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There's more than a tree growing in Brooklyn, as one start-up farms high-tech produce

There's more than a tree growing in Brooklyn, as one start-up farms high-tech produce

The word "farm" usually conjures up images of lush greenery, animals and Midwestern amber waves of grain.

Yet rarely, if ever, does the word invoke a Brooklyn, New York, parking lot.

It may sound unreal, but one team of entrepreneurs has set up farms — in shipping containers, no less — to bring fresh produce to urban residents. Even more surprising, the food is grown without natural sunlight or soil.

"By 2050, there'll be 9 billion people and the planet, and 70 percent of them all live in the city. Those people need feeding and those people will want real food," said Tobias Peggs, the CEO of Square Roots Grow, the start-up behind the shipping container farms. He cited 2015 population estimates from the United Nations.

"So the only conclusion that you can draw here as an entrepreneur is, we [have to] figure out how to grow a lot of real food right in the middle of the city at scale as quickly as possible," Peggs added.

The start-up is the brain child of Peggs and Kimbal Musk, the brother of Tesla (NASDAQ: TSLA) founder Elon Musk. They selected 10 entrepreneurs to run their own farm, located behind a former Pfizer factory in the shadow of the Marcy Houses — a public housing development where rapper Shawn "Jay Z" Carter, grew up.

Meanwhile, this particular farm produce comes with a unique touch.

"This food is grown hydroponically, which means that the nutrients are mixed with the water that feeds the roots, they're not put into soil," Peggs said.

In each of the 10 shipping containers Square Roots uses, the plants grow on vertical towers stacked side to side in the container. This means each container is the equivalent of a 2-acre farm, according to Square Roots.

"We don't use pesticides, we don't spray. All of the seeds are sourced non-GMO [genetically modified organism]. This is literally the cleanest, healthiest food that you're ever going to eat," said Peggs.

Not organic, still healthy

While the food is grown following organic principles, it is not formally labeled as such because it does not improve soil, a current requirement of organically grown foods. However, the advantage of Square Roots' controlled environment is that food can be grown all year round. Meanwhile, produce can be adjusted to meet specific buyer requests.

"Let's say you were growing lettuce inside these farms, you'd expect to get about 55,000 heads of lettuce a year out of that farm," said Peggs.

"If you said to me, 'You know, I love your basil, but I'd like it slightly sweeter.' We have the math and the model to tweak one of those environmental parameters to get that basil slightly sweeter for you next time," Peggs added.

Currently the farmers are growing greens, such as kale, salad mix and basil. The plants are ready for harvest in as little as four weeks. The food is then sold to restaurants and direct to consumers at farmers' markets — in as little as three hours after being picked.

"I want to deliver the freshest kale that anybody has ever had," said Mason Grassfield, one of Square Roots' farmers.

During a recent farmers' market held at Egg Shop, a Manhattan eatery, Square Roots farmers talked to customers over cocktails made from their produce (basil margaritas), while music made the atmosphere lively. Each farmers' market gets over 100 visitors, which is helping to turn Square Roots profitable. It's one of the ways the start-up is helping the farmers make their business successful.

"The farmers' market came about through our conversations and learning more about Square Roots Grow and trying to learn how we could work with local businesses and how we could support the farmers," said Sarah Schneider, Egg Shop's owner.

Square Roots set up the farms, which cost more than $100,000. The farmers also receive coaching and help with sales. While they do not pay rent, they must cover operating costs, such as water, electricity and seeds. Square Roots then takes a percentage of their revenue.

To help keep costs down, the farms are very efficient. Each one runs on about 10 gallons of water a day, less than a typical shower. Lighting inside is pink, the perfect color for photosynthesis, the process by which plants make food.

Currently the environment is best suited for greens, but Peggs expects strawberries and blueberries may soon be viable. Square Roots plans to add more farms in Brooklyn in a couple months and then to expand across the country.

"It's not just a Brooklyn hipster foodie thing, right? It's a global mega trend," Peggs said. "We'd like to be in 20 cities by 2020."

"On the Money" airs on CNBC Sundays at 7:30 p.m., or check listings for air times in local markets.

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