What should I check before buying a hydroponic or vertical farm?

An indoor farm grows crops under lights in a controlled room, often in a leased industrial building. Unlike a field farm, it has no soil or farmland to review; ask your lawyer whether any supply rules apply to the product. Review the building, the systems inside it and the buyers who take the crop. This page is about that kind of operation, not about greenhouse structures.

The building and the lease

Read the lease closely. Ask how long it runs, whether it can be renewed, whether the landlord must consent to a new tenant, and who owns the fit-out if the lease ends. Ask whether the building was approved for this use. Your lawyer should review the lease and any landlord consent before you commit.

Power and climate systems

Lighting, cooling, dehumidifying and pumps use a great deal of electricity, so ask for the utility bills and the capacity of the service. Find out what happens during an outage and whether there is backup. Inspect the equipment with a qualified technician, and ask about its age, repairs and the warranties that pass to a buyer.

Automation, software and vendors

Many indoor farms run on controllers, sensors and software supplied by one vendor. Ask which licences, service agreements and data come with the sale, whether the vendor must approve a transfer, and what happens if the vendor leaves the market. Read the farm business due diligence guide for a wider checklist.

Crop records and buyer contracts

Ask for harvest records, losses and food safety practices, and for the contracts or standing orders with grocers, distributors and restaurants. Check how concentrated the sales are, and how much depends on the owner or a head grower. Have your accountant review the financial statements, and look at financing a farm acquisition with your lender.