25th June 2022
Economy Funding Round Markets

New Funding Rounds Sends VC Activity To USD 1.1Bn in Vertical Farming

Good morning readers, recession looms closer as the US shows the first sign of an economic slowdown, the latest report on food innovation and investment opportunities, new funding rounds sends VC activity to USD 1.1Bn, and much more!

Here are 5 things to know before this week’s opening bell!

1- US Data Shows First Signs Of Economic Slowdown

According to Reuters, The Philadelphia Federal Reserve’s manufacturing activity index slid for a third straight month to a reading of minus 3.3, it’s first negative reading since May 2020 in the early months of the coronavirus pandemic. That is down from a positive 2.6 in May. The Philly Fed survey is a measure of regional manufacturing growth (though it also shows countrywide conditions). When the index is above zero, it indicates factory-sector growth, and when below zero, it indicates contraction. This comes after weeks of speculations on whether the United States will enter recession or not after consecutive inflation hikes, and a historical interest rate increase.

2- Mester Warns That Inflation Could ‘Take Several Years’ Before Returning To Normal

As the risk of recession is growing, Loretta Mester, president of the Cleveland Fed said that it may take ‘a couple of years’ for inflation to return to the FED’s target (2%)

“I’m not predicting a recession,” she said. “The recession risks are going up, partly because monetary policy could have pivoted a little earlier than it did. We’re doing that now by moving interest rates up but, of course, there’s a lot of other things going on as well,” she said on CBS, Face the Nation program.

“We do have growth slowing . . . and that’s OK, we want to see some slowing of demand to get in better line with supply.” Mester said that while monetary policy can target the excessive demand in the economy, it will take time to get the supply side “to come back into better balance”. “I expect the economy to slow, it’s been growing at a very rapid rate as the labour market has recovered and we’ve reached full employment,” Yellen said on ABC’s This Week. “We expect a transition to steady and stable growth but I don’t think a recession is at all inevitable.”

3- Franklin Templeton Latest Report Highlight That Vertical Farms Will “Be Part Of A Well-Diversified Portfolio”

On their latest report, the Franklin Templeton highlights:

“Like clean energy infrastructure before it, vertical farming will mature into a defined real asset sector that will be a part of well-diversified portfolios. Over the next several years, vertical farms will create alternative use cases for underutilized land and vacant buildings, and create opportunities to drive lasting social and environmental impact.” Says John G. Levy, Director of Impact “A confluence of powerful short-term and long-term market factors give vertical farms the potential to become a major disruptor in the food and agriculture space. The global population is growing, the supply of arable land is shrinking, weather patterns are becoming far less predictable, eating habits are shifting and demand for sustainable products is growing. We need solutions that increase yield; use less water, chemicals and land; and reduce our dependence on long, wasteful and complex food supply chains. Vertical farming promises to not only increase global food security, but also to provide forward-thinking investors with strong opportunities to bring scale to this burgeoning space.”

4- Energy Prices Soar in Europe As Russia Further Gas Supply Cuts

Since the beginning of the year, energy prices in Europe have been growing each day but since the vist of the French President accompanied by the German and Italian Prime Minister to Ukraine, Gazprom (Russia’s largest gas supplier) has halted supplies to France and further cutted supplies to Germany and Italy over what it claims being technical reasons. This news has sent gas prices soaring by over 40% despite Europe’s effort to diversify its sources of energy with its increase in LNG supplies as well as new gas imports. The situation previous to this price soar was already critical for most indoor farmers as some even had to halt operations but with this current price soar, it is expected that an increasing number of greenhouses and indoor farms will halt operations thus further increasing food inflation.

5- New Funding Rounds Sends VC Activity To USD 1.1Bn in Vertical Farming

The latest news from Little Leaf Farms Banking a USD 300 Million Funding, and Leafood Expanding To Baltics With a 6.45 Million Euro Funding has sent VC activity to USD 1.1Bn in Vertical Farming from a previous USD 800 million since the beginning of the year already beating 2020 VC activity and edging closer to 2021’s. Though a smaller number of VC activity was reported, the funding rounds were much greater as 2 of them reprents nearly 50% of the entire amount spent in the sector.

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