Originally published on The Daily Flare.
Vertical farming survived a brutal shakeout in 2022–2024 — and in 2026, the technology behind it is advancing faster than the headlines suggest.
Stacked layers of crops grown under LED lights in climate-controlled rooms still promise food production with far less land and water than field farming. But between 2022 and 2024, some of the sector's most celebrated companies collapsed, proving that growing plants indoors is the easy part. Making the economics work is the hard part. The companies still standing in 2026 look different from the ones that failed: they grow higher-value crops, run tighter on energy, and lean on automation instead of cheap venture capital.
The 2022–2024 Shakeout: A Brutal But Necessary Reset
The failures were large and fast. Infarm, the Berlin startup that raised around half a billion dollars and briefly hit a $1 billion valuation, laid off roughly half its staff in late 2022 and declared insolvency across its European markets in 2023. AeroFarms, a pioneer founded in 2004, filed for Chapter 11 protection in June 2023 before emerging under new ownership that September. Bowery Farming, which had raised more than $700 million at a $2.3 billion valuation, ceased operations entirely in November 2024, laying off 187 workers. Kalera and AppHarvest also went through bankruptcy in 2023, and Plenty Unlimited filed for Chapter 11 in March 2025.
The common thread was unit economics. Vertical farming replaces free sunlight with electricity for LEDs, heating, cooling, and dehumidification, which makes power the dominant operating cost — and when European energy prices spiked in 2022–2023, farms selling ordinary lettuce could not compete on price with field growers who have no lighting bill at all. Agricultural consultancy Agritecture has put the lesson bluntly: energy and labor make up 50–65% of operating costs in controlled-environment agriculture.
How Vertical Farming Technology Is Advancing in 2026
The advances fall into four areas — lighting, automation, water, and energy strategy — and a fifth, crop selection, underpins them all.
| Advance | What changed | Impact |
|---|---|---|
| LED efficiency | Fixtures now deliver 3.0+ μmol/J; Signify's latest line reaches 3.7 μmol/J; fixtures improve ~5–7% yearly | Lower power per photon, but gains are flattening |
| Spectrum & dimming | Tunable spectra and dimming down to 10% during price peaks | Growers buy electricity when it is cheap |
| Automation & AI | Plenty analyzes 10M+ data points daily per farm (company claim); harvesting robots and robotic partners | Labor share of costs drops, consistency rises |
| Water recirculation | Closed-loop systems capture, filter, and re-dose water; company claims of ~95% less water | Viable farming in water-scarce regions |
| Crop shift | Commercial strawberries, tomatoes, and melons replacing commodity lettuce | Higher margins pay the electricity bill |
| Institutional support | USDA expanded controlled-environment crop insurance for 2026 and 2027 crop years | Federal insurance de-risks the sector |
Lighting: the efficiency ceiling is in sight
State-of-the-art horticultural fixtures now deliver more than 3.0 μmol/J of photosynthetic photon efficacy, and Signify — the Dutch lighting company spun out of Philips — has a top-lighting line reaching up to 3.7 μmol/J. But horticultural lighting researcher Erik Runkle of Michigan State University has warned that diminishing returns are setting in. The frontier has therefore shifted to smarter use of light rather than brighter diodes.
Automation, robotics, and AI climate control
Plenty says its Richmond farm analyzes more than 10 million data points each day across its 12 grow rooms (a company claim). Oishii acquired the harvesting-robot startup Tortuga AgTech in 2025. AeroFarms has credited automation projects at its Danville facility with increased throughput and efficiency.
Water: closed loops instead of irrigation
Vertical farms do not irrigate soil — they recirculate nutrient solution in closed loops. Company claims of "up to 95% less water than field farming" trace back to AeroFarms' founders; Dubai's Bustanica gives the concrete version: 15 litres per kilogram of produce versus 317 litres conventionally. No independent public audit of these figures has been found, so they should be read as company claims, not verified facts.
Energy strategy: buying cheaper, cleaner power
Electricity remains the make-or-break input. Oishii's CEO Hiroki Koga has said that substituting renewables for grid power would leave "literally nothing we do worse than conventional farming" (a company statement). Co-location near cheap power and strong food demand is now standard strategy.
What's Next: The Road to Mainstream
Four things would take vertical farming from a disciplined niche to a mainstream part of the food system. First, energy economics have to keep improving — sustained profitability needs either much cheaper power, renewable procurement at scale, or the final rounds of LED and dimming efficiency. Second, crops have to keep moving up the value chain: Plenty's Richmond farm bills itself as the first farm growing indoor, vertically farmed berries at scale (a company claim), targeting more than 4 million pounds of strawberries a year. Oishii's Amatelas farm in Pennsylvania's Lehigh Valley is described by the company as the world's largest indoor vertical strawberry farm. Third, scale has to be matched with discipline: Dubai's Bustanica — 330,000 square feet, opened in July 2022 — shows the flagship model working in a water-scarce, import-dependent market. Fourth, policy is becoming a tailwind: the USDA's Risk Management Agency expanded its Controlled Environment crop insurance pilot by 48 counties in 17 states for the 2026 crop year, raised the coverage ceiling from 75% to 85%, and announced a further expansion for 2027.
Vertical farming failed once when it grew the wrong crops, ignored energy bills, and underestimated plant disease — and those failure modes have not disappeared. But food supply chains remain fragile, and for an industry that burned through billions learning that lesson, that is genuine progress.
Originally published on The Daily Flare.
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