Bowery Founder and CEO Irving Fain joins Yahoo Finance Live to discuss vertical farming, reinventing the fresh food supply chain, facility expansion, and the outlook for the farming industry
BRAD SMITH: Vertical farming promises to provide a more sustainable, reliable way to produce food for the global population. The industry faces some expensive overheads, so just how practical is this alternative venture? Well, we're going to dive further into this, and joining us now is Irving Fain, who is the founder and CEO of Bowery Farming. Irving, great to have you here on the show with you.
I have been able to try out-- it's made it to my own grocery cart-- some of the Bowery Farming lettuces. So I've got to know, when you think about some of the sustainability and what goes into running the day-to-day operations of Bowery Farming, how does this differ from what has been tried, trusted, true for decades, centuries, even?
IRVING FAIN: First of all, it's great to be here. And I am happy to hear that you are a consumer of the product already.
BRAD SMITH: Good lettuce.
IRVING FAIN: It is the purest expression of produce, in fact. It is what came out of your grandmother's garden. But to answer the question, this is really not just the re-imagination of farming, but it's actually the reinvention of the entire fresh food supply chain. And so at Bowery, what we're doing is we build warehouse-scale, indoor farms. We stack our crops from the floor all the way up to the ceiling. We grow in smart growing environments that allow us to grow 365 days of the year, independent of weather, independent of seasonality, under lights that mimic the spectrum of the sun.
And on top of that, and there you have a picture of it right there, we are able to grow completely pesticide free, completely agrochemical free produce. So no herbicides, no fungicides, no insecticides. We grow more than twice as fast as the field. We get more cycles a year than the field and more yield per cycle. So we're over 100 times more productive than a square foot of farm land outside. And all the while, we use a very small fraction of water compared to traditional agriculture.
And all of this is essentially enabled by not only robotics and automation that we design and develop but also the Bowery operating system, which is software and hardware, artificial intelligence, computer vision and sensor and control systems which essentially monitor and maintain the entirety of our operations from before a seed is planted until when our product ends up in your grocery cart.
JULIE HYMAN: Irving, that does not sound like my grandmother's garden. Maybe it tastes like my grandmother's garden, but that bears no relationship to my grandmother's garden, which, obviously, is by design. All of that also sounds very, very expensive. And I'm sure as Bradley can attest, who has purchased your product at the store, it's costly for the consumer as well. So how does the cost work over time? When do you start to get that down?
IRVING FAIN: Well, so first of all, I think really important to know, we sell today at or below the cost of field grown organic products. So we are comparative to and competitive to organic product that's coming out of the field. And the product that we're producing is a day to two days from when we harvest it to when it's delivered to the retailer, which means it is not only fresher, it lasts longer at our retail partners on the shelf. It lasts longer in Brad's or anyone else's refrigerator once it goes home.
And it's also more nutritious because 50% of nutrition is lost from the time a product is harvested outside to when it actually eventually gets there. So you have a better product than the organic product at or below that price point. That's the first piece. The second piece is when you look at what we're building at Bowery, it actually is not comparable just to the outside field. It's actually the entirety of the supply chain.
So we are taking out all of these different players along the way, all of the time, all of these steps that happen. And we're creating a safer supply chain, a simpler, a shorter supply chain, and we can provide much more surety of supply on top of the sustainability. So you change the entire cost structure because many of the middlemen and steps along the way now actually are completely-- they go away.
JULIE HYMAN: I guess, I don't know, maybe I'm shopping in different grocery stores, but I have not found that it is necessarily cost competitive. Like I can buy an organic head of Romaine at Whole Foods for three bucks. I'm pretty sure a Bowery, if I buy a box of lettuce, is more expensive than that, no?
IRVING FAIN: Well, so when you get in the packaged salad category, you usually see prices between $2.99 to $3.99, and that's exactly where Bowery plays in that zone as well. So when you look at any of the other packaged salad products, whether they're from outdoor agriculture or from other controlled environmental agriculture players, we sit right alongside that price point in that $2.99 to $3.99 price point. So sometimes the loose leaf product, which you can find on the shelves, ends up being cheaper. But that's oftentimes lower quality product, lasts a shorter period of time as well.
BRAD SMITH: How much of a kind of operation in square footage wise, kind of looking across warehouses and going into vertical farming there, how much of a footprint does that require in order to output what you've already scaled up to? And how much more do you feel like you need to build out at this point?
IRVING FAIN: Yeah, you can think about these-- our farms as essentially a very small scale distribution centers. So Amazon, for instance, may build distribution centers a million square feet. This is a fraction of the size of those distribution centers to produce essentially 100 times more on a square foot basis than you would get outside. And so you're not only much more efficient on the land side of things, but you're actually much closer to your point of consumption.
So you're eliminating the food miles and the trucking that's required. As we said before, you're delivering a product a lot faster and with much more shelf life on it, which has retail and consumer benefits. The truth is, Brad, we're a fraction of the total market in produce right now. And I think that's what's actually interesting and exciting because right now we are seeing more consistent disruption in agriculture than we've really ever seen before. The world has gotten much more uncertain and much more unreliable.
And all you have to do is look to the West Coast of this country where it wasn't too long ago that we were looking at and talking about the 1,200 year mega-drought, and we couldn't grow crops effectively in the way that we had historically in Southern California and in the Central Valley or in Arizona because of how little water there was. Now, over the course of the last few months with atmospheric river events and now a record snowpack in the Sierras, production out of the Salinas Valley is at a fraction of where it typically is at this time of year because now that there's flooding and enormous amounts of water.
And you can see these types of changes not just happening in the United States but everywhere around the world. So this isn't just important from a sustainability perspective. This is important from a surety of supply perspective because the existing system that we have today is already proving that it is not going to be able to stand up to the increasing variability that's coming from climate change.
JULIE HYMAN: Irving, the vertical farming industry is mostly known for lettuce, right, and other types of greens. But you guys and some of your competitors have also dabbled in some other types of produce. I know strawberries was something you guys were testing last year. Just want to know how that was going and what your other produce ventures look like right now.
IRVING FAIN: So we launched strawberries about a year ago. We've had a lot of success. Been small launch so far, but we can't keep them on the shelf, which is always a good problem to have. I think berries are a really interesting category, specifically. We've all had that experience where we get a strawberry in the off season, and it doesn't taste like very much. It isn't very good.
It may be extremely expensive as well because price variability fluctuates based on what's happening outside. And we're excited about strawberries not just because of strawberries, but they're part of the fruiting crop family-- so tomatoes and peppers and hot peppers and cucumbers and raspberries and blackberries. There's so much that shares similar attributes to a strawberry, and we've actually grown hundreds of varieties of crops from an agricultural science perspective.
We haven't necessarily launched everything commercially, but when we look at the actual opportunity for what we can grow economically at Bowery, it's about a trillion dollar a year global opportunity. So it's enormous but certainly not all of agriculture. And I would never tell you that indoor vertical farming is going to take over all farming across the world. The only way we're going to get to a sustainable future in agriculture is many, many different approaches working together to solve the overall agricultural challenge.
JULIE HYMAN: Irving, finally, a question about the company specifically and a financial question, if you will. IPO plans at some point? I know it's not the best market necessarily generally, but just curious what your trajectory looks like on that front.
IRVING FAIN: Right now we're just continuing to focus. We're fortunate we have got great investors, great supporters, and we're a private company today. That's allowed us to continue to grow and build effectively. And for right now, we're continuing to grow and focus on building the business, and certainly this can be a durable public company when the time is right.