Restaurants, food retailers head indoors for produce amid water shortages and food security concerns

From restaurant menus to grocery store aisles, food prices are climbing, and the outlook for rising prices and looming droughts means these trends will not vanish anytime soon. 

To hedge against growing threats to food security, shortages and inflation, vendors and restaurants are leaning into indoor farming-- or farming methods that use machine-learning algorithms and proprietary software to create precise growing conditions.  

"Indoor farmers say it’s a more stable and secure food supply chain," FOX Business’s Lydia Hu said on "Varney & Co." 

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Indoor or vertical farming stacks rows of plants on top of each other under lights that simulate the sun with hydroponic methods that can produce 12 growing seasons compared with two growing seasons for a traditional farm. This summer’s anticipated heat and droughts have the demand for locally grown food reaching new levels. 

Bowery Farming, the country’s largest vertical farming company, can grow up to one hundred times more lettuce than compared to a traditional farm, according to Hu.  

As scarcity of water across the West Coast is expected to wipe out crops and deplete production, food retailers are tapping into indoor alternatives like Bowery Farming, not only as a way to secure larger quantities of produce, but also for cheaper transport costs. 

Last year, vertical farming accelerated in popularity as the pandemic spurred demand for fresh and locally grown produce as customers became more aware of the origins of their food. Add to that, California wildfires that took out swaths of vegetation last summer are casting new fears for produce supplies ahead of another projected record number of wildfires this summer. Although the state is no stranger to extreme heat conditions, this year’s outlook is expected to be one of the worst in four years, while a lack of water has many farmers already leaving their fields unseeded for the season.

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"Droughts are becoming more frequent, and people are more accepting of changes in climate," CEO of AeroFarms David Rosenberg told FOX Business. "And when droughts and shortages pop up more and more every year, that makes the farmer’s job harder, which heightens stresses from a security standpoint." 

California’s $50 billion dollar agriculture industry provides over 25% of food nationwide, which is furthering the need for more farming alternatives and supply chain efficiencies. 

With indoor farming warehouses propped up in major cities, produce can be shipped in a matter of hours rather than days worth of travel. That also means that the butter lettuce that would typically sit inside a truck for days as it makes its way from the West Coast to the East Coast no longer loses its quality or nutritional value. 

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AeroFarms, based in Newark, New Jersey, is located near urban hubs to deliver produce to major retail chains like Walmart and ShopRite, as well as fresh-to-direct options such as Amazon Fresh that can be delivered to customers within hours. 

The company, one of the world’s largest vertical-farm outfits, uses aeroponics and LED lights to grow its products, enabling the production of 2 million pounds of crops like kale, watercress, arugula, red-leaf lettuce, bok choy, mizuna and other baby salad greens per year. The growing process is done without sun, soil or pesticides and consumes 95% less water than outdoor farms, making it a more sustainable and efficient option than traditional soil-based farming. 

"It’s a much more efficient system because we essentially get by doing less," Rosenberg said. 

AeroFarms has plans to expand its high-tech indoor farms across the country and is set to go public this month through a special purpose acquisition company (SPAC) with a $1.2 billion valuation under the ticker symbol "ARFM."

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While critics of indoor farming argue that the produce grown without soil loses its healthy nutritional value, proponents say that the technology can be used to fine tune the plants to the best quality.

"What stresses the plant out is exposing it to more intensity and longer duration of light, so we are able to optimize that recipe because we control every aspect or input into the plant’s growing," Bowery Farming’s Chief Commercial Officer Katie Seawell told FOX Business. "And we are able to hit the exact flavor profile we want."