The Current - Could vertical farming reduce Canada’s need for U.S. produce?

Episode Date: March 6, 2025

With a big push to buy Canadian, vertical farming could be a way to grow leafy greens in the dead of winter — and reduce our reliance on U.S. produce. We look at how vertical farming works, what it costs, and whether it can actually be scaled up to help feed Canadians.

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Hello, I'm Matt Galloway and this is the current podcast. Have you been looking to try and find some grown in Canada things? I'm buying all. Yeah. Are you? Oh yeah. We're? Oh yeah, yeah. We're from CBC Radio. Can we ask you a couple of questions? Sure.

Sure, tell us what your name is. Gail Hunston. And tell us what you're doing here now. You're doing your grocery shopping. Yeah, weekly grocery shopping. You have the list there, and are you looking for buy-in, made-in-Canada things? Yes, completely.

So far, I've been able to get everything that was either Canada or Spain or some other place But I've just been looking at the lettuce and I can't find so far anything that's not USA. Why are you doing this? Oh, because of the tariffs. Yeah, it's a protest for sure. My trip to the grocery store last month got a ton of response. Many of you also tried to buy Canadian and that increases day after day, it seems like. While we were shopping, we couldn't find it at the grocery store, but many of you wrote in to

tell us that you actually can get homegrown lettuce and leafy greens during the Canadian winter. And one company that kept coming up in that conversation is a company called Good Leaf Farms. It operates vertical farms in four Canadian provinces. If you're wondering what a vertical farm is, well, you're about to find out. The CEO of Good Leaf Farms is Andy O'Brien. He's with me in studio now. Good morning. Good morning. Thanks for having me. Thanks for being here. For people who don't know, what is vertical farming? Well, vertical farming is a controlled environment indoors, growing it upwards versus horizontally, like in open fields. We have literally stacks of benches that go up probably,

you know, 40 or 50 meters. Um, and we have 10 different stacks and they're probably, I don't know, a hundred yards long. And so what does it take me inside one of those buildings? What does it look like aside from with the stacks? Uh, how the stacks are. Pretty impressive. It's a pretty advanced technology where we have

lights on each bench that mimic the ideal lighting conditions outside. Uh, we have irrigation that we control by, by stack. So every plant that we have gets a certain level of, of water, uh, controlled by our computer systems and we control the air. So it's perfect conditions for growing. The advantage of this, I mean, it probably is an

obvious answer, but the advantage of this compared to a traditional greenhouse for example, this sounds like a stacked greenhouse in some ways, is what? That's a good comparison. The advantages would be that first off, we don't have to use any pesticides. We use less water, we use less land, and because we're so close to the source of where we sell, roughly 350 kilometres is probably the farthest we have to go, our product lasts longer on the shelf.

Why did you think there was an opportunity in vertical farming? You've worked in the food industry for a while and have had a bunch of big jobs in different parts of that food industry. Yeah, you know what? I have, I've worked in the food business for 30 years on both sides of the border. When this opportunity was presented to me a year ago and I did my homework, I realized pretty quickly that we have a food security issue here in Canada. We're getting majority of our produce, 90% of it from the US, mostly from California and Arizona. Then it takes three, four weeks sometimes to get up here. The quality of the product is not great. And particularly, you know, in Canada where we have pretty long winters, um, I was

out in Newfoundland back in November and they have a real challenge getting fresh produce from Arizona and California to St. John's. So I looked and I said, there's an opportunity here for us to develop, you know, the capacity to produce leafy greens right here in Canada. How is that opportunity sharpened by the context that we are talking in where we are now in a trade war with the United States?

Yeah, I don't think the trade war or the tariffs brought this issue out. I think the issue's been around for a while. I think what's happened over the last, you know, call it two months, is it's a heightened awareness that we need to do something now. If this is as, it's straightforward, but if it makes sense in the way that you're talking about, we can grow things all year long.

We can grow things in places where you haven't been able to grow things or get things in easily. Why aren't there more vertically farmed vegetables available across this country right now? Well, the reality is it's a very expensive, you know, build. Why aren't there more vertically farmed vegetables available across this country right now? Well, the reality is it's a very expensive, you know, built, you know, these facilities are not cheap.

