When starting a vertical farm, it is important to consider two of the most important startup costs: the facility where the farm is going to be located and the equipment.

Securing a facility is a big financial factor. Many farming companies reuse shipping containers, warehouses and even abandoned ports to make efficient use of urban space and lower the cost of facilities for vertical farming.

However, not all entrepreneurs opt for large-scale commercial operations, preferring to set up a small indoor farm for their production cycle. For example, the French microfluidic cosmetics company Capsum went for a 10-square-meter mini lab to grow pesticide-free microgreens and flowers for their new cosmetic formulas.

When it comes to working out the expense of constructing a vertical farm, it is crucial to consider your business objectives, the location, the condition of the building, and a variety of other elements.

Although the building costs can not be generalized, we can still calculate other setup costs: design, equipment and installation.

The price tag for outfitting an area with iFarm vertical farm rack technology, including setup and activation, is around $ 1,000 per square meter (the exact cost depends on the overall size of the farm, as well as on other factors such as building conditions or if any auxiliary equipment is needed).

For a growing area of 1.000 square meters (500 square meters of floor space; 4.5 meters in height), the total capital expenditures (CapEx) would be roughly $ 1 million (including equipment and installation, but excluding the cost of building construction or renovation, logistics and customs fees).

To gain insight into which components are included in calculating the setup costs of an indoor vertical farm, consult the table below:

Farming produce at a large scale is financially and technically demanding. The most expensive part of a vertical farming business are the operating costs.

So, how much does vertical farming cost? Let’s have a closer look at the biggest operating expenses: energy and labor costs.

The rack construction of an indoor vertical farm makes energy the highest operational expense. The LED lights installed on each shelf of a farm can account for half to two-thirds of the energy bill.

Since outdoor air does not circulate in vertical farms, they have to be constantly climate-controlled and the humidity must be regulated. Thus, air conditioning and dehumidification take up the remaining third.

The energy needed for farm management operations such as fertigation, control, and automation is much lower than the amount used for climate control and lighting, and usually makes up less than 10% of the bill.

One big challenge for farm entrepreneurs is the cost of hiring highly qualified staff, which can represent up to 60% of all operational expenditures.

The degree of automation is the main factor determining how many employees a farm will require. Higher levels of automation increase CapEx, but they also significantly reduce operating expenditures (OpEx) in the long term.

To calculate labor costs, let’s take as an example a mostly-manual large vertical farm built with iFarm Leafy Greens technology with 1.000 square meters of cultivation area located in Saudi Arabia.

On such a farm, the employees perform multiple tasks such as:

• Preparing planting containers
• Sowing seeds
• Cleaning facilities
• Packaging

The expenditure of employing professional farm operators for this farm in Saudi Arabia on a monthly basis will add up to $ 13,000, based on an average farm worker’s salary (including taxes) of $ 1,300. In European countries, it may be twice as high.

On the other hand, the vertical farm with the same growing space of 1.000 square meters that is mostly automated is 30% less expensive in terms of labor costs, regardless of the region.