Key Takeaways

The Question Everyone Asks — and Why Most Answers Get It Wrong

If you spend any time in controlled environment agriculture, you will inevitably encounter the debate: is vertical farming better than greenhouse growing? Are both superior to open field agriculture? The question gets asked at every conference, in every investor pitch, and in every planning meeting for a new facility. And the most common answers — which tend to advocate passionately for one model over the others — are usually wrong.

They’re wrong because the question itself is incomplete. Better for what? For which crop? In which climate? At what price point? With how much capital? The honest answer — the one that experienced operators and agronomists will give you off the record — is that each CEA model has a real and defensible use case, and the companies that succeed over the next decade will be the ones that match the right model to the right crop, market, and geography rather than forcing a single approach to fit every situation.

Here’s what each model actually looks like in 2025, with the economics and tradeoffs that matter.

Vertical Farming: Maximum Control, Maximum Cost

Vertical farming — fully enclosed, multi-layer indoor production with 100 percent artificial lighting — offers the highest degree of environmental control available in commercial agriculture. Temperature, humidity, CO2, light spectrum, light intensity, airflow, and nutrient delivery are all managed to the tenth of a unit. There is no weather. There are no seasons. There are no pests, assuming the facility maintains proper biosecurity protocols. The result is the most consistent, predictable crop output of any growing method.

That control comes at a cost. Energy consumption in vertical farms averages 38.8 kWh per kilogram of produce, with lighting alone accounting for 40–60 percent of the total. Capital expenditure for a commercial-scale vertical farm typically runs $500–$2,000+ per square foot of growing area, depending on automation levels and build quality. These numbers are real, and they constrain what vertical farming can profitably produce.

The crops that work in vertical farms share specific characteristics: short growth cycles (14–28 days for most leafy greens), high value per unit weight, consumer willingness to pay a premium for locally grown or pesticide-free product, and perishability that makes proximity to the end market a competitive advantage. Lettuce, herbs, microgreens, and specialty greens are the proven categories. Strawberries are emerging, led by Oishii’s success with premium Japanese varieties. Commodity row crops — wheat, corn, soybeans — are not economically viable in vertical farms and likely won’t be for decades, if ever.

The strongest case for vertical farming is urban proximity. A facility producing lettuce inside a major metropolitan area eliminates 1,500–2,500 miles of cold chain logistics compared to field-grown product shipped from Salinas or Yuma. That proximity means longer shelf life at retail, fresher product for the consumer, and reduced food waste throughout the supply chain. For operators who secure the right off-take agreements and price their product appropriately, vertical farming is a viable and growing business. For operators who try to compete on price with field-grown commodity greens, it is a guaranteed path to insolvency. Hydroponics, Aeroponics, or Aquaponics? Choosing the Right Growing System for Your Farm

High-Tech Greenhouses: The Proven Middle Ground

If vertical farming represents the technology-maximalist end of the CEA spectrum, high-tech greenhouses represent the pragmatic center. And pragmatic, in this context, means commercially proven at extraordinary scale.

The Dutch greenhouse model is the benchmark. The Netherlands operates approximately 600 hectares of high-tech greenhouse production — roughly 10,000 football fields — that supply fresh produce to 20–30 million consumers across Northern Europe. This is not a pilot program. This is a mature, profitable, decades-old industry that produces tomatoes, cucumbers, peppers, and other vine crops year-round in a climate that would otherwise make that impossible.

The critical advantage of high-tech greenhouses over vertical farms is sunlight. Even in the relatively low-light conditions of Northern Europe, greenhouse structures capture enough natural solar radiation to dramatically reduce supplemental lighting requirements. A modern Dutch greenhouse might use 60–70 percent less energy per kilogram of produce than a comparable vertical farm growing the same crop, simply because the sun provides the majority of the photosynthetically active radiation for free.

The tradeoffs are real but manageable. Greenhouses require more land area per unit of production. They are partially climate-dependent — heating costs in cold climates and cooling costs in hot climates are significant variables. Pest management is required, unlike in sealed vertical environments. And seasonal variation in natural light means that production volume fluctuates, even with supplemental lighting.

The crop range for high-tech greenhouses is substantially broader than for vertical farms. Vine crops — tomatoes, cucumbers, peppers, eggplant — are well-proven at commercial scale. Strawberries, leafy greens, and herbs also perform well. The combination of natural light, lower energy costs, and proven commercial infrastructure makes the greenhouse model the lowest-risk entry point for large-scale CEA production in regions with adequate solar resources.

