Indoor farming : fancy concept or environmental breakthrough? : economic analysis of a small scaled indoor farm producing iceberg lettuce in Bergen, Norway.

Abstract

The purpose of this thesis is to evaluate the concept of indoor farming from an economic perspective. In evaluation of the concept, the study aims to clarify whether current trends and applications of the concept do consider, to provide a contribution to tackling of environmental and agricultural challenges. In clarification, the study builds a case of establishing a smallscaled indoor farm in Norway, by following paths as indoor farms and authorities suggest. Once the indoor farm is established and costs are determined, the study pursues an additional task of examining prospects of this indoor farm within Norwegian agricultural market. This part of the study intends to figure how does pricing and sales strategies of a small scaled indoor farm varies, depending on profitability and competition. In evaluating the position of the indoor farm, the study applies two analysis methods from corporate finance. Initially, the viability of investment to the small-scaled indoor farm is measured by application of net present value calculation. Secondly, production efficiency and pricing strategy of the indoor farm is measured by break-even analysis. Due to significant findings regarding costs determination of the indoor farm, financial analysis of the study is extended into three different scenarios. While first scenario is kept as is, in following two scenarios project leader is expected to cover role of some labor used in production, in order to decrease costs. As the study reflects several critical factors in economic viability of an indoor farm, most notable finding is that indoor farmers are currently concerned with gaining economic profit, rather than contributing to tackling of environmental challenges. With suggestion of further efforts to aid development and existence of indoor farms in agricultural production, the study suggests indoor farmers to make further attempts in forming an image to the concept as a practice to provide a better environment to current and future generations.