They're advanced technology. We're very fortunate that we have some really, really good investor partners. But how much, and when you say very expensive. Well, $70 million to build one farm. $70 million to build one farm. And that cost is, break that down for me, why does it cost $70 million to build one farm. $70 million to build one farm. And that cost is, break that down for me, why does it cost $70 million?

Well, that's all the equipment, all the lighting, all the irrigation, we have robotics in there that lift up benches, 30, 40 meters in the air. It's expensive technology. And yet there is an opportunity, you believe, that this is viable? That's a huge startup cost. It is, and I think that's a major reason

why there's not more players right now, but I think the opportunity is massive for Canada. I mean, I guess one of the reasons why people would ask whether this is viable is because there have been a number of pretty high-profile business failures in vertical farming, in-farm, aero farms, App Harvest declared bankruptcy in the last few years. 15 companies based in Europe that do vertical farming all had to cash out because there wasn't the money there. People have compared this in some ways to

the cannabis bubble. Is this really a viable business? If people can't make a go of it and because of those startup costs, companies are going bankrupt. How is this possible? It has definitely been a very challenging sector for the last five years. And you're absolutely right, Matt. There's been a number of companies that have come into this space and for various reasons didn't make it. I can't speak to why they didn't make it. I can only speak to how we're going to make it. And we're looking at this not only as an opportunity to provide food security and cannabis, but

it has to be a business model. How much energy does it take to grow? If you're not relying on the sunlight, if you're not relying on rain and typical irrigation, how much energy does it take to grow in one of these towers? Well, I'll give you an example. Our farm in Quebec use about 12 million kilowatts

a year, but we use renewable hydro energy for that. Is 12 million kilowatts a year a lot? It's not insignificant, for sure. And so that's a significant carbon footprint, presumably. I mean, you are using renewable, but if you aren't, that's a lot of energy that you use. Correct, yes. What about water consumption in terms of irrigation? We use 97% less water than traditional farming and we recycle most of it.

And why are you able to use less water than traditional farming and we recycle most of it. And why are you able to use less water than traditional farming? Because none of it's wasted. It's going directly into the plants and then we bring it back into, we clean it up and put it back into another plant. What is the cost of vertically grown vegetables compared to the imports that people are familiar with from Arizona and from California? Does it cost more? They do cost more right now.

And we're an early player in this market. So right now our costs are probably about 50% higher versus your open field produce. You've said that this is a premium product. It is a premium product. It comes with significant benefits. No pesticides, non-GMO. It has nutrient density in it because the way we grow it and how fast it gets to the store has longer shelf life.

Those are all really significant consumer benefits. I mean, there are a number of people who got in touch with us saying, this is something that you need to think about when we were at the grocery store and we couldn't find Canadian grown lettuce. And part of it is about buying Canadian, but part of it is also about food security. Just finally, what is at stake when it comes to food security and what role do you think you can play in terms of allowing us in this moment to have some control over our food supply?

Yeah, it's a great question. And I think if you look at probably five or six months of the year here in Canada, we really don't have access to fresh produce grown in Canada. A vertical farm like Goodleaf really allows us to be able to provide Canadians with fresh produce 365 days a year. Andy, thank you very much. Thank you very much Matt. Andy O'Brien is the CEO of Goodleaf Farms. Vertical farming at scale could take as we heard serious money, but my next guests are trying to make it a lot easier

for small farmers to get growing vertically. They manage self-contained vertical farms and shipping containers and sell them across this country. Their customers include retailers, nonprofit organizations, schools, and remote First Nations. The company is called The Grocer, spelled G-R-O-W-C-E-R. See what they did there? The co-founders, Corey Ellis and Alida Burke

are in our Ottawa studio. Good morning to you both. Good morning, hi Matt. Corey, describe your farming machines. What are these? So they do look like shipping containers, but they're steel buildings. We build them 100% in Winkler, Manitoba.

