Through hundreds of conversations with growers, technologists, and investors, Kyle Barnett, host of the CropTalk podcast since 2019, has witnessed both the excitement and the growing pains of the North American greenhouse and vertical farming industry, moving from a period of venture-backed optimism and explosive growth to one of realism, consolidation, and renewed focus on operational performance.
From expansion to reality
Participating in the industry since 2013, Kyle started CropTalk in 2019. First with a co-host, later on his own, he interviews CEA leaders, entrepreneurs, consultants, growers, and start-ups ‘that are pushing the limits on how we grow’.
“When I first started covering CEA, there was an enormous amount of energy,” he recalls. “New facilities were being built everywhere. Money was flowing in from Silicon Valley, and many believed controlled environment systems could replace a significant share of traditional agriculture within a decade.”
Between 2019 and 2022, billions of dollars were invested in North American CEA startups, mainly in the United States. Many of these ventures, some backed by major retail chains or technology investors, promised a revolution in how food would be grown. Vertical farming was positioned as a climate-proof, hyper-efficient alternative to open-field production.
But as the companies expanded, cracks began to show. “Many of the interviews from the early days are with people from companies that have gone bankrupt. It’s fascinating to look back and relisten to some of those conversations, trying to analyze what happened”, he shares honestly. “It was a gold rush. Investors were promised scalability, but they underestimated how complex and capital-intensive farming actually is. You can’t apply the same growth model used for software to food production.”
“The money was there, the passion was there, but the operational fundamentals often weren’t,” he continues. “Many companies focused on marketing and expansion before achieving stable yields or efficient cost structures.” In hindsight, it’s clear many of these early projects were overdesigned for what they produced, both technically and financially. “We saw facilities with the most advanced automation, lighting, and sensors, but when we asked further, they often operated without a clear understanding of market demand or distribution logistics. Some farms could grow the product beautifully, but they couldn’t sell it profitably.”
Squeezed and crushed
As energy prices surged and interest rates rose, many CEA ventures, particularly vertical farming companies, but also firms like AppHarvest, found themselves squeezed between high operational costs and limited consumer price tolerance.
Over the last few years, the sector, especially the vertical farming segment, has undergone what Kyle describes as a “reset.”
According to conversations Kyle held during the Finance and Investment Series of CropTalk with Adam Bergman (EcoTech Capital) earlier this year, an estimated USD 8 billion was invested, and largely lost, across a range of CEA projects during that period.
“When I visited the Cultivate trade show this year, it was clear that topics like vertical farming are ones nobody wants to touch, even affecting high-tech greenhouse growing. In the longstanding industry, it’s often looked at as a nuisance, as if it’s stolen capital from the collective horticulture. And unfortunately, I can’t even argue — we’ve seen $8 billion go up in smoke. There was a lack of experience and humility from large groups coming into the space with a large amount of capital; there were elements of greed and ignorance. The frustration I, and many others in the industry, feel is that if that money were utilized better, our industry would be in a much better place.”
Technology suppliers
The industry, though, has changed through these (expensive) lessons. Rather than measuring success by square meters of new greenhouse space or the number of vertical farm towers, the focus has shifted to optimization, efficiency, and resilience. Growers are increasingly emphasizing data-driven decision-making, integrated climate control, and automation that serves a clear agronomic purpose rather than being adopted for novelty’s sake.”
Some companies have successfully repositioned themselves from growers to technology suppliers, providing modular systems, AI-driven climate management, or vertical farming infrastructure to other producers. Back in the early days, many new operators explained they would later sell the techniques and technologies they developed. “Technology itself is no longer the story, performance is,” he says. “Technology developers are technology developers, growers are growers. They can collaborate.”
Others have scaled back ambitions, focusing on regional markets or high-value crops. “The industry is smaller than it was in 2021,” Kyle acknowledged, “but it’s also smarter and more grounded.” Another crucial truth that was often overlooked: CEA must operate as part of a larger food system, not in isolation from it. “Distribution is king,” Barnett said. “The farms that survived are the ones that secured partnerships with retailers and foodservice providers early on.”
Hard reset
Although a lot of money has been lost, Kyle emphasizes that not all companies lost themselves in the expansion game. “The best operators I talk to aren’t trying to double in size every year,” he said. “They’re trying to increase yields by 2–3%, improve labor efficiency, and make smarter use of inputs like energy and CO₂.”
Examples like Little Leaf Farms in the U.S. and other steady, regionally focused growers demonstrate that measured, pragmatic growth strategies can succeed. “Companies like these didn’t chase hype,” Barnett said. “They built gradually, proved their economics, and earned trust from retailers. That’s the kind of model investors are looking for now.”
He compares it to the growth trajectory in Europe and Canada. Greenhouse horticulture has long been established in countries such as the Netherlands, Belgium, and Spain, meaning controlled environment practices are already deeply integrated into mainstream agriculture. “Europe never really had the same speculative boom as the U.S.,” he said. “The Dutch model, for instance, is built on decades of experience. They’ve always understood that margins in agriculture are slim, so innovation must lead directly to efficiency.”
New pressures
However, the European sector also faces new pressures, from energy costs to environmental regulation. Barnett believes these forces will accelerate innovation in heat recovery, renewable energy integration, and circular production systems. “The Dutch and Scandinavians are leading in turning waste heat and CO₂ from industry into resources for greenhouses,” he said. “That’s the kind of practical sustainability that makes sense economically as well as ecologically.”
The CEA industry today is smaller, leaner, and arguably wiser than it was at its investment peak. The failures of the early 2020s have not undermined its long-term potential; they have clarified what sustainable growth in controlled environment systems should look like. “CEA isn’t going away,” Kyle concluded. “It’s evolving into something more realistic, more data-driven, and more connected to the rest of agriculture. The vision of reliable, local food production under any conditions still matters, but now it’s being pursued with a better understanding of what it takes to make it work.”
Reframing the value proposition
Kyle argues that the next phase of CEA’s development depends on reframing how it presents itself to both investors and policymakers. “For too long, the story has been about RO, about quick returns and disruption,” he said. “But agriculture doesn’t work on a quarterly cycle. If we instead focus on food security, local production, and resilience, CEA becomes much more compelling.”
This reframing, he suggests, could align the sector with government strategies on food sovereignty and climate adaptation. “Controlled environment systems can play a key role in stabilizing production during droughts or extreme weather,” Kyle said. “If countries recognize that value, we may see more public-private partnerships and long-term funding, rather than speculative capital.”
Passion
Despite the technical and financial challenges, Kyle remains optimistic about the industry, and especially about the people driving the sector forward. “What keeps me in this industry is the passion,” he said. “Everyone I speak to, whether they’re growing leafy greens in a warehouse or managing a greenhouse cluster, genuinely wants to improve how food is produced.”
Through his CropTalk podcast, Kyle continues to document these developments. His upcoming series, Future Leafy Green Leaders, brings together emerging growers and operators to discuss practical lessons from the past decade and the path ahead. “The podcast isn’t about hype,” he said. “It’s about facts, lessons, and the people building the next version of this industry.”
Click here to listen to the CropTalk podcast series.
For more information:
CropTalk Media
Kyle Barnett (e-mail)
https://www.croptalkmedia.com/