Indoor Ag in the Stock Market

January 12, 2023


Indoor Ag in the Stock Market is now of interest to practicioners as the industry matures.

Indoor ag – growing crops in warehouses, container farms and greenhouses – has become an attractive private investment sector over recent years. In the past two years alone, more than $2.5bn has been invested in the sector by private investors. High profile investors in the space include Amazon, Bain Capital Ventures, Cargill and Walmart.

Traditionally, the next step for a fast growing company is to list on public markets, and many indoor ag firms have chosen to do just that. For many, the mechanism that they utilized was a special purpose acquisition corporation (SPAC). This allows private indoor ag companies to be acquired by existing listed entities, side stepping the usual rigors of the initial listing process. It speeds up the path to becoming a listed company. As SPACs saw a renaissance, and interest rates remained low, so indoor ag companies benefited by listing in increasing numbers.

Amidst the optimism and overall upward growth of the industry, at Contain, we have been tracking indoor ag in the stock market through our stock market index, and since the initial surge of listings, they have consistently underperformed the broader market index.

By mid 2022, the SPAC bubble burst and the euphoria that surrounded the indoor ag sector faded. The sector’s underperformance has most widely been linked to its poor profitability, and there’s no doubting that the listed sector has struggled with widespread losses. It has seen numerous bankruptcies, from companies like Portuguese Agricool and Dutch Glowfarms, layoffs and earnings misses. Thanks to high initial capital costs and an energy-driven increase in operating costs over the past year, indoor agriculture is especially vulnerable to the withdrawal of capital lines from loss making firms. But this is only part of the story, as there are plenty of profitable sectors that have also struggled. Media outlet CNBC recently described how the tech sector lost $7.4 trillion in market value over the past year, for example.

The Contain Indoor Ag Stock Index™ follows the returns of a portfolio of controlled environment agriculture related listed stocks. The largest share of the index is US listed, but it also includes European, Canadian and Japanese exchange listed stocks. It excludes stocks that are focused only on cannabis.  In this briefing paper, we cover the index composition, performance and other attributes.

Download the full briefing paper on Contain Insights.

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