CEA in 2025: Balancing Innovation with Execution
March 11, 2025 As the controlled environment agriculture (CEA) industry stands at a crossroads, leading experts are offering a mix of caution and optimism for what lies ahead. In a recent CropTalk roundtable episode (ep.256), Marco de Bruin, Chris Higgins, and Adam Greenberg shared their insights into the current state of CEA, the challenges that need urgent attention, and their predictions for the industry’s future. Their perspectives offer a comprehensive view of the opportunities and risks that will shape the future of CEA in 2025 and beyond.
The Current State of CEA: Navigating Uncertainty and Volatility
The panelists agreed that the CEA industry is experiencing significant volatility, driven by factors like tariffs, energy costs, and shifting investment landscapes. As Adam Greenberg noted, “There’s a lot of uncertainty. The tariffs, labor pricing. Sometimes you have some of the highest prices in the last 20 years, and other times, the lowest.” This economic turbulence has put pressure on operators to focus more on efficiency and less on rapid expansion.
Chris Higgins added that the industry is at a “crucible moment” where decisions made today will dictate the sector’s trajectory for the next few years. He emphasized the need for CEA operators to focus on operational excellence over flashy technology and to understand which market segments they serve best. The growing pains faced by the industry are largely a result of over-investment in technology at the expense of proven operational practices.
Marco de Bruin shared similar concerns but highlighted that the industry’s biggest challenges are not just tariffs or technology but the fundamental issues of labor and energy costs. He pointed out that labor costs have jumped by 50% to 75% in key regions over the past five to seven years, making it critical for CEA operators to address workforce development if they are to survive and thrive.
Investment Realities: A Shift Towards Sustainable Growth
One of the most significant points made during the discussion was the shifting landscape of investment in CEA. The panelists agreed that the era of easy venture capital money is over. According to Greenberg, the investment community is still interested in CEA but is focused on de-risking investments. “There’s this black box of unknowns that they’re ready to put money into work, but they want to make sure that they can de-risk every piece of it,” he explained.
Higgins echoed this sentiment, noting that many investors have been burned by previous promises of high-tech CEA solutions that failed to deliver sustainable profits. As he put it, “The problem was that they weren’t actually building sustainable food production businesses. They were selling investors on technology.” Moving forward, investors are likely to focus on companies that demonstrate operational efficiency and profitability rather than those touting the latest tech solutions.
Predictions for 2025 and Beyond: Consolidation and Regional Hubs
The roundtable also covered the likelihood of consolidation in the CEA sector. As smaller companies struggle with high operational costs and uncertain markets, they may become targets for acquisition by larger, more established players. Marco de Bruin suggested that consolidation is not only inevitable but necessary to create a more stable and scalable industry.
Another key prediction was the development of regional hubs for CEA, particularly on the U.S. East Coast. Chris Higgins argued that the East Coast, with states like Virginia showing strong governmental support, could serve as a model for a network of CEA hubs focused on specific crops like leafy greens. However, this vision comes with challenges, particularly around labor availability and the need for a more coordinated supply chain.
Greenberg, however, took a contrarian view, arguing that energy costs might not be the most significant barrier to the growth of CEA hubs. Instead, he emphasized the need to focus on labor efficiency and suggested that building CEA facilities in regions with a strong labor ecosystem could yield better results.
Key Takeaways for CEA Operators
For operators planning to launch or expand CEA operations in 2025, the panelists offered some clear advice:
- Start small, focus on execution. Marco de Bruin recommended starting with manageable projects, around 4 to 10 acres for leafy greens, to ensure operational excellence before scaling up.
- De-risk investments. Investors are looking for proven models, not speculative technology. Demonstrating sustainable growth and profitability should be a priority.
- Build for regional strengths. Developing CEA hubs that leverage local strengths, whether that’s lower labor costs, government support, or efficient supply chains, could be key to long-term success.
- Prioritize workforce development. As labor costs continue to rise, training and retaining skilled workers will be critical. Higgins emphasized the need for a more sophisticated approach to workforce development to ensure that CEA facilities can operate efficiently.
Looking Ahead: CEA’s Path Forward
Despite the challenges, the panelists were cautiously optimistic about the future of CEA. They agreed that while the rapid growth of the past decade may not return, a more sustainable and disciplined approach could pave the way for significant advancements. By focusing on operational excellence, de-risking investments, and regional specialization, CEA operators can position themselves for long-term success.
As the industry moves forward, the ability to balance innovation with execution will determine which companies thrive and which are left behind. For those willing to adapt, the future of CEA could be both profitable and sustainable.