The Role of Innovation in Urban Farming
Mathilde Coussy, September 2015
Photo: Peter Dasilva, New York Times, Redux
Editor’s Note: This article by Mathilde Coussy is based on research she conducted for her thesis.
Urban farms can respond to different purposes depending on the role given to them. Previous research has demonstrated the ability of urban agriculture to offer numerous benefits that are related to various dimensions of sustainability and consequently help cities to meet their social, economic and environmental challenges. In addition, urban agriculture has recently risen up as a complementary strategy supported by the United Nations to face food security needs.
However, supermarkets and agri-business are currently the dominant partners in the food supply chain, which means that they have a powerful control over it. For this reason, it is hard for urban farms to stand out from this strong market. They need to offer something new and different within their products or services. In other words, they need to be innovative!
Each urban farm’s initiative is different in terms of the business approach employed and no innovation strategies specific to urban farming have been defined yet. This brings numerous questions in terms of innovation in the field of urban farming and leads us to wonder:
What role does innovation play in the business model of urban farms?
The aim of my research is to define the effectiveness of innovation within urban farming and understand success factors in innovation strategies.
To this end, 34 urbans farmers from 15 countries participated in the study by answering a survey. References from regular growers and industrial firms were obtained through a literature review in order to be compared to urban farms’ results. Then survey’s answers have been analysed with statistical analysis software (SPSS).
On one hand, analysis of innovation strategies suggests that urban farmers invest relatively more in innovation than industrial firms. In addition, results show that increased revenues can be linked to innovation activities. According to OECD average, 5% to 7% of firms’ turnover comes from innovation, while 44.1% of survey respondents presented a revenue from innovation higher than 10% of their turnover (Figure 1). In the case of urban farming, innovation is indeed a profitable investment to be considered since 89% of respondent have a revenue from innovation higher than their investment.
Figure 1: Share of turnover dedicated to innovation
The survey results revealed differences in terms of the implications of innovation processes by urban farmers. Indeed, some of them adopt a well-structured strategy and have an orchestrated concept for their innovation activities. Other urban farmers prefer to conduct their strategy informally and build their project depending on market need or good ideas.
Also, analysis shows that both strategies can lead to profitable revenues from innovation. However a structured strategy seems to be preferable in the case of high investment in innovation since it assures a better control of the strategy.
Through our literature review we defined four areas of innovation as a reference for all types of companies: process, product, organisation and marketing. Research among Dutch regular growers (Het innovatiesysteem voor de glastuinbouw in 2020) found out that they are mainly focused on process innovation and invest to acquire advanced technology for their production methods. However as shown by Figure 2, in the case of urban farms the scheme is different. Indeed, urban farmers will invest relatively more in product and marketing innovation. Even though urban farmers are not particularly interested in process innovation, results present this area of innovation as a quite profitable one.
|Process innovation||Product innovation||Organisational innovation||Marketing innovation|
|Implementation within survey respondents (%)||35,3%||88,2%||44,1%||73,5%|
|Average revenue from innovation (% of turnover)||14,4%||12,7%||8,9%||15,6%|
Figure 2: Distribution of innovation areas implementation within respondents
Differentiation: To differ from conventional supply chainThe uptaking of innovation strategies in urban farms’ business models have been analysed. First of all, business models permit to classify urban farms depending on their objectives. Dr J.W van der Schans (LEI, Wageningen UR) defined five models specific to urban farms:
- Diversification : To provide other services and goods aside from agricultural production
- Low cost: To expand the business in order to realise economies of scale
- Reclaiming the commons: To reintroduce the feeling of ownership of our own food
- Experience: To add value by providing memorable experiences more than regular goods or services
Finally, based on data obtained through the survey, a hierarchical cluster analysis has been made. Four levels of innovation strategy depending on available funds for investment and urban farm business model were determined.
As presented by Figure 3, each business model can be associated to a specific innovation strategy in order to have a more profitable investment in innovation. As shown, a differentiation model is more inclined for high investment and can assure a high revenue by focusing on process, product and marketing innovation. On the contrary, models reclaiming the commons and experience can hardly offer high revenue from innovation to urban farmers.
|Level 1||Level 2||Level 3||Level 4|
|Business model(s)||Reclaim the commons and experience||Reclaim the common||Diversification and experience||Differentiation|
|Investment in innovation||[0%-5%]||[1%-10%]||[6%-10%]||+30%|
|Area(s) of innovation||Product and organisational||Product and marketing||Process, product, organisational and marketing||Process, product and marketing|
|Revenue from innovation||[0%-5%]||[10%-20%]||[20%-+30%]||+30%|
Figure 3: Four levels of innovation by five criteria, source: Mathilde Coussy
Although innovation is not the only responsible criteria for an urban farm’s success, revenue streams of urban farms are based largely on the company’s recent innovation. It is indeed recommended to implement innovation in an urban farm initiative. Results show that the majority of studied cases have revenue from innovation higher than the investment they made on it. In addition, “product innovation” appeared as a “must have” in innovation strategies but other areas as organization and marketing have interesting benefits as well. We should notice that “process innovation” is often forgotten by urban farms’ initiatives, however this innovation area shouldn’t be disregarded since it could generate substantial revenue. In this way, it can be recommended that urban farmers should invest in advanced technology or E. Business (web shop) for instance.
Furthermore, a structured innovation process is advised for high investment, while low-level investments do not seem to pay off.
To conclude, innovation does have a relevant place within urban farming and can offer great financial benefits if carried out in relation to farms’ characteristics and business model. Innovation strategy has a strong relation with the chosen business model and a good association of the two of them can lead to a successful and profitable innovation strategy.
Mathilde Coussy – email@example.com
This research has been conducted during a four months internship at Wageningen UR Greenhouse horticulture in The Netherlands. It has been made in the frame of my studies during an exchange programme between Esitpa, Engineering School of Agriculture, France and CAH Vilentum, University of Applied Sciences, The Netherlands.
I would like to address a special thanks to Mr Tycho Vermeulen, my company coach from Wageningen UR Greenhouse horticulture; for his help and support during the whole period of my placement.