The business models of commercial urban farming in developed countries

Abstract: This thesis is an analysis of the business models used in commercial urban farming in the developed world. With its global sample and praxis to include all found firms not subject to delimitations, this thesis is an extension of the academic writing that already has gone beyond the case approach in studying urban farming and alternative food networks. Moreover, it further establishes the economic perspective on alternative food networks, and introduces this perspective for commercial urban farming. Commercial urban farming can be partitioned into three main classes. - Small production, their products ranges are either very focused or very diverse. Mode of output is typically a farmer’s market and a few restaurants. - Large production, their product ranges are typically focused around leafy greens or other perishables. Mode of output is typically retail and restaurants. - Secondary purpose, their urban farming operation directly benefits another activity which provides additional revenue or lower costs for the business. The range of secondary activities includes marketing, distribution, self-harvest and recreation. These classes were found by quantifying the business models of the firms in accordance with the conceptual framework of Boons and Lüdeke-Freund (2013) in terms of binary data. The binary data matrix was then converted into a proximity matrix (Warrrens, 2008) from which an agglomerative hierarchical clustering was able to discern some useful patterns (Jain & Dubes, 1988). The classes was then analysed strategically following mainly Porter (1980). The analytical findings in this part of the thesis was mainly that the small production cluster is instable and that the firms in it are likely to either (1) expand outside the city after an initial marketing phase, (2) expand within the city and seek the business model of large production or (3) introduce or expand secondary value propositions in order to gain additional revenue or lowered costs. The exploratory results of this research are generalizable and can be used to theoretically define a sample of commercial urban farms. It can thus be used as a framework within which to apply confirmatory research. The propositions of the strategic analysis need confirmatory research to be validated. With the further analysis of commercial urban farming, this thesis contributes to a wider understanding of urban farming in general and deeper understanding of commercial urban farming in particular.