June brought several new indoor farms, with a whopping 377k ft2 of vertical farming capacity.  Elsewhere, funding remained slow but the listed indoor ag sector ended the month up.

1. Private funding is still AWOL

We saw just one significant funding in June, in the form of garden product distributor iPower’s $5m post-IPO round.  On the upside, Q2’s tally of $98m was more than triple that seen this time last year.

2. New indoor farms debuted in June

Our Indoor Ag Buzz Index™ combines the popularity of a range of indoor farm-related phrases in the media into an index.   The index ended the month a little down thanks to how quiet the market has been.

The announcements this month were mostly around new indoor farms:

• Mucci Farms, owned by Cox Enterprises, has expanded its operations with new indoor farms in California. The 32-acre greenhouse in Tehachapi is part of Mucci Farms’ strategy to increase production. It enhances Mucci Farms’ capabilities to meet growing demand on the West Coast.  The Company grows a variety of produce including tomatoes, cucumbers, peppers, eggplants, mushrooms, lettuce, herbs, strawberries, blackberries, and various snack vegetables.
• Oishii has opened a 237,000-square-foot vertical strawberry farm in Phillipsburg, NJ. The facility meets increasing demand for their high-quality strawberries.  It is powered by an onsite solar farm, and utilizes plentiful automation and robotics.  The Company entered the US market with “gift pricing”, a unique strategy for the US market, with the intent of cutting prices over time.  Pre-2022 pricing was $50 for a tray of eight strawberries, the product is now selling for $12 at FreshDirect.
• Soli Organic, the leading national grower of fresh organic culinary herbs, has launched a state-of-the-art 140,000 square-foot indoor vertical farm in San Antonio, TX. It has 100,000 square feet of production space with six vertical layers of growing capacity. This is complemented by a 40,000 square-foot processing and packing area. This advanced farm will cultivate over 10 different crops, such as basil, cilantro, mint, spinach, arugula, and romaine lettuce.

AI in Indoor Ag

There were a couple of announcements on the AI front this month:

• A new high-tech mushroom farm in Singapore is advancing local agriculture. It integrates artificial intelligence, automation, and big data. Located in the Su Land Park, this vertical farm spans an area equivalent to three football fields and aims to meet over a third of the local demand for one mushroom variety. By employing AI to monitor and predict growth cycles, the farm claims that it can double the yield and provide improved quality. The farm’s approach includes recycling waste for other crops.
• Village Farms discussed optimizing its greenhouse operations through the integration of AI-driven solutions. In collaboration with Blue Radix, an autonomous climate and irrigation control company, the greenhouse grower has enhanced efficiency and product quality by precisely monitoring and adjusting growing conditions. This technology reduces the need for constant human oversight, thereby allowing growers to concentrate on strategic tasks such as crop planning and experimentation. The AI systems also support sustainable practices as they optimize resource use and minimize waste, while improving growers’ work-life balance by automating routine tasks and reducing the need for evening and weekend monitoring.

Finally, we saw some crop news.  Pairwise announced the world’s first seedless blackberry using CRISPR technology. This innovation offers a sweeter taste and smoother texture by removing seeds through precise genetic editing.  It is part of an industry-wide focus on developing crop varietals using CRISPR.  We wrote more about this phenomenon in our recent discussion with Square Roots.

3. The listed sector saw mixed results season 

Our proprietary Indoor Ag Stock Index™ ended the month up 4% year on year.  That’s well below NASDAQ’s 35% gain, driven by AI enthusiasm.  

At the end of the second quarter, we rebalanced the index to include two new indoor farms tech companies:   

• Heliospectra AB is listed on the Stockholm Stock Exchange under the ticker HELIO.ST.,  The Company provides lighting systems for greenhouse and CEA environments worldwide.  Product offerings include modular cooling solutions, wireless controllable lights, and advanced light control systems.  Like much of our index, Heliospectra is a micro-cap stock whose market capitalization is around $12.74m.¹  2023 revenues were around $3.43m. The stock is lightly traded, which contributes to its low-ish beta of 0.745.  A beta under 1.0 indicates that a stock is less volatile than the market.
• Nature’s Miracle, listed under the ticker NMHI, went public through a SPAC² merger on May 15, 2024.  The company’s products include advanced hydroponic systems and LED grow lighting, for commercial and consumer markets. Its first quarter revenue was $2.2m, down 26% year on year.  It attributed this to slower customer demand and a more competitive market.  The company’s current market cap stands at $13.6m, so it is another microcap in the industry.

Footnotes:

1. Calculated based on SEK0.55 stock price on July 3, and SEK70.782m market cap.
2. A Special Purpose Acquisition Company (SPAC) is a publicly traded shell corporation created to raise capital through an initial public offering (IPO). Its purpose is to acquire or merge with an existing private company, thereby taking it public.
3. Per Form S-1 filing

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