Retailers appear to have taken a significant place in the indoor vertical farming sector with a number of participations in funding rounds as well as partnerships inked with various solutions providers across the world.
Currently, retailers incur losses as a result of inefficiencies throughout the supply chain as well as a result of presenting empty shelves to their clients. This led a number of large groups to rethink their supply chain and to see indoor vertical farming as a potential solution to the problems they are facing today.
Walmart’s investment in Plenty, Infarm’s large global retail channel, Kalera’s increasing retail distribution, Vertical field’s latest partnership with supermarket giant Billa Plus and many more examples confirm the strong interest retailers have in indoor vertical farming.
Today we go through the current situation facing retailers and the economics sought when making decisions before looking at the latest activity recorded this year.
The Current Situation Facing Retailers
- An increasing loss incurred during or just after harvest causes inflation in prices
The sad truth is that the current supply chain incurs an impressive amount of losses accounting, as per McKinsey’s recent study, for about USD 600Bn per year globally. Indeed, the report highlights the fact that about 33 to 40% of the world’s food is lost or wasted every year at or near the farm, during or just after harvest.
“More than two billion tons of food are lost or wasted every year of which about half happens upstream, during the harvest, postharvest handling and storage/processing stages” – McKinsey Report on Reducing Food Loss
Fruits and vegetables are among the most wasted produce with crops such as Tomatoes, losing as much as 40% of the total output ready to be harvested by the time it reaches stores. The report also highlights the loss’s sheer importance in carbon emissions as it represents 45% of the water consumed by loss and 17% of the CO2 emissions from loss in 2019.
Not only does this loss represents increased operational costs for farmers and distribution centers but, it also represents increased costs for retailers as they often have to order more than they can retail, thus further increasing the retail prices for the end-user.
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