Key Takeaways
- Experts agree the Controlled Environment Agriculture (CEA) sector is facing economic volatility driven by energy costs, labor, and investment shifts.
- A shift from high-tech emphasis to operational excellence is becoming critical for long-term viability.
- Venture capital interest remains but is focused on minimizing risk through proven models.
- Regional CEA hubs may emerge, especially in the Eastern U.S., depending on labor and policy conditions.
- Workforce development is a growing priority as labor costs rise.
Industry Snapshot: Volatility and Strategic Pivots
In a recent CropTalk roundtable (episode 256), panelists Marco de Bruin, Chris Higgins, and Adam Greenberg offered their perspectives on the current state of the CEA industry. The discussion emphasized that the sector is undergoing a period of adjustment marked by inflationary pressure, trade policy challenges, and evolving investor expectations.
“There’s a lot of uncertainty. The tariffs, labor pricing. Sometimes you have some of the highest prices in the last 20 years, and other times, the lowest,” said Adam Greenberg.
Chris Higgins described this period as a “crucible moment,” encouraging operators to move away from growth focused solely on technology and instead prioritize business fundamentals and market fit.
Marco de Bruin noted that while policy and tariff issues matter, labor and energy costs have emerged as structural challenges, with labor costs increasing by 50% to 75% in several regions over recent years.
Investment Shifts: Focus on Sustainable Business Models
A major theme of the conversation was the changing investment landscape. Panelists pointed out that while funding for high-growth startups in CEA has declined, there is still capital available—particularly for companies that have demonstrated operational efficiency and long-term viability.
“They weren’t actually building sustainable food production businesses. They were selling investors on technology,” said Higgins, reflecting on some previous investment trends.
Greenberg added that investors are now focused on de-risking every aspect of a potential investment, seeking greater transparency and reliability before committing capital.
Industry Trends: Consolidation and the Rise of Regional Hubs
The panelists also predicted a wave of consolidation in the industry as smaller firms face rising operational costs. Larger players with established infrastructure may absorb these businesses, contributing to industry stabilization.
Marco de Bruin suggested that regional CEA hubs—particularly in the eastern United States—may present a sustainable path forward. He emphasized the importance of scale, recommending projects between 4 to 10 acres for leafy greens as a starting point.
Higgins pointed to Virginia as an example of state-level support for CEA initiatives, though he acknowledged that the development of regional supply chains and labor resources remains a challenge.
Greenberg offered a slightly different view, suggesting that energy costs may be less of a constraint than labor efficiency. He advocated for developing operations in areas with strong labor ecosystems rather than solely focusing on utilities.
Strategic Advice for Operators For a Sustainable Future in CEA
For operators planning to enter or expand within the CEA sector, the roundtable provided the following strategic considerations:
Start with Measurable Scale
Marco de Bruin advised beginning with manageable, efficient facilities before scaling up—particularly in leafy greens production.
Demonstrate Investment Viability
Investors are seeking validated models, not experimental technologies. A focus on sustainable profitability is increasingly essential.
Leverage Regional Advantages
CEA operators should explore markets where local conditions—such as government incentives or workforce availability—support agricultural production.
Invest in Workforce Development
With rising labor costs, retaining and training skilled personnel is increasingly important. Chris Higgins emphasized that long-term viability will depend on the sector’s ability to manage human capital effectively.
The Future of CEA: A Shift Toward Discipline and Stability
While the period of aggressive expansion in the CEA industry may be slowing, the panelists expressed cautious optimism for its future. With greater focus on operational efficiency, financial discipline, and regional specialization, the sector may continue to grow—albeit at a more sustainable pace.
“The future is likely to favor those who can balance innovation with execution,” said Greenberg.
The full conversation is available in episode 256 of the CropTalk podcast, titled “EXPERT ROUNDTABLE: The State of CEA 2025,” which can be found on CropTalkMedia.com, Apple Podcasts, Spotify, and other platforms.
