Investing in urban agriculture pays off

Investing in urban agriculture pays off

September 25, 2020

Investing in urban agriculture pays off

There is no lack of challenges and they differ depending on the existing socio-economic context, but urban agriculture can also have unexpected economic benefits and consequences


The term “urban agriculture” may sound like an oxymoron at first glance. What do urban settlements have to do with growing crops? But, above all, how much can urban gardens and other similar practices affect the economy and sustainability of a city, and how much is it worth investing in this form of agriculture? 

The answers to these and other similar questions are provided, at least in part, by an increasing number of studies supported by a growing interest in the subject, with governments and international institutions increasingly inclined to invest in urban agriculture policies and citizens more and more interested in eating “local” for various reasons, such as supporting the local economy or respecting the environment. Interest among institutions is clearly visible internationally with projects focused on new green city issues, such as the Green Cities Initiative promoted by FAO, which, through a program of concrete actions, aims to improve the well-being of citizens particularly through urban and peri-urban agriculture. 

Real farms in the city

As early as 2007, in their Profitability and Sustainability of Urban and Peri-Urban Agriculture report, FAO experts explained that the sustainability of urban and peri-urban agriculture systems “implies the ability to continue into the future and consequently should be profitable and economically practicable”. Over the years, however, the economic sustainability of these urban agricultural practices has been described only in generic terms, particularly because, in many cases, a greater focus has been placed on social and food safety impacts. Indeed some experts believe that even these social benefits should be counted among the “profits” of an urban agriculture project. 

The fact remains that, according to an analysis supported by the USDA Agricultural Marketing Service (AMS) and the Small Farm Program at Cornell University, for urban farms to be truly successful and bring benefits to the population, as well as economic gains, it is essential that farmers are aware of the funding programs available to support these activities that many municipalities and national governments implement, but it is also important that decision-makers are competent people willing to think about sustainable projects from different points of view

New challenges, new successful solutions 

“Urban agriculture presents challenges and business opportunities that depend very closely on its location. Urban agriculture in Nairobi, Kenya, will necessarily be different from that of New York, in the US, but there are some common features.” An essay in Horticultural Reviews, dedicated to the economic prospects for this agriculture, supports this view.

According to the authors, people who decide to grow crops in the city generally have a large workforce available, albeit unskilled, and can generate employment, but have some major challenges to face, such as the difficulty of finding arable land, business start-up costs and the costs of the new technologies often used in urban farming. Solutions are available and, as already mentioned, they must be “customized” to meet specific local requirements

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Companies could for instance use abandoned municipal land, while also cutting costs for municipalities: for every vacant lot converted to urban agricultural land, the San Francisco Department of Public Works has saved $ 4,100 a year.  Introducing urban green areas also increases real estate values (10% in 5 years) for the benefit of home owners and the cities that collect taxes from those properties..

Ad hoc products and new business models

Consideration has to be given to yields and the need to produce enough food to make a profit. It is therefore essential to choose the products to be grown very carefully, prioritizing high “value” vegetables for instance. There are many examples of success, such as the SPIN (Small Plot Intensive) Farming model, with which farmers are able to earn a gross income of more than $ 50,000 from half an acre (around 2,000 m2).  

All this is necessary but still not enough. It is also important to look for new channels to sell and distribute products: from local markets to restaurants and city institutions, the range of possibilities is quite wide. 

Last but certainly not least, urban agriculture must also rely for its profits on activities other than the more common sale of the food produced. As reported in the aforementioned analysis by the USDA Agricultural Marketing Service (AMS)/ Cornell University, on-site and touring activities account for up to 25% of the profits for some companies, while educational activities (workshops, teaching, etc.) provide 3-14% of the total earnings of companies that organize them.  

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