Urban Growth

Globally, losses in traditional agriculture amount to 40% of production. Agriculture in a controlled environment is a technique of agricultural production that guarantees crop productivity since it is the only solution up to the challenge of mitigating effects of climate change on agriculture. It does not matter if it rains, if there is a drought, or if there is a hurricane—within these farms, production continues 365 days a year. The concept of controlled agriculture, which can be carried out both in urban and rural areas, is a larger umbrella that defines many agriculture structures such as vertical farms, urban farms and gardens, and hydroponic crops. This method of production also allows minimizing the environmental impact, since chemical fertilizers and pesticides are not used, and ensuring the food security of the population.

The Food and Agriculture Organization of the United Nations (FAO) estimates that food production will have to increase 70% to feed an additional 2.3 billion people by 2050. This new business model in food production, which was born in Japan a couple of decades ago, uses closed environments with high technology, and allows producers to plan crops and alter elements such as light, humidity, concentration of carbon dioxide, and air flow. In Japan, controlled agriculture represents 1% of total production, while in Latin America it has just begun. This new form of agricultural production is gaining momentum in Panama particularly because of a growing awareness amongst companies of the benefits of this type of technology, especially vertical gardens and hydroponic farms. The year 2017 was a decisive year in Panama for this type of production since the International Congress of Agriculture in Controlled Environment (ICCEA) was held in Panama. At the event, Dr. Toyoki Kozai, often known as the “Father of Vertical Farming“ and former President of Chiba University in Japan, gave the keynote address on LED lighting in urban agriculture. Growing large-scale farms in urban areas is becoming increasingly efficient because of technological advances in lighting, cooling, and automation.

One of the companies implementing this system commercially since 2011 is Urban Farms. It has a vertical farm with ultraviolet lights located in Rí­o Hato. Meanwhile, the company Veggiefresh also supplies peppers, fruits, and other produce to clients across the country, but its main market is international. At a cost of USD100,000, Panama will establish a training center to develop techniques and best practices of controlled environment. With these methods, it is intended to guarantee year-round production of spinach, aromatic herbs, strawberries, lettuce, potatoes, and watermelons.

Furthermore, the government of Panama has established a special department within the Ministry of Agriculture (MIDA) for the design, training, and application of greenhouse technology throughout the country. In 2017, the government invested USD243 million into the economy to stimulate food production using controlled environment techniques. To better encourage the private sector, the government is offering incentives and reimbursement subsidies to producers who develop greenhouses and indoor food production facilities of up to 50% of the investment in infrastructure, equipment, and materials.

On top of incentives from the government, multinational development banks in the region are also joining the effort. The Agricultural Development Bank (BDA) is offering long-term loans at 0% and 2% to develop protected agriculture. Since 2015, more than 10 new greenhouse projects are already operating or in the development stage in Panama.

The initial investment of this productive model is high because it uses cutting-edge technology, but the return on investment is faster and production costs can decrease by up to 25%. Usually, it requires an initial high investment of between USD800,000-900,000.
Controlled agricultural production opens a door of possibilities for Latin America, placing Panama as a leader in the sector.