Business strategy deciphered from plant factory history and recent trends

Hello everyone! I’m Shohei.

I’ve been working at a plant factory since 2011, and even back then I had an image of it as being at the cutting edge of agriculture.

There have been several booms in plant factories, and each time they have attracted attention from the public.

Partly as interest in food issues, environmental issues, and a sustainable society increases around the world,
What is attracting attention is “plant factory”.

A plant factory is a technology for cultivating plants in a facility with an artificially controlled environment.

By optimally managing light, temperature, humidity, water, nutrition, etc. without relying on sunlight, we achieve high-quality, stable production that is impossible with conventional agriculture.

In this article, we will explain the historical background and development of plant factories, as well as especially recent trends.

By the way, what is a plant factory? If so, please refer to the following articles.

Changes in interest in recent years as seen from search trends

By the way, how much attention does “Plant Factory” receive from the public?

In the case of Japan, search demand for the keyword “植物工場”, which stands for “Plantfactory”, peaked around 2010, declined, and has leveled off since around 2020.

It looks like this↓↓

It really feels like the boom has passed.

However, the downward trend has stopped as the plant factory industry continues to face difficult social conditions, such as the weak yen and high prices.

This may suggest that the temporary boom for plant factories has ended and that they have settled down to a certain level.

On the other hand, globally, English keywords such as “vertical farm” and “indoor farm” have been on the rise since around 2006.

This shows that there is a growing interest in urban agriculture.

In fact, globally, the plant factory market continues to expand, and this trend is expected to continue in the future.

History of plant factory development

Plant factories have gradually started to attract attention since the 1980s, and so far there have been three booms in Japan.

First boom (late 1980s)

• The “rotating lettuce production factory” exhibited by Hitachi at the 1985 Tsukuba Science Expo attracted a lot of attention and sparked the beginning of plant factory research.
• In 1987, the world’s first “Plant Factory System Exhibition” was held, and many companies and research institutions began to participate.
• During this period, the focus was mainly on technological development and demonstration experiments.

Second boom (1990s)

• Major companies such as Kewpie and JFE Life entered the market, and construction of full-scale plant factories began.
• However, due to the technological level and cost issues at the time, it did not become widespread.

Third boom (after 2009)

• While consumption-driven industries were hit hard by the Lehman Shock in 2009, social businesses such as medical care and agriculture remained relatively stable, leading to increased attention to plant factories.
• The Great East Japan Earthquake of 2011 reminded us of the importance of ensuring a stable food supply, and raised expectations for plant factories.
• Advances in technological innovation have led to cost reductions and improvements in production efficiency, leading to a period of full-fledged widespread use.

Japanese plant factories: current situation and challenges

Although Japan’s plant factories have developed ahead of the rest of the world, there are still many issues facing them.

Types and scale of plant factories in Japan

According to a survey by the Japan Facilities Horticulture Association, the plant factories known as of February 2023 are as follows.

For detailed explanations about the types of plant factories, see the article below.

Issues faced by plant factories

As I have written in other articles, the problem with plant factories is that they are expensive.

The impact of recent high raw material prices and the weak yen has been especially serious.

I have the following problems:

• High cost: Artificial light type has high electricity costs, which poses a problem for stable earnings. Large-scale facilities require high capital investment.
• Technological development: Technological development is required to improve production efficiency, energy saving technology, pest control, etc.
• Market development: The challenge is to understand consumers, expand demand, and develop new sales channels.
• Human resource development: Lack of human resources with specialized knowledge and skills is an issue.

I have written about this in detail in another article. Please also check it out.

There is only one way for plant factories to overcome the difficult situation.

In conclusion, the problems faced by plant factories are linked to high costs.

So what should we do to overcome it?

The only way to do this is to honestly improve our on-site capabilities.

However, in reality, many sites are struggling. This is because there are surprisingly few sources of information from which you can obtain specific know-how that will lead to increased profitability.

Our website also provides support to resolve these issues.

In particular, if you want to increase the profitability of your plant factory, the following content will be very helpful.

Plant factory outlook: Creating the agriculture of the future

In summary, although the plant factory boom has subsided in Japan, it continues to expand globally.

Plant factories have the potential to contribute to solving various issues facing modern society, such as food problems due to climate change and population growth, a decrease in arable land due to urbanization, and reducing environmental impact.

On the other hand, there are still challenges for widespread use, such as the size of the initial investment and energy costs.

There are a wide range of issues to overcome, including securing energy sources, improving labor savings and productivity, and securing new markets.

Contributing to sustainable agriculture

• Food security: A stable food supply that is less susceptible to disasters and climate change.
• Reduced environmental impact: Reduces the amount of pesticides and chemical fertilizers used, increasing the efficiency of water resource use.
• Regional revitalization: Food production in urban areas reduces transportation costs and creates jobs, contributing to regional revitalization.

Technological innovation and market expansion

• IoT technology: Automation and optimization using sensors and AI to save labor and improve production efficiency.
• LED lighting: The development of highly efficient LED lighting has reduced electricity costs and improved photosynthesis efficiency.
• Vertical farms: Vertical farms are a new model for food production that makes effective use of limited space in urban areas.

As climate change and population increases, plant factories will become increasingly important from the perspective of ensuring a stable food supply.

In which countries are plant factories popular?

Plant factories are being actively researched and put into practical use in countries such as the Netherlands, Japan, and the United States. The Netherlands in particular is known as a developed country for plant factories, and by the 1990s, plant factories had spread to the point where they accounted for 100% of the area of ​​greenhouse horticulture. On the other hand, although Japan has a long history of plant factories, it has not seen the explosive spread of plant factories as in the Netherlands.

Why is the plant factory in the red?

The main reason why plant factories are in the red is the high initial investment and running costs. Particularly for plant factories that use artificial light, the investment in equipment such as lighting is large, and the burden of depreciation costs is heavy. Energy costs such as electricity bills are also high, accounting for approximately 30% of the total cost. These cost issues are putting pressure on the profitability of plant factories.

What are the disadvantages of plant factory?

The biggest drawback of plant factories is the issue of economic efficiency. The problem is that initial investment and running costs are high, making it difficult to ensure profitability. In addition, currently the cultivated items are limited to a few crops such as leafy vegetables, and it is necessary to support a wide variety of crops. Furthermore, plant factories that use completely artificial light consume a lot of electricity, which poses an issue in terms of environmental impact.