Optimizing the Controlled Environment Agriculture Supply Chain: A Case Study for St. Louis, USA

Haitao Li, Joe Parcell () and Alice Roach
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Haitao Li: Supply Chain and Analytics, University of Missouri-St. Louis, St. Louis, MO 63121, USA
Joe Parcell: Agricultural Economics, Kansas State University, Manhattan, KS 66506, USA
Alice Roach: Agricultural Economics, Kansas State University, Manhattan, KS 66506, USA

Agriculture, 2025, vol. 15, issue 20, 1-18

Abstract: Controlled environment agriculture (CEA) pivots food production from an outdoor field setting to the indoors where growing conditions can be calibrated to fit crop needs. This research investigates vertical farms as a type of CEA. In particular, using the St. Louis area as a case study, it provides data-driven support for optimizing a vertical farm’s business model including its supply chain. The methodology presented here informs agri-preneurs about what crops to grow in a vertical farm, how much to grow given local market demand, and what vertical farm configuration (e.g., Dutch bucket, nutrient film technique, deep water culture) a facility should use. Based on the case study’s base scenario, the simulated vertical farm business would record an economic loss. However, the study did find several paths to improving profitability. First, reducing fixed and variable costs benefits profitability. Proper facility-level production and resource planning helps with managing the fixed costs. Second, increasing market prices may benefit profitability, but it has diminishing returns. As a result, firms can justify making investments that enhance their reputation and market competitiveness, though the advantage these marketing activities provide will decline as prices increase. Third, growing demand or increasing market share does not necessarily improve profitability.

Keywords: controlled environment agriculture (CEA); vertical farming; facility location; crop portfolio; optimization; supply chain; profitability (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2025
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