The last six months have seen sharp increases in the global prices of wheat, maize, sugar and edible oils. According to the World Bank, the food price index increased by 15% between October 2010 and January 2011 and is only 3% below its 2008 peak. Weather shocks, export restrictions, curtailed supply and soaring demand for maize and other products pushed prices to levels that threaten millions of poor people. The current situation also reflects the established U.S. biofuel targets -- the Congress mandated that biofuel use must reach 36 billion gallons annually by 2022. China, Indonesia, India and the European Union (EU) increased their demand for corn for biofuels. Combined with rising fuel costs, this is driving food prices to an all-time high.

Rising food prices are affecting mostly developing countries with steadily growing populations and thus the growing demand for food. In India, China and the Middle East, higher incomes contribute to more people shifting to the middle class, which is also changing dietary habits. To feed world populations, food production must be increased by 2050. Ways to achieve this vary with local climate and conditions such as water supply, soil fertility, humidity, etc., which vary significantly throughout the world.

While VCs are still mostly on the sidelines, there has been an influx of interest in air and water investments, and films like Food Inc. and the spread of organic food underscore the tremendous public interest in this issue.

AeroFarm says it potentially represents one way to start tackling the problem. Considering that 925 million people in developing countries (13.6% of the 6.8 billion world population) are undernourished, according to the Food and Agriculture Organization (FAO), the AeroFarm system, which is not restricted by any capacity other than modest amounts of water and electricity, has already proven to be a good solution for growing high-quality leafy greens in Saudi Arabia.

“Farm land fertile enough to grow crops is declining. AreoFarms is not constrained by any limitations. We only need a modest amount of land, plus water and electricity,” said David Anthony, managing director of 21Ventures, a virtual technology incubator that invested in the AeroFarm System.