As featured in Investment Report, KUBO Group CEO Wouter Kuiper shares his vision on the future of controlled environment agriculture.
In the interview, Kuiper discusses climate change, water scarcity, scalability and risk reduction in controlled-environment agriculture.
Climate change and water scarcity are central drivers behind the shift toward controlled-environment agriculture. In the European Union, reduced allowable pesticide use makes outdoor farming increasingly difficult, making indoor cultivation a solution.
Countries such as China and Saudi Arabia are investing in protected crops and greenhouses to secure supply. In a world of de-globalization, food security is increasingly on the political agenda of governments.
Population growth plays a role, but rising welfare may be an even bigger driver. As people come out of poverty and have more to spend, demand shifts toward different types of food.
"How much cultivation needs to move under glass? A lot, but there is a restraint. Our industry, technology and solutions are still too complicated to scale. First, we need to simplify them. Then expansion can happen very rapidly.”
Investment interest in high-tech greenhouse systems has lagged behind their technical potential.
“It’s still too dependent on the knowledge of a small group of people.”
Kuiper states that more science, data, sensing and computer-driven intelligence must be integrated into the greenhouse. The human factor remains necessary, but dependency must be reduced so that the success rate goes up and the risk factor goes down.
He notes that vertical farming has seen bankruptcies and money burned, while the glasshouse industry is less risky. In five to ten years, he foresees strong growth, but only if risk comes down.
“Capital is not the issue. There’s plenty of cash. Risk is.”
Greenhouses are going through major modernization as the sector focuses more on energy and cultivation efficiency.
Plants are influenced by many variables, including disease risks. Hardware, software and algorithms help simplify systems and make them more predictable. The challenge lies in combining these technologies to forecast outcomes such as harvest volumes.
Retailers need to know how many kilos of tomatoes are coming onto the market. Today, this cannot be predicted with sufficient accuracy.
Energy management is also critical to control costs. With many variables at play, algorithms and AI help interpret complexity, provide better decision-making information and reduce risk.
Climate control, CO2, humidity, irrigation and labour directly influence greenhouse performance. Labour remains important, as falling behind can disrupt plant balance.
Genetics and plant strategy remain largely human-based and are expected to stay that way in the coming years. At the same time, technology is increasingly used to read the plant. The efficiency of photosynthesis is central, and sensors are emerging that can measure this directly.
Greenhouses can now be heated with low-grade heat of around 40 degrees instead of 85 degrees. This makes it possible to use waste heat, for example from data centers. This opens pathways toward a near-zero CO2 footprint for vegetable production.
CO2 use is also changing. Instead of injecting CO2 in closed greenhouses, outside air can be used. Atmospheric CO2 levels are now high enough, if delivered effectively to the plant, to support efficient photosynthesis without injection.
Technically, greenhouses can be built almost anywhere. Financial feasibility depends on the earning model.
In tropical climates, dehumidification through air conditioning is often neither sustainable nor financially feasible. Cooling requires significant energy. In regions with lower humidity, cooling by adding moisture is more viable.
KUBO’s technology is currently limited to five or six crop types, and about 95 percent of the market is fruit and vegetables. In Europe, this mainly includes tomatoes, peppers and cucumbers. Strawberries and lettuce are increasingly moving indoors.
Research is conducted in KUBO’s own test greenhouses, assessing whether crops grown outdoors, such as winter production in Egypt, Ethiopia or Morocco with long logistics chains, can be grown indoors with good returns and a similar cost price.
Current growth is strongest in the Middle East, Europe and Canada.
Political and economic stability influence where controlled-environment agriculture can scale.
In the United States, tariffs have increased costs for inputs such as ceramics and plastics from China, plant material from the Netherlands and bark from Finland. Rising input costs make expansion difficult when selling prices cannot increase accordingly.
Canada is described as easier to build and operate from a permitting and regulatory perspective, with lower energy costs. While many assume future growth in indoor growing will occur in the United States, Canada and Mexico supply the majority of produce to the US market.