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BALTIMORE -- The green shoots of a new business will sprout soon in a newly built steel-framed warehouse on the grounds of the shuttered steel mill in Sparrows Point.

This isn't a metaphor. New York's Gotham Greens is about to plant the first seeds in a 100,000-square-foot indoor hydroponic farm that expects to produce 6 million heads of butter lettuce, romaine, basil and other leafy crops a year.

The company's lettuces and herbs are part of a growing global hydroponic market serving increasing demand for locally grown food with fewer environmental impacts. Owners of the industrial park and local officials also see the company and its produce as a symbol of the new economy at work on this property where tens of thousands were once employed in the dirty business of making steel.

"We'll have the first harvest before the end of the year, with fresh produce available in local groceries and restaurants," said Viraj Puri, co-founder and CEO of the company on a recent tour. "It won't matter if there is snow outside. You'll be able to get very fresh lettuce."

Baltimore will be the private company's fourth market, and a fifth is on the way. Puri said the greenhouses can produce 30 harvests annually, compared with the three or so from conventional, land-based farming.

The Baltimore plant will sell its produce in an area from Philadelphia to Washington, D.C., and Virginia.

The greenhouses work by controlling their environments. Seeds are planted in trays with silver-dollar-size holes that allow roots to grow into water instead of soil. The baby lettuces and herbs are moved from a nursery to other parts of the building when they are ready for different amounts of water, air and sun -- or LED bulbs. About 60 workers will tend, pick and package, sell and account for the crops.

Puri, an entrepreneur, said he was struck to learn that nearly all leafy greens are grown in faraway places such as Arizona and California and trucked east. Up to 40% of the perishable product ends up wasted.

Puri said his greens can be harvested and on store shelves in a plastic clamshell box the same day, and can last in a refrigerator for three weeks. The price will be $3.99, which is about average for high-end and organic greens.

The hydroponic system means less use of land and water, no pesticides and far more food per year. The greens are not considered organic because the government definition requires such crops to be grown in soil.

Analysts see a sunny future for hydroponic lettuces and herbs, though the collection of big and small growers currently represents just a sliver of the $20 billion leafy-green market.

A downside, according to analysts, is the cost to set up such systems. Puri said he spent $11 million on the Baltimore greenhouse. And there were years of research into developing an efficient and consistent method of production. The proprietary system also includes special filters to limit the risk of water-borne contaminants that could sicken customers and put them off hydroponic crops.

Several competitors are taking root around the country and internationally, seeking to take advantage of demand for fresh greens and feed the world's growing population, according to the research and analysis firm MarketsandMarkets. Analysts there predict the international hydroponics market will double to $16 billion by 2025 from about $8 billion this year.

The United States is catching up with the rest of the world and now has a $2.8 billion market, with growth estimated at about 5% annually, said Aslam Shaikh, a MarketsandMarkets analyst.

He said other companies are likely to enter the market, provided they can attract investors to cover the steep costs of equipment and technology. These modern-day farmers are attracted by the high yields and the controlled environments that avoid extreme temperatures, droughts and floods, and pest infestations.

Shaikh also said surveys show consumers will pay up to 50% more for organic or pesticide-free produce.

The most popular hydroponic food is tomatoes, which represent 40% to 45% of all such crops. Leafy greens are also popular, and indoor farms are increasingly growing other vegetables and flowers. As states approve medical and recreational cannabis, growers also are turning to these indoor farms.

Hydroponic produce still represents a sliver of the market. Less than 5% of lettuce sold in U.S. markets is grown in hydroponic farms, Shaikh said. But there is a lot of room to grow.

"Consumers are interested," he said. "Where they can, people are even renting patches of the farms for themselves. This is a significant trend in Germany."

Gotham Greens doesn't release sales information, but officials said the company is profitable and growing. It's lining up customers in the region, too.

Whole Foods Market is among the retailers that sells hydroponic crops, including from Gotham Greens. There is even a commercial greenhouse atop the retailer's Brooklyn store. Officials said the company chooses producers and crops based on what's available locally.

"The appeal with Gotham Greens' program is having product that can be grown and sold within a very close proximity," said Erik Brown, executive leader of procurement at Whole Foods. "We're always looking for the best programs to help support our program to bring the highest quality to our stores."

Puri said the company has been choosy about where it puts down roots, purposefully seeking places such as Sparrows Point that are urban, or near-urban, and in need of reinvestment. Other spots are in an old light bulb factory in Providence, R.I., an old toy factory in New York City's Queens and on the runway of an old airport in Denver.

SundayMonday Business on 12/15/2019

Print Headline: Hydroponic farms wave of the future?

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