Plenty plans to build 300 LED farms in China

U.S. indoor farming startup Plenty Inc is scouting land for its new farm in Chinese cities as part of a global effort to build high-tech facilities that use LED lighting to grow organic vegetables in warehouses.

China may have at least 300 of these large farms, Plenty CEO Matt Barnard told Reuters on Wednesday. Backers behind the company include Amazon and Japanese technology investment firm SoftBank Group.

Barnard said in an interview in Beijing that the company is currently recruiting staff in China and looking for suitable locations and distributors in Beijing, Shanghai and Shenzhen. According to Barnard, the company has hired a team in Japan and has "locked down" some farm sites there.

He did not disclose financial or investment goals for the company's expansion. Plenty currently operates only one farm in San Francisco, with another opening in Seattle in the first half of 2018.

"We see a huge opportunity to give people a product that tastes better, and is healthier and safer than anything on the market today," Barnard said.

Plenty's farming model means growing vegetables and herbs on indoor vertical towers, with nutrients delivered to the plants through a water circulation system, while LED lighting stimulates rapid growth throughout the year. Plus, closed farms reduce pests, allowing companies to optimize growing conditions.

That could be a big draw for China, which has less than one-third the amount of arable land per person in the U.S. and whose soil is in many places polluted by heavy metals and pesticides.

Many farms are designed to be 3 to 10 acres (1.2 to 4 hectares), which can produce 150 to 350 times as much as farmland, Barnard said.

Concerns about food safety among Chinese consumers are also a major opportunity. These farms in China will feature "experience centers" where people can taste the product and see how it is produced.

"It's very important that people can trust it," said Barnard, who expects the Chinese market to account for 25% to 50% of the business going forward.

The company is in talks with restaurants, online retailers and some supermarkets to distribute the product. The pricing of this product will be higher than most of the products on the Chinese market.

The location of these indoor farms can be close to the city, which can reduce the transportation from the field to the supermarket and avoid affecting the freshness of the agricultural products. This allows Plenty to have variety options, rather than considering the ability of a particular vegetable variety to withstand shipping.

Of course, Plenty also had their concerns, and that was the cost of operating the lighting system.

“Electricity is more expensive in China than in California,” he said, adding that farms can still be successful as long as they are located where the best electricity prices are available.