Controlled Environment Agriculture (CEA) Production

August 31, 2023

Controlled Environment Agriculture (CEA) Production

The 2018 farm bill (Agriculture Improvement Act of 2018,

P.L. 115-334) expanded support for “urban agriculture and

innovative production methods like indoor and rooftop

farming.” In a Joint Explanatory Statement, the farm bill

conferees acknowledged the potential for urban and

innovative production methods to create new market

opportunities for agricultural communities, expand access

to fresh food in low-income communities, improve

availability of fresh products year-round, and “help build a

new generation of farmers.” The 2018 farm bill also

expanded some existing programs administered by the U.S.

Department of Agriculture (USDA) to support innovative

and emerging crop production methods. These actions have

expanded USDA’s attention on a range of nonconventional

farming practices including Controlled Environment

Agriculture (CEA). Congress may consider amendments to

these programs as it debates farm bill reauthorization.

factors such as temperature, light (intensity and quality), air

movement, humidity, carbon dioxide levels, and damage

from disease and pest infestations. Some advanced systems

are fully automated and employ robotics. Some systems

may integrate blockchain with system sensors, for example,

to chronologically record and provide more precise crop

treatments (e.g., light, fertilizers, systems controls) as well

as record steps in the supply chain (e.g., harvest date,

packaging, transport). Accordingly, advanced technologybased CEA systems require knowledge of engineering,

chemistry, plant science and physiology, horticulture, plant

pathology and entomology, and computer systems. CEA

systems, however, may be scaled for smaller-sized

installations at local community grow operations or schools.

CEA-Related Terms and Definitions

• Hydroponic systems: Growing plants without soil using

a water-based nutrient solution.

Innovative and emerging crop production encompasses a

variety of cultivation techniques and alternative modes of

production compared to that of more traditional outdoor

open-field production in a mostly land-based rural

environment. Examples of some of the types of innovative

and emerging systems include indoor vertical technology

operations, outdoor vertical production systems such as

rooftop farms and green walls, and high-technology shade

or greenhouse production. These types of operations may

involve large capital-intensive production systems that

grow crops throughout the year as well as smaller-scale

community-based operations located in urban, suburban,

and peri-urban areas or in urban clusters that grow crops for

a mostly local or nearby consumer market.

Myriad definitions exist of controlled environmental

agriculture (CEA) from various land-grant universities,

system developers, and trade organizations. CEA

production systems are not defined in statute or regulation.

CEA generally refers to the growing of crops and plants in

a protected and controlled environment, often indoors and

using advanced technologies and intensive growing

conditions throughout the year. Common indoor techniques

may employ a vertical grow system using a soil-less system

such as hydroponic, aeroponic, or aquaponic production

systems (text box). CEA may also be soil-based, growing

crops in greenhouses, hoop houses, growth chambers, or

shade structures as well as the use of mulches, plastic film,

nets or row covers to protect field-grown crops.

CEA systems are designed to create optimal growing

conditions for and maximum productivity of crops and

plants, usually in an intensive closed-loop system. Most

systems employ artificial lighting and water and ventilation

controls to allow for the stable control of environmental

Selected CEA Production Systems

• Aeroponic systems: Growing of plants by suspending

their roots in the air and regularly misting the roots with a

water and nutrient solution.

• Aquaponic systems: Combines plant growing with fish

or aquaculture production using wastewater from the

aquatic species to fertilize a connected plant system.

• Vertical systems: Growing crops in vertically stacked

layers on top of each other or in tall towers (rather than

horizontal open-field rows). Vertical farming may use soil

or soilless techniques such as hydroponics or aeroponics.

Many have documented the challenges associated with

CEA systems. These include typically high initial capital

investment and variable costs, high energy demand and any

associated carbon emissions, water availability, plant pest

and disease challenges, disposal of chemical fertilizer and

nutrient waste, and the need for a technically skilled labor

force. Others point to the benefits of CEA systems and its

potential to supplement traditional open-field farming.

Benefits include protection against weather-related grow

challenges, more precise targeting of production inputs

(water, land, and other natural resources), opportunities for

higher yields and overall output (given the efficient use of

space and tight planting densities), less weed management,

decreased prevalence of some food safety concerns,

reduced food loss and waste, and the ability to grow crops

year-round often with multiple harvests per year (reducing

seasonality and supply variability). Some further highlight

possible environmental and societal benefits. These include

reduced land use, ability to grow crops on nonarable land

(where soil may be unsuitable), reduced use of pesticides

and herbicides, less runoff and soil erosion (compared to

some open field operations), reduced transportation needs

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Controlled Environment Agriculture (CEA) Production

(if operations are located near consumer markets), and

opportunities for local food system development.

including the use of CEA practices as part of a small-scale

production in food insecure areas (§4206; 7 U.S.C. §7518).

