If there was a theme to indoor ag in May, it was new specialty crops moving indoors.  We saw moves in crops from saffron to onions. 

1. Private funding flatlined in May

After a large haul in April, there was only one significant private funding in May.   Chilean firm AgroUrbana raised $6m to expand its existing leafy greens facility.  It aims to increase production five fold over the next three years.

2. New specialty crops and farm expansions buoyed industry sentiment

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 up in May thanks to news on farm openings and new specialty crops.

Farm Openings

Starting with the farm openings:

• Greenhouse firm Local Bounti opened a new high-tech controlled environment agriculture facility in Mount Pleasant, Texas.  It utilizes their patented Stack & Flow Technology® to grow sustainable produce year-round, creating approximately 50 local jobs and enhancing distribution capacity across the Southern US.
• Israeli firm Saffron Tech launched a pilot facility for cost-effective saffron cultivation, featuring autonomous systems. These enable year-round production with four cycles per year. This facility aims to revolutionize saffron farming by integrating advanced agronomy and CEA tech to reduce costs on the notoriously expensive spice.
• CubicFarms sold two DGS-66 Production Systems to Upgrowth Ag in Utah. Upgrowth Ag will pay 50% upfront and the balance upon shipment. These fodder systems will help Upgrowth Ag enhance sustainable livestock feed production and expand operations in the U.S. and Asia.

New Specialty Crops

Elsewhere, there were announcement around new specialty crops for CEA systems:

• Beotanics has developed wasabi varieties suitable for Irish conditions through collaboration with Japanese farmers. These varieties, Wasabi Hana Utogi and Wasabi Midori Utogi, are being adapted for local production and European markets.  Wasabi is a notoriously tricky crop to grow outside of traditional Japanese areas.
• Researchers at the University of Essex are growing onions in bright pink shipping containers using aeroponic methods to reduce carbon footprints. This partnership with Stourgarden aims to make onion production more sustainable and disease-resistant.  Lower value root crops, like onions, have not traditionally fared well in CEA systems, so this is an interesting application of the tech.
• Edible Garden announced a product development agreement with Hermann Pickle Company to create new fermented products such as pickles and sauerkraut. It aims to leverage Edible Garden’s distribution network and Hermann’s manufacturing expertise to meet the growing demand for non-GMO, plant-based products.

3. The listed sector saw mixed results season 

Our proprietary Indoor Ag Stock Index™ had a weak month, as it significantly underperformed the NASDAQ year-on-year.  We attribute this to macro factors, like the weakening of the yen and AI-driven rebound in NASDAQ tech stocks.

Earnings Announcements

This month saw a slew of results announcements, almost equally split between beating and missing analyst estimates.  

Most of the stocks that we track are for companies where indoor agriculture activities are just a small portion of revenues. Given this, results don’t always reflect the sector’s performance.  Within these results, we noted a couple of interesting CEA data points:

• Gibraltar Industries – owner of greenhouse firm Rough Bros – saw its AgTech segment backlog down 21% at quarter end.  It says this reflects timing issues with order bookings which were expected in Q1 but occurred in April.  This is consistent with the pattern that Contain has seen elsewhere.
• A number of companies mentioned the potential for reclassifying cannabis in the US as a potential positive for their businesses.

Corporate Moves

There were also some corporate moves:

• Edible Garden announced a $6 million common equity plus warrant offering. It priced 2.7 million shares that combine common equity and two tranches of warrants at $2.76 each vs current price of $1.76. The offering is expected to close on June 8, 2024. Net proceeds will fund operations, expansion, and general corporate purposes.
• Nature’s Miracle and Agrify announced, and then canceled, a $6.4m merger due to regulatory and financial challenges. Nature’s Miracle struggled with debt issues, hindering the merger’s completion. Both companies decided to remain independent and focus on their core operations.
• ScottsMiracle-Gro doubled down on its commitment to the cannabis industry. It supported a merger between RIV Capital, the vehicle through which it has invested $175m into the industry, and operator Cansortium. 

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