And inside our shelves with LED lights to grow hydroponically all sorts of vegetables, we prefab them. So they essentially just get loaded on a truck, they show up to our customer's site, we offload it, we plug it into a garden hose and power, and you now have in a 400 square foot footprint, you now have a farm that can feed 600 people a day

for 30 years. How does this compare to the technology that Andy O'Brien of Goodleaf just described? The fundamental principles are the same. I mean, we're using similar science. We're just scaling it down to a community scale. So what we are trying to build is a network of local farmers across the country

that can feed their own communities with a locally owned farm. Alita, people may have seen the two of you on Dragon's Den a few years ago, right? That's right. Where did the idea for this come from? Yeah, it was about 10 years ago now, which is hard to believe. We were students at the University of Ottawa and looking at social entrepreneurship, so looking at building a business that looks at

environmental, social and economic factors. And we were able to go up north, and we experienced the very common sticker shock that one does when one goes into the grocery store and sees the incredibly high prices for consumer goods. And what we then realized in our journey is that that's a problem across Canada. And we thought, how can we combine technology with local options for people to grow food in our community.

You mentioned the North. I mean, one of these containers is in Yellowknife, right? Yes, that's right. Tell me about it, what it's doing there. It's supporting the local co-op in Yellowknife, and so they're growing in their parking lot and having their own brand of produce on their store shelves. I mean, based on what you saw and what people in the North certainly see every single day, how much of a difference can something like this make, do you think?

It makes a massive difference, and that's what really drives us to do what we do every day. We hear the local stories of how this has ripple effects. Food brings us all together and it creates local jobs. It supports the local economy in keeping those dollars in the community and builds that network to be able to have that fresh, nutritious, local product right there in the community. Corey, one of the things that Andy and I were just talking about is the cost and the cost of getting started up in the vertical farm space. How much do these farms cost and who's putting that money up? So the farms are about a quarter million dollars, so $250, dollars. You can make that money back in about five years if you're

running it commercially. But as of last week we will actually now fully invest in a hundred percent of that startup cost for an organization locally that wants to produce food. So what we'll do is we'll put up a hundred percent of the equipment cost, the farmer will put up the site preparation cost and then we'll revenue share over a five or ten year period So that's if a food bank for example, we have First Nation customers grocery stores and so on if any of those Local organizations want to get a farm. We will put up the upfront capital to help them do that Did you find that I mean and that's a great initiative

Did you find that that initial startup cost was an impediment for people who might want to get involved in this? Again, with Goodleaf, we were talking about the $70 million that it takes to get rolling. Both of those numbers, they're different, but they're big numbers for people. They are big numbers. It is an impediment for sure, Matt. I mean, Food Bank, for example, raising a quarter million dollars to put in a capital cost, there is a return on investment there.

They would offset and no longer have to procure vegetables, which many food banks already do. So there is an economic case, but it's a barrier. And so we wanted to, at the heart of what Grocer's doing is how do we make it easier for Canadians across the country who want to start growing locally in their organization? How do we remove those barriers? Alita, what about the energy consumption? Again, this is something that I was talking with Andy about, particularly when it comes to electricity. Yeah, similarly it takes about four homes worth of energy to power a grocery firm like ours. That sounds like a lot. Yeah, but I think there's a variety of other benefits that support that and, you know, offset some

of those long transportation costs that a lot of our clients are in very remote places. So there's definitely some side benefits as well. So you think the carbon footprint might work itself out? Yeah, that's right. Yeah, it's about a 75% reduction when we looked at it. Largely, as Andy mentioned, most of our power across the country is fairly green,

but we're using about four homes worth of power to feed about two to 300 homes. When you started this company, Corey, you were university students and you're just selling the machines and now you're invested in, in helping people, you know, afford them in some ways. Tell me a bit more about how your business model has changed and what the, we start out with an idea, but what is the big goal here? I mean, we had a very modest initial goal.

We just wanted to start a single farm in the North with some of our friends and community partners, and we couldn't find a supplier that we could trust and that actually had a solution that was turnkey, ready to go. And so we basically just went about building the solution we wish we had had, and that's been the mantra for, I mean, the last decade.