Rien Kamman, CEO of Source.ag, has been particularly vocal about the opportunity cost of the vertical farming capital boom. His critique: the roughly $2.7 billion lost in vertical farming bankruptcies could have built Dutch-style greenhouse clusters at commercial scale, providing proven production capacity with established unit economics. Whether or not you agree with the full argument, the underlying math is worth considering for anyone evaluating where to deploy capital in CEA.

Open Field Agriculture: Still Feeding the World

Any honest comparison of growing models must acknowledge the elephant in the field: traditional open-air agriculture still produces the overwhelming majority of the world’s food, and that isn’t changing anytime soon. Staple crops — grains, legumes, root vegetables, oilseeds — require land areas and sunlight intensities that no indoor facility can economically replicate. A single Iowa corn farm produces more calories per dollar of capital investment than any vertical farm on earth.

But open field agriculture faces mounting structural pressures that make the CEA conversation relevant for an expanding range of crops. Climate volatility is increasing the frequency of crop failures, droughts, and extreme weather events. Arable land is declining through urbanization and soil degradation. Water scarcity is tightening constraints in major growing regions including California, the Colorado River basin, and large parts of India and sub-Saharan Africa. Labor availability is shrinking as agricultural workforces age and younger generations move to urban employment.

These pressures don’t make open field agriculture obsolete. They make it increasingly complementary with controlled environment production for the crops where CEA economics work. The framing of indoor farming “replacing” conventional agriculture is misleading. The more accurate framing is that CEA is expanding the total production capacity for specific high-value crops while reducing the supply chain risks associated with climate-dependent growing regions.

Hybrid Models: The Emerging Winner

The most interesting development in CEA facility design is the convergence of greenhouse and vertical farming into hybrid models that combine the best characteristics of each approach. These facilities use greenhouse structures as the primary growing environment — capturing natural light and reducing energy costs — while incorporating vertical growing sections, supplemental LED lighting, and advanced environmental controls to extend production capability beyond what a traditional greenhouse can achieve.

The logic is straightforward. Why pay for 100 percent artificial lighting when you can capture 50–70 percent of your photosynthetic requirement from sunlight? Why limit yourself to single-layer growing when certain crop stages — germination and seedling development — are ideally suited to dense vertical racks with focused lighting? Why choose between environmental control and energy efficiency when hybrid designs can deliver both?

Several operators are already building along these lines, combining greenhouse main growing areas with vertical propagation sections, indoor nurseries, and controlled-environment post-harvest processing. The result is a facility type that is more capital-efficient than a pure vertical farm, more controllable than a pure greenhouse, and more resilient to energy price volatility than either pure model alone. How to Design an Indoor Farm That Actually Makes Money: Facility Planning Guide

The Intelligence Layer Is Model-Agnostic

Regardless of which physical growing model an operator selects, the intelligence layer — data collection, environmental monitoring, AI-driven optimization, and decision-support software — applies across all of them. A high-tech greenhouse generates environmental data that benefits from the same analytical tools as a vertical farm. An open field operation using sensor networks and satellite imagery can leverage many of the same machine learning models for yield prediction and resource optimization.

This is a critical point for operators evaluating technology investments. The software and analytics platform you choose should not lock you into a single growing model. AgEye’s platform approach works across facility types precisely because the intelligence layer — crop monitoring, environmental optimization, yield forecasting — operates on data patterns that are fundamentally model-agnostic. A temperature deviation’s impact on leaf expansion follows the same physics whether the facility has glass walls or insulated panels.

Choosing the Right Model: The Decision Framework

For operators and investors evaluating which growing model to pursue, the decision comes down to five variables that interact differently in every situation.

Crop selection is the first filter. If you’re growing leafy greens, herbs, or microgreens for urban markets, vertical farming is a strong candidate. If you’re producing vine crops at volume, a high-tech greenhouse is likely the better fit. If you’re growing staple crops, stay in the field.

Market proximity matters enormously. Vertical farming’s cost premium is justified primarily by reduced logistics costs and extended shelf life — advantages that erode quickly if your facility isn’t close to your end market. Greenhouse operations can be farther from urban centers if they’re in regions with favorable solar resources and energy costs.

Energy costs vary by geography by a factor of three or more. A vertical farm in a region with $0.04/kWh industrial electricity faces a fundamentally different cost structure than the same facility paying $0.15/kWh. This single variable can determine whether a project is viable.

Capital availability and risk tolerance shape the choice between a high-CapEx vertical farm and a lower-CapEx greenhouse. And the buyer landscape — who will purchase your product, at what price, in what volume — should ultimately drive every other decision.

The future of controlled environment agriculture is not one model. It’s the right model for the right situation, operated by teams with the agronomic expertise to execute and the data infrastructure to optimize continuously. The intelligence matters more than the walls.