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Ocado invests £17m in newly emerging vertical farming industry

Ocado Group has announced two complementary investments designed to enable Ocado to become a leader in the newly emerging vertical farming industry, which involves the production of food in indoor facilities where crops are grown on a series of levels in a precisely-controlled environment

Firstly, Ocado has completed the acquisition of a 58% stake in Jones Food Company (JFC), Europe’s largest operating vertical farm, based in Scunthorpe.

JFC’s facility is currently producing leafy greens and herbs for UK customers with its capacity expected to grow to 420 tonnes per annum. With more than 5,000 square metres of production area and 12 kilometres of LED lights, JFC has the ability to produce consistent crop yields throughout the year, and plans to expand crop types and production across the UK. JFC’s clean-room operations provide additional options to cultivate cosmetic and pharmaceutical-grade crops.

Also, Ocado's ventures arm has signed a memorandum of understanding to create a strategic three-way joint venture with 80 Acres Farms Inc and Priva Holding BV, each a leading participant in the vertical farming industry.

80 Acres and Priva have been working together for over 4 years to design turnkey solutions to sell to vertical farming clients worldwide, with forecast revenues in 2019 of over $10m and the expectation of significant growth beyond. The venture will be called Infinite Acres.

There are clear sustainability advantages of vertical farming including low wastage, very low water use, minimal land use and no pesticides, all with predictable yields of high quality produce.

From a consumer’s perspective, vertical farming offers tastier and fresher products all year round, picked when ripe, grown without pesticides or fungicides, and virtually untouched by human hands.

The extreme density of vertical farms allows them to be placed much closer to customers, potentially co-located next to Ocado's partners' fulfilment centres, supermarkets and other locations near population centres.

Ocado foresees a day where customers' vegetables are harvested hours before they are packed, metres from where they are shipped, bringing the freshest, best tasting, and pesticide-free produce to customers with the fewest food miles.

Tim Steiner, Ocado's CEO, said, “We believe that our investments today in vertical farming will allow us to address fundamental consumer concerns on freshness and sustainability and build on new technologies that will revolutionise the way customers access fresh produce.

'Our hope ultimately is to co-locate vertical farms within or next to our CFCs and Ocado Zoom's microfulfilment centres so that we can offer the very freshest and most sustainable produce that could be delivered to a customer’s kitchen within an hour of it being picked”.

James Lloyd-Jones, CEO of Jones Foods, said, 'JFC is delighted that Ocado has chosen to partner and invest with us. We are certain that the combination of their world-leading logistics and automation systems coupled with our advanced growing technology will transform the way customers experience fresh produce - delivered fresh to their door a matter of hours from ordering.

'JFC has always been committed to minimising the environmental impact of agricultural production and we see this partnership accelerating our ambitious growth strategy to make a wider variety of vertically farmed produce available to even more customers. We are very excited and looking forward to a bold and ambitious future as part of the Ocado Group.'

Mike Zelkind, CEO of 80 Acres, said, 'With Priva's and 80 Acres Farms’ extensive horticulture, engineering, operational, and food industry expertise, along with Ocado's predictive analytics, automation and comprehensive system development, the partnership will provide its customers with everything from stateof- the-art facilities with uniquely developed crop recipes and the right unit economics, to an option for facility management with yield guarantees, product packaging, branding, marketing, and distribution.'

Meiny Prins, CEO of Priva, said, 'Infinite Acres' mission is in perfect alignment with global sustainability needs as our planet grows to 10 billion people by mid-century, with most living in urban areas. We can develop optimal environments in which plants and food crops experience the best way to grow indoors, using leading-edge technology and solutions which result in substantially lower energy and water use, as well as reducing food waste.'