Agriculture hasn't gone through a fundamental change for around 10,000 years when humans started harvesting fields. The seeds still go in the ground and crops still need to be harvested before they end up on our dining room tables. Incremental changes like improved seeds, farming equipment, and pesticides have helped crop yields, but a revolutionary change may be taking hold in a small factory in Japan.
A farming model that can produce 100 times what a farm produces in the same amount of space may revolutionize that model. The farm of the future is moving indoors.
The farm producing 10,000 heads of lettuce per day
In a 25,000 square foot building in Japan, indoor farming company Mirai has built a farm producing 10,000 heads of lettuce per day. Not only is the production staggering, but the farm uses 40% less power, 80% less food waste, and 99% less water than outdoor fields while improving yields from around 50%-90%.
General Electric (NYSE:GE) played a central role in the first plant, producing LEDs that could be used to grow crops while using less power than fluorescent lights. And with the plant's success this probably won't be the last we hear of LED farming.
Mirai and GE are looking to expand the indoor farm concept to places like Hong Kong, Mainland China, Mongolia, and Russia. What's fascinating about this technology isn't where it is today, but where it could be in 10 or 20 years. This technology could be automated, powered by solar energy, and could even produce high value plants used in medicines, just as an example. The possibilities for growth are almost endless.
Who makes a mint from this technology?
GE could be a clear winner if this indoor farming concept takes off. It designed a special light bulb for the Japanese plant and since the lights are high density in the factory the potential for sales is tremendous. But don't overlook what this could mean for custom designed crops.
Companies like Monsanto (NYSE:MON) and DuPont (NYSE:DD) have spent decades increasing the yields of crops planted in fields around the world and now spend millions protecting the seeds from being used by farmers for multiple seasons. Not to mention, the money spent on herbicides and pesticides to protect these crops.
If Monsanto and DuPont (NYSE:DD) built their own indoor farms they could reap the rewards of their plant technologies, capturing the value for shareholders.
Any company that decides to get into indoor farming could use this for a variety of value added applications. You could create an "on-demand" farming system that could produce crops year round. Imagine a fresh cantaloupe in Manhattan in January or a fresh orange in Minnesota in February.
The medical and pharmaceutical industries often find valuable plant extracts in remote parts of the world. These plants could be produced indoors in a controlled environment, improving supply.
Synthetic biology could also open a world of possibilities for indoor farming. Designer plants could be used to fill industry needs the way algae are beginning to be used to create specialty chemicals today.
Opening a world of possibility
An indoor farm that can create 10,000 heads of lettuce per day is impressive, but it's just scratching the surface of what indoor farming could do. Biological engineering combined with automated growing could feed the world at a lower cost with higher quality and also produce products for a variety an ancillary industries.
This could be the future of farming and could be on a dinner table near you before you know it.
Travis Hoium owns shares of E.I. du Pont de Nemours & Company and General Electric Company. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.