SKYSCRAPER-FARMS1

Tomohiro Ohsumi / Bloomberg News

Inside Spread’s existing facility in Kameoka, Japan.

High-rise indoor farms for vegetables are spreading across the world.

In a suburb of Kyoto in Japan, surrounded by technology companies and startups, Spread Co. is preparing to open the world’s largest automated leaf-vegetable factory. It’s the company’s second vertical farm and could mark a turning point for vertical farming — bringing the cost low enough to compete with traditional farms on a large scale.

For decades, vertical farms that grow produce indoors without soil in stacked racks have been touted as a solution to rising food demand in the world’s expanding cities. The problem has always been reproducing the effect of natural rain, soil and sunshine at a cost that makes the crop competitive with traditional agriculture.

Spread is among a handful of commercial firms that claim to have cracked the problem with a mix of robotics, technology and scale.

Its new facility in Keihanna Science City, known as Japan’s Silicon Valley, will grow 30,000 heads of lettuce a day on racks under custom-designed LED lights. A sealed room protects the vegetables from pests, diseases and dirt. Temperature and humidity are optimized to speed growth of the greens, which are fed, tended and harvested by robots.

“Our system can produce a stable amount of vegetables of a good quality for sale at a fixed price throughout the year, without using pesticides and with no influence from weather,” Spread President Shinji Inada, 58, said in an interview at the company’s existing facility in Kameoka.

Inada won the Edison Award in 2016 for his vertical-farming system. He expects the new factory, called Techno Farm, to more than double the company’s output, generating 1 billion yen in sales a year from growing almost 11 million lettuces.

About 60 percent of indoor-farm operators in Japan are unprofitable because of the cost of electricity to run their facilities, according to the Japan Greenhouse Horticulture Association. Most others only turn a profit because of government subsidies or by charging a premium to consumers for vegetables that are chemical-free. Spread sells lettuces for 198 yen a head to consumers, about 20 to 30 percent more than the normal price for conventionally grown varieties, according to Inada.

Consumers pay the premium because the pesticide-free vegetables are increasingly seen as an alternative to often more expensive organic foods, which must be grown outdoors in soil. Japan’s hot summers and high humidity also make organic plants more vulnerable to insects and diseases, said Yasufumi Miwa, an expert at the Japan Research Institute.

“Producing organic vegetables requires farmers’ extra-hard work and that should be reflected in the prices,” said Takumu Okuma, spokesman for online food supplier Oisix ra daichi Inc. “Pesticide-free vegetables are seen as safe by consumers and accepted by them as a substitute for more expensive organic ones.”

Small-scale vertical farms have been operating in Japan since the 1970s, niche players that took advantage of high prices for fresh food in cities in a nation that imports about 60 percent of its food. But it wasn’t until 2010, that the sector began to expand rapidly with the adoption of energy-saving LED lights and a government program to support innovative farming with subsidies, according to the association.

Spread’s Inada, a former vegetable trader, founded his company in 2006 and opened his first facility the following year in Kameoka city in Kyoto prefecture. The company spent years refining systems for lighting, water supply, nutrients and other costs and the plant finally turned its first profit in 2013.

Its new Techno Farm, expected to open as early as November, will push efficiency further, yielding 648 heads of lettuce a square meter annually, compared with 300 heads at its Kameoka farm and only 5 in an outdoor farm. It will use only 110 milliliters (4 ounces) of water a lettuce, 1 percent of the volume needed outdoors, as moisture emitted by the vegetable is condensed and reused.

Power consumption per head will also decrease, with the new factory using custom-designed LEDs that require about 30 percent less energy. A collaboration with telecoms company NTT West on an artificial intelligence program to analyze production data could boost yields even more.

Spread doesn’t disclose the cost of producing lettuce at its farms, but Japanese researcher Innoplex estimates the cost to make one head of lettuce at its existing Kameoka building is about 80 yen (71 cents), among the lowest in the world. Japan Research Institute expects production costs at the new Techno Farm would come close to parity with outdoor farms within about 5 years.

But extreme weather events and climate change, major disrupters of traditional agriculture, are making vertical farming competitive even sooner. Japan’s hottest-ever summer this year with heavy rains, typhoons and flooding, sent supermarket lettuce prices soaring to more than double the level at which Spread retails its products.

“Climate change is affecting food production almost everywhere, and the economics of growing and selling produce is affecting everyone,” said Dickson Despommier, emeritus professor of Public and Environmental Health at Columbia University, who has been promoting the idea of vertical farming since the 1990s. “If we don’t do something soon to reduce the rate of climate change, vertical farming may be our last hope of getting food on the table for all those who live in cities.”

Around the world, many existing vertical farms are located in climates that are inhospitable for vegetable farming and have high transport costs to import fresh produce, or in places where pollution concerns created a demand for “clean” food, such as in China.

In Antarctica, where weather conditions prevent shipments of supplies for much of the winter, scientists at Germany’s Neumayer Station III harvested their first batch of indoor lettuce, cucumbers and radishes this year to feed the station’s staff. And in space, astronauts grow food on the International Space Station in a mini-farm nicknamed Veggie.

Some commercial ventures have targeted wealthy nations in the Middle East as prime candidates for vertical farms because of the high cost of importing fresh produce. Dubai’s Emirates Flight Catering plans to begin construction next month of a 130,000 square foot vertical farm to supply airlines in a joint venture with California-based Crop One Holdings. The $40 million facility is expected to deliver its first vegetables to airlines and airport lounges in December 2019.

Other high-rise farms have appeared in office towers or condos as part of the design. In Tokyo’s Ginza shopping area, stationary retailer Itoya tends a vertical farm on the 11th floor of its 12-story building to supply lettuces exclusively to its cafe, at a cost that would be uncompetitive with vegetables grown in outdoor farms.

One of the biggest challenges to the wide-scale adoption of vertical farms is the rise of massive greenhouse-based operations outside cities that employ many of the same technologies, such as the U.K.’s Thanet Earth.

Lucca de Paoli contributed to this report.

Lucca de Paoli contributed to this report.