But this is a business, it's not a philanthropy, right? Absolutely. And so, I mean, again, as we talked with Andy, I mean, there are people who have tried to get into this space who have found, what do they say, the juice isn't worth the squeeze in some ways, that the cost going in is more than what you can get out of it. So is there a sustainable business model here? Yeah, there absolutely is.

I mean, we're proof of that. We have 110 organizations across the country that currently have a grocer farm in their community. There's about 50 more on the way for the next 12 months and they're doing a self-sustaining operation, selling produce in their local community. And it's not just a luxury product again, in a community that is already facing food insecurity, a luxury product in some ways, maybe the last thing that they need.

Yeah, I mean, there's different ways to look at it. The way I see it is those are dollars that stay in the community and then create local jobs and create local employment. We've seen a huge uptake even in some of the smaller communities for a product like this because people are actively trying to support their neighbours and their local community members. And what do you see as the potential here? I mean, how big could this get? You know, we have grand ambitions. We're looking to, you know, start this movement.

I think the local food movement is an important one. You know, we're also here to support our local community. So we're looking to start here at home and hopefully expand globally as well. Corey, pick up a little bit on that and what Andy was saying as well about this moment and the interest in food security, given our changing relationship with the United States, where so much of our vegetables come from right now. Yeah, I mean, so if I look at our business today, we're feeding about 60,000 Canadians every day with the network that we have today. And I think that can expand significantly.

So I think we just need to learn that we have the resources and the know-how and the skills within Canada to feed ourselves. And we just need to be willing to activate that network and that potential. It's really interesting to hear about the work that you're doing. Thank you both for being here.

Thanks for having us. Thank you. Corey Ellis and Alita Burke are the co-founders of The Grocer. They were in our studio in Ottawa. What do you see when you look around? Lively cities, growing neighborhoods, things that connect us. For those in the skilled trades, it's a world they helped create.

Discover more than 300 careers, paid apprenticeships, and the unmatched feeling of saying, I made that. Learn more at Canada.ca slash skilled trades. A message from the government of Canada. You're an entrepreneur. Growth is essential for your business. At BDC, we get that. And we're here to help you stay two

steps ahead. With our flexible financing and advisory services, we help you adapt, growing your business in the face of today's challenges and tomorrow's opportunities. Stepping up for entrepreneurs, we're on it. BDC, financing, advising, know how. Lenore Newman is director of the Food and Agriculture Institute at the University of the Fraser Valley. And with Trump's tariffs now in effect, she believes there is an opportunity in Canada for new approaches to homegrown farming. She's been listening in.

Lenore, good morning to you. Good morning. Great to be here. What do you make of what you've just heard from Corey, Alita and from Andy? Well, I think it's a really exciting time in this industry because what you're seeing is an industry that's going from really the research phase where it doesn't quite work yet and there's a lot of experimentation, a lot of failure to an industry

that is actually starting to be economically viable at scale. And for Canada, what that is actually starting to be economically viable at scale. And for Canada, what that means is we could be food secure in these crops in, you know, looking forward in 10 years or so. You believe in 10 years we would be food secure when it comes to these crops that we rely on the United States and other places for? We certainly could. Already, Quebec is at about 50% self-production

in the leafy green space, and that's huge. I mean, here in BC, we still get about 90% from California, Arizona, and Mexico, so we got a long way to go, but it's moving very quickly. What do you see as the challenges to scaling this up? I mean, again, we've talked about the input costs. We've also talked about how there are some parts of this industry that have tried and failed at this.

What to you are the big things to think about? For investors in the space, one of the challenges has been that farming is very expensive. And it's a bit of a shock for people who are used to being in the tech sector, where you can fund a guy in a garage and somehow it turns into a company. Like, even building a conventional lettuce farm is incredibly expensive. But the example I like to use is a century ago

greenhouses were basically toys for the rich until the Dutch basically created an industry. So here in Canada today, if you buy a cucumber or a tomato or a pepper or even an eggplant, it probably grew inside. And that's a big win for us. It puts jobs in our communities. It makes us food secure, which is part of national security, which of course on everyone's mind right at the moment and we're basically at that point now with the particularly leafy greens largely because of work done in Japan and the Netherlands. Tell me more about Japan because Andy talked about the opportunity here that if you stack and you build up you can grow more,