Overview of CEA Sector

Other existing USDA programs may support CEA systems,

even if not explicitly so. In general, CEA operators may

access USDA grants and loans broadly available to U.S.

farmers; however, most federal grants and loans tend to

target smaller-sized businesses and may be insufficient to

meet the needs of larger CEA growers/developers. For

example, grants under the Local Agricultural Marketing

Program (LAMP) mostly target locally-based operations

and Small Business Administration loans target small

business. CEA developers might also not be eligible for

USDA farm loans that target family-sized farms and

ranches. Support for high-tunnels and energy efficiency

practices may be eligible under USDA conservation

programs. Educational and technical support also is

available through USDA’s Urban Agriculture Office or

county cooperative extension offices. For background on

USDA and other federal programs, see CRS Report

R46538, Local and Urban Food Systems: Selected Farm

Bill and Other Federal Programs, and CRS Report

R47387, Federal Economic Development Resources for

Food Businesses and Systems: In Brief.

The 2018 farm bill directed USDA to conduct “data

collection of urban, indoor, and emerging agricultural

production (§7212). Congressional appropriators have also

directed USDA to collect data on these types of operations

in the periodic Census of Agriculture (H.Rept. 116-107).

USDA does not currently maintain data and information on

urban, indoor, and emerging agricultural production,

including the use of CEA or vertical farming systems.

A 2021 USDA-commissioned report found that nearly

3,000 fruit and vegetable operations grow crops under

CEA-type protection, accounting for 2-3% of the value of

U.S. crops. This estimate excludes mushroom and indoor

cannabis production or aquaculture. Leading CEA-grown

crops are typically higher-value crops such as leafy greens,

herbs, microgreens, berries, vine vegetables (cucumbers,

tomatoes, peppers), mushrooms, flowers and nursery crops.

Some industry estimates suggest there may be more than

2,000 vertical farming operations in the United States.

CEA operations represent a diverse range of systems and

practices, spanning large capital-intensive operations and

smaller-scale community-based operations. Larger-scale

operations tend to be commercial grow operations and/or

proprietary technology and growing platform developers.

Some are publicly-traded companies. Hybrid operations

that both grow crops and are engaged in research and

development (R&D) as technology developers might grow

crops mainly for demonstration or investment purposes

(i.e., not directly engaged in commercial farming). Some

companies operate plant science research facilities.

In the past year, the CEA sector has been marked by highprofile operation closures, layoffs, and bankruptcies both in

the United States and globally. Among the cited reasons for

these current challenges is a perception that the sector may

have been built out too quickly given the initial sizable

influx of venture capital and private investment funds in

recent years. This has caused some companies to become

financially overleveraged. Some identify exaggerated

expectations for growth in the marketplace. Others cite a

perceived tendency to prioritize R&D and emphasize the

construction of ever-larger grow facilities without a focus

on business fundamentals, market testing and viability, and

efforts to reduce high start-up and variable costs in the

sector. While some claim recent bankruptcies, layoffs, and

closures represent an inevitable market correction, this has

raised questions about the near-term viability of the sector.

Provisions in Farm Bill Legislation

Congress expanded support for innovative and emerging

agriculture in the 2018 farm bill. It created the Urban

Agriculture and Innovative Production (UAIP) to encourage

and promote urban, indoor, and emerging farming practices,

and also authorized UAIP project grants (§12302; 7 U.S.C.

§6923). It further authorized competitive grants supporting

research, education, and extension activities for the sector

(§7212; 7 U.S.C. §5925g). Congress also established a

micro-grants program to support locally-grown food,

USDA has continued to commission research supporting

CEA growers. Leading research areas cover hydroponic and

vertical farming growing applications; LED light spectrum

impact analysis on plant growth; use of renewable energy;

nutrient optimization; plant pathology; plant breeding and

selection; pollinator experiments; and automation

processes. USDA is also supporting projects to improve

CEA efficiencies, lower the carbon intensity of resource

inputs, educate consumers and producers to CEA products

and practices, and develop CEA “best practices” guides.

Considerations for Congress

At a March 2022 House Committee on Agriculture hearing,

a CEA representative stated there are opportunities to

support CEA “in nearly every title” of the farm bill.

Recommendations focused the Horticulture and the

Research titles, but noted opportunities in the Nutrition,

Credit, Rural Development, and Energy titles. Two

recommendations were (1) expand LAMP to explicitly

cover CEA and indoor vertical farming; and (2) increase

funding for USDA’s research and extension support for

urban, indoor and emerging agriculture. Others note

opportunities for CEA in programs such as the Small

Business Innovation Research program and initiatives that

leverage public and private research partnerships. Other

legislative priorities have been put forward by the trade

association, CEA Alliance. Its legislative priorities include

ensuring CEA producers are specifically eligible for USDA

loans and grants, ensuring CEA’s eligibility under USDA’s

rural development and conservation programs, and

expanding USDA’s Specialty Crop Research Initiative to

prioritize innovation and technology and increase research

and extension services for CEA systems. CEA Alliance also

recommends codifying USDA’s Food Supply Chain

Guaranteed Loan program that was part of the Biden

Administration’s Build Back Better Plan. Congress may

consider these and other options as it debates the farm bill.

Renée Johnson, Specialist in Agricultural Policy

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Controlled Environment Agriculture (CEA) Production

IF12485

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