Green revolution inside an innovative vertical farm

February 25, 2019 09:16
Vertical farming startup Sustenir has calibrated a patented farming system with lighting, temperature, humidity, water, nutrients and air to allow the crops to grow faster than traditional farming. Photo: CNBC

Being a farmer in the face of climate change is no easy task.

Dealing with nature and its elements poses a huge challenge for farming, and crop yields have slowed around the world. On top of that, the logistics of getting crops on planes and ships is but one of the ways agriculture contributes to carbon emissions.

Enter a new generation of urban farmers like Benjamin Swan, who wants to start a green revolution by growing crops in a sustainable way. The 38-year-old engineer found himself starting a vertical farming business, Sustenir, in land-scarce Singapore.

"I felt this was my opportunity to do something that would make a difference, an opportunity to fight the good fight,” he told me.

Swan believes vertical farming can improve how we use land. His first project: growing kale, which is unheard of in a place like Singapore. But growing kale indoors, he said, means he can be “127 times more efficient than traditional farms, per square foot."

But with no background in agriculture, Swan was taking a risk in starting the business. So he did it on the side while working fulltime at a bank. For the first six months, he worked on taking measurements of the plants, trying to understand all of the inputs and outputs of the plant, the diminishing returns so that he could optimise growing.

"To be completely frank, for the first six months of exploring this space, it just didn't work. The numbers weren't making sense especially on the capex,” he said. “I mean, this is a very capex-heavy industry. It wasn't until about seven months after starting to trial the different lights, different techniques, that the cost for LEDs started to come down, and then it started to make sense.”

Swan showed me around. I had to put on a clean suit and undergo an air purification process before entering his high-tech farm. I got to see for myself the patented farming system he calibrated with lighting, temperature, humidity, water, nutrients and air to allow the crops to grow faster than traditional farming—all using 95 percent less water.

The innovative farmer told me he could alter the Kale he produces by just tweaking the lights or adjusting the nutrients and water. Swan has created two types of Kale varieties, one light and crunchy to go with meats like fish and seafood and another one with a nutty finish for red meats. He asked me to sample some to taste the difference.

Unlike other vertical farmers who focus on locally produced vegetables, Swan said he is focused on "high-margin" crops to break even on the cost. "We are paying real estate here, electricity, a lot of manpower. So we need to make sure that we can grow products that will break even.”

Swan made a breakthrough last year when he launched his own vertically grown strawberries, the first time the fruit has been produced locally in Singapore. It took him four months to get it right and involved the introduction of bees into the space to help with pollination.

"Pollination to date has been done by hand with a forensic brush. It's very laborious and you'll never get it as perfect as a bee can,” he said. “So we're expecting the yield to increase a further 40 to 50 percent just by bringing the bees into the space."

That is something, I am told, has never been done before and I saw the bees myself. He said he rotates the insects so they have a lifestyle of both outdoors and indoors.

Sustenir now grows kale, lettuce, arugula, strawberries and tomatoes. Swan said the sky is the limit as to what else he can grow and anything is possible with indoor farming. But, he prefers products with a shorter lifecycle because they are more feasible from a business perspective.

After five years, the fruits of his labor have paid off. Sustenir broke even in 2018 with year-on-year revenue growth of about 83 percent and margins of around 40 to 45 percent EBITDA figures. And Swan aims to expand further. He plans to add another 50,000 square feet to the current 10,000 square feet already in operation in Singapore, and, on top of that, a new 50,000-square-foot facility in Hong Kong.

When I talked to Swan in January, Sustenir had just completed a series A funding round.

"Given it’s a sunrise industry, a lot of investors were a bit hesitant about investing in this space. They want more proven cases in order to invest,” he said, adding that it wasn't easy. It took seven months and a lot of road shows before finding investors.

When I pressed Swan to reveal who the cornerstone investors were, he said they "potentially" included a sovereign wealth fund investor.

Swan said he is in the process of developing his own artificial intelligence system called "SARA" — an agricultural real-time assistant. It would allow him to monitor the lifecycle of the plants and how they are doing. As he integrates robotics in the growing process, Swan said he sees vertical farming existing alongside traditional farming and that he wants to work with outdoor farmers to help them use smart technology to help optimize their farming.

After five years building up Sustenir, Swan said his entrepreneurial instincts came naturally to him: "I definitely surprised myself and never in my wildest dreams thought I'd be an entrepreneur.”

He still faces challenges finding good people because farming does not resonate well with many in the younger generation of workers.

"When people think of farming, they think of it in the soil, in the sun. It's not until we bring them into this environment that they actually go ‘wow, this is pretty cool.’ We like to think of ourselves as more of a tech company. We’re actually using technology to create great products.”

Looking ahead, Swan said he wants Sustenir to be in every major city across the world. Those are tall ambitions for a vertical farmer, but he's confident he will get consumers buying into the vision. "No matter where you're eating our produce, you know it's local, you know it's sustainable and you know it's 100 percent clean.”

As for an eventual listing, Swan said: "One day, potentially," but he emphasized that he’s in it for the long haul.

"I'm not in this to make money. I'm in this to make a change.”

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"I felt this was my opportunity to do something that would make a difference, an opportunity to fight the good fight,” says Benjamin Swan, founder of  Sustenir. Photo: Sustenir

CNBC’s award-winning anchor and host for Managing Asia