you don't need the spread of land that a traditional farm would require. What's happening in Japan? don't need the spread of land that a traditional farm would require. What's happening in Japan? Exactly. Japan's a great case study in how a country can really build a domestic industry because after the tsunami disaster, they decided as part of the recovery to invest in vertical farming. And it had always been a weakness for Japan there there largely green consumers and they like a very high quality product. And they couldn't always get it and so they put government funding into developing farms

and yeah at first all the farms lost money. But at this point they have a thriving industry and they produce pretty well all of their leafy greens now. In country and most of those farms are actually making money and producing product at a similar price point. And we're moving towards that here.

It's just a little slower. Let me ask you about the price point. Tamara Haspel is a food columnist at The Washington Post who has been critical of this idea of vertical farming. Have a listen to this. You cannot grow any of the staple crops that actually feed people that are the backbone of a diet for people and planet in vertical farms

because the energy costs there are somewhere, depending on who you ask, between 50 and 100 times the price of the product that you can grow. So we're talking about just luxury products for rich people around the periphery of the food system. This is not a way to feed people. Lenore, is this just luxury products for rich people? Uh no and it's weird because I both agree with her

and disagree with her. Like I would never try and grow grain or lentils indoors, even though we could do it. And there are situations where, say, we're in, you know, traveling to other planets, we might want to do it. But here on Earth, Canada is a, you know, a grain superpower, because we have prairies. I'd never try and build a prairie in a box and make money. It's not possible. But that's not what we have prairies. I'd never try and build a prairie in a box and make money. It's not possible. But that's not what we're talking about. And so yes, at some level, is lettuce a luxury product? Well, I don't know. What about arugula? I mean, I love arugula, but people could say what people don't need

arugula. people need staples. Well, I feel it's a bit of a silly argument, to be honest, because number one, food is cheaper than it has almost ever been in history. And if all we wanna eat is porridge, yes, that's very easy. We don't need these technologies, but we're trying to build an economy. And I really do feel the customer is always right and they want lettuce. And they also want their lettuce not to be rotten.

And really her argument, if you take it to its logical extreme, we don't really need a lot of things that are made. We don't need, we don't need Teslas. Probably aren't buying those today either. We don't need cars. We don't need fancy houses, we just need simple houses. It's, I mean, it's a good argument if someone is actually trying to grow a prairie in a box, but that's a bit of a straw man.

I mean, all we're trying to do is grow lettuce, and the truth is in Canada, you can't do it outside in the winter. Now, I will say, I do feel the industry to be successful has to hit the same price point as California import. And my group actually tracks the price of California import versus indoor grown in BC. And routinely over the last couple of years, we have occasionally been cheaper. It fluctuates a lot though, so that's still an issue.

We're not quite there yet, but we're really close. What do you think in this moment, there is a bi-Canadian kind of feeling. What could government do to make vertical farming more sustainable, do you think? There's a number of things. So number one is to cut red tape that make it hard to build things in this country.

And I'm not talking just about vertical farms. Sometimes it's not even changing regulation, it's just say appointing a concierge to walk people through all the regulation. Now, if we wanted to actually subsidize this industry, probably the best way is to give people a cheaper hydro rate and to help them with direct subsidies. But really the bi-Canadian bit is fascinating because it's supercharging this industry and an industry that I was like, oh, you know, 10, 15 years from now it's probably how we're going to grow all of our greens just the way like we grow tomatoes. It's probably cut five years off that runway because all of a sudden everyone really wants the product. And the other thing I will mention, it is a

far superior product and there is a health benefit to that. The quality on this product is far superior, the nutrient count is really high, and if we can get it to a price parity that agrees with people, they will actually eat more leafy greens, and that saves all of us money and makes everyone healthier. Lenore, really good to talk to you about this. Thank you very much. Wonderful to be on. Lenore Newman is the Director of the Food and Agriculture

Institute at the University of the Fraser Valley. For more CBC podcasts, go to cbc.ca slash podcasts.