Nordic Harvest: indoor farming technology transfer from Taiwan

In this newsletter the Baltics/Nordics-Asia Business Bulletin highlights an excellent example of business internationalisation made possible between Asia and the Nordics.?

In the fourth quarter of 2020 operations began at Nordic Harvest’s first Indoor Vertical Farming (IVF) plant in Copenhagen. Nordic Harvest is a new start-up that aims to make food production more sustainable through vertical farm technology and growing crops indoors. Once this vertical farm reaches full production capacity, it will yield more than 3.000 kg every day making it the most efficient vertical farm in Europe to date.

This Danish business has been made possible through a business partnership with YesHealth Group, a Taiwanese company that develops technology, and builds and operates such indoor vertical farming systems. Their farming technology is hydroponics-based; where plants grow in a solution of water and nutrients and no soil is used.

The grow area is utilised optimally by placing the plants in floors. By having full control over the plants'environment the best conditions is created for their growth. Therefore, the indoor farm can deliver delicious, tasteful and nutrient-rich herbs and lettuces every day year round - 100% free of pesticides and herbicides.

“Nordic Harvest ApS is backed by prominent investors and leaders within business, the food industry, and agriculture making Nordic Harvest the ideal partner for YesHealth Group” explains, Jesper Hansen, their Chief Commercial Officer who ended up in Taiwan due to his extensive Chinese culture and language studies.

It has more than 40 private investors, aside some bigger investors and lenders like V?kstfonden, the Danish government's financing fund for venture capital & private equity; and Danmarks Gr?nne Investeringsfond, a new, independent investment fund that co-finances investments supporting the transfer to a green society.

As an investor Yeshealth has also contributed capital towards setting up the Danish food business. “And we have a significantly larger stake through our technology transfer; licensing our technologies and proprietary formulas.”

Setting up sales and distribution, marketing and operating the business is done by Nordic Harvest, while Yeshealth looks after everything relating to technology.

“We are building the next phase in 2021, which will almost triple the capacity to around 1000 tons per year - to be completed and fully operational by early next year.”

Jesper also informs that Nordic Harvest is one in a two-pillar idea, by the Danish founder and CEO Anders Riemann, to take away the need for traditional farmland and instead grow vegetables inside cities. Farmland outside the cities should be returned to nature by growing forests, creating lakes etc.

The start-up also has further plans to expand into the other Nordic countries over the next years.?

Jesper called the Danish launch proof “that it is now possible to commercialise vertical farming produce on a large scale and that this produce will be able to support the traditional farming sector from now on. Vertical farming is no longer just a theoretical concept for the garage.”????

The launch in Denmark represents a crucial milestone in its international expansion and the first step in its elaborate expansion plan, where the Philippines is next in line. YesHealth Group is currently the largest vertical farming company in Asia with plans to expand globally.

“We are by far the largest player in Taiwan and our main production unit is the largest farm provides for the major retailers here, in addition to hotels.”

In charge of business development Jesper took on their first export project, which was in Shenzen, China in 2018.?

“We succeeded in delivering that project, which remains one of the largest farms ever built up until now. And from 2019 onwards I started developing projects in Europe.”

Favourable conditions in various markets and countries can vary. “It can be a combination of climate conditions favouring indoor farming, coupled with inexpensive energy or access to green energy. The harsher the climate is outside the better our technology is because it means you cannot grow outside. But it also means the more difficult it is for us to control the temperature inside. And we try purposefully to link our technology with green energy resources. Actually in the case of Denmark, including the wind power, electricity is not inexpensive. But it’s clean, so we don’t have the carbon footprint. The link with green energy sources is a driver and whether or not there is a market for high quality sustainably produced produce,” explains the Dane.

“In Denmark we are the only large-scale vertical farm. So the competition comes from overseas’ producers. We identify which crops that can be, and are grown, in Denmark, and we purposely grow other things. We are trying to take away import to Denmark. Competitors would be from countries like Italy and Spain. But we’re selling at a certain price point – because the cost structure is still relatively high compared to outdoor farming. The challenge is to make it a sustainable and viable business by being able to offer produce that doesn’t cost more than the traditional. So our goal is to bring down the cost so that this kind of quality and healthy produce is available to anyone,” he continues.

This is something they will achieve gradually, partly via technology improvement in terms of driving down cost. LED technology, for instance, becomes better and better and lower in cost. The same goes for software and automation.

“There is also an operational aspect that you get better and better at operating these farms, so using the same input in money and labour we can get more and more out of the farms,” says Jesper. “So there’s a learning curve in terms of being better at that but there’s also technology improvement over time.”

“With all of our technology in-house, YesHealth Group will be able to utilise real-world data from vastly different climates and environments and improve our technology at an even greater speed and efficiency.”

The Taiwanese company is the developer of all the technology that underpins their vertical farms such as engineering design, climate control systems, fertiliser and micro-biology, automation design, and data collection and management.

YesHealth Group was actually mainly started to solve the issue with pesticides: “Taiwan is a hot country with lots of bugs and insects in nature. So the farmers have to spray a lot of pesticides on the crops. Over time we developed technology and became experts at running these large farms, where we actually have something not only for Taiwan but being solutions for export. It’s also a very valuable experience, because many of our competitors focus on only making the equipment; they don’t have live experience from operating these systems. And our combination of being both a technology developer and manufacturer, and an operator, gives us an edge towards many of our competitors.”

“Almost everything essential to a vertical farm, such as LED lighting, it is proprietary; something we developed. The same goes for the automation equipment - everything is made in-house.”

“We have something called ‘Nano bubble oxygene injection system’, which we use to induce oxygen in water. We have some 50 patents of which some are only here in Taiwan and some are international, but, actually most of our core technologies are what we call trade secrets,” informs Jesper.

In Taiwan they have a cost competitiveness advantage, but it is by no means any easy market for vertical farming and thus a tough test-bed. “Some of the values – for instance being pesticide-free and sustainable – are things that just don’t resonate. Taiwan is a little bit behind Europe and the U.S in focusing on these kinds of things, so selling the produce is more difficult. The fact that traditional produce from the field is extremely cheap in Taiwan also contributes to that. Hence, the price gap between the traditional produce and our premium produce becomes higher, whereas in Denmark people are used to eating organic, pesticide-free, high quality produce. There, we don’t have to fight this price gap and change people’s perception. We just tap into the mass market, while in Taiwan we’re still a very premium product and a niche.”

“The way we see vertical farming is that it’s never going to replace traditional farming: it’s just going to be a big niche technology that will have applications in areas where you cannot grow or have a problem with pesticides. And providing year-round pesticide-free, safe and healthy vegetables is part of a larger trend, which is to move away from the need for meat everyday to a more plant-based diet. This is the kind of trend we are tapping into.”

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