sufficient funds to survive for the foreseeable future.
During the weekend, news spread that Pittsburgh-based Fifth Season shut down and even if we can suspect the macroeconomic pressure led to the closing of the business on Friday as reported by bizjounral.com, no official reasons were communicated by management.
These two companies join another vertical farming company failure, French-based Agricool earlier this year even if the latter was then bought back by VIF systems.
Another indoor farming company, Plantise has also announced ceasing its operations in the Netherlands as the company expected unbearable energy costs and an increase in wages and minimum wages.
The entire industry is affected by the current market conditions as illustrated by the recent layoffs initiated by leading companies, InFarm, CubicFarms, or Iron-Ox as they envision becoming cash flow positive/break-even. Another company, Kalera PLC (NASDAQ:KAL) has had to divest some of its assets in order to accelerate its path to profitability and is now under threat of being de-listed from NASDAQ similarly to Edible Garden Ag (NASDAQ:EDBL) or Agrify (NASDAQ:AGFY) (Both companies have received de-listing notice but Agrify managed to regain compliance by performing a reverse stock split).
Image provided by Glowfarms