ONLINE GROCERS Ocado have made a major investment in 'vertical farming', with the intention of establishing self-contained farm units to grow herbs and leafy greens right next to its urban distribution centres.

The vertical farming concept involves the production of food in indoor facilities where crops are grown on a series of levels in a precisely-controlled environment. Such systems are claimed to offer sustainability advantages, including low wastage, very low water use, minimal land use and no pesticides, all with predictable yields of high quality produce. From a consumer’s perspective, produce grown in these sealed units promises to be tastier and fresher, picked when ripe, grown without pesticides or fungicides, and virtually untouched by human hands.

"We foresee a day where customers' vegetables are harvested hours before they are packed, metres from where they are shipped, bringing the freshest, best tasting, and pesticide-free produce to customers with the fewest food miles," declared Ocado, which stated its intention to become a leader in the emerging vertical farming industry.

To that end, the firm has announced two 'complementary' investments – the first is a strategic three-way joint venture with US firm 80 Acres Farms Inc. and Dutch climate control tech experts Priva, which have already been working together for over four years to design turnkey solutions to sell to vertical farming clients worldwide. This three-way venture will be called Infinite Acres.

The second is the acquisition of a majority stake in Jones Food Company, Europe’s largest operating vertical farm, based in Scunthorpe. JFC’s facility is currently producing leafy greens and herbs for UK customers with its capacity expected to grow to 420 tonnes per annum. With more than 5000 square metres of production area and 12 kilometres of LED lights, JFC has the ability to produce consistent crop yields throughout the year, and plans to expand crop types and production across the UK.

Taken together, Ocado's planned equity investments in JFC and Infinite Acres will total £17million.

Ocado's CEO, Tim Steiner, said: “We believe that our investments today in vertical farming will allow us to address fundamental consumer concerns on freshness and sustainability and build on new technologies that will revolutionise the way customers access fresh produce. Our hope ultimately is to co-locate vertical farms within or next to our CFCs and Ocado Zoom's microfulfilment centres so that we can offer the very freshest and most sustainable produce that could be delivered to a customer’s kitchen within an hour of it being picked."

Ocado's current grocery distribution deal is with supermarket chain Waitrose, but that is due to come to an end in September 2020. The firm will then start delivering to Marks and Spencer customers, as well as supplying its own-label products and big-name branded goods.

80 Acres CEO Mike Zelkind said:"With Priva's and 80 Acres Farms’ extensive horticulture, engineering, operational, and food industry expertise, along with Ocado's predictive analytics, automation and comprehensive system development, the partnership will provide its customers with everything from state-of-the-art facilities with uniquely developed crop recipes and the right unit economics, to an option for facility management with yield guarantees, product packaging, branding, marketing, and distribution."

Priva chief Meiny Prins added: "Infinite Acres' mission is in perfect alignment with global sustainability needs as our planet grows to 10 billion people by mid-century, with most living in urban areas. We can develop optimal environments in which plants and food crops experience the best way to grow indoors, using leading-edge technology and solutions which result in substantially lower energy and water use, as well as reducing food waste."

CEO of Jones Foods, James Lloyd-Jones, said: "JFC is delighted that Ocado has chosen to partner and invest with us. We are certain that the combination of their world-leading logistics and automation systems coupled with our advanced growing technology will transform the way customers experience fresh produce – delivered fresh to their door a matter of hours from ordering. JFC has always been committed to minimising the environmental impact of agricultural production and we see this partnership accelerating our ambitious growth strategy to make a wider variety of vertically farmed produce available to even more customers. We are very excited and looking forward to a bold and ambitious future as part of the Ocado Group."

Commenting on Ocado's announcement, NatWest bank's director of agriculture Roddy McLean said: “This is exactly the sort of deal that we think is good for the wider agriculture and food production sector. This is a big player demonstrating a real commitment to a positive disruptor in the sector. There is so much innovation taking place in the farming world as we drive towards a more immediate and sustainable future.

"Beyond this, the industry is crying out for a new focus; for the bright minds that may have otherwise entered so-called ‘sexier’ industries to take a look at deals like this and think ‘this is where I can make my mark’. We are excited to see this develop in the near future and are on-hand should others need the financial support and industry know-how to do something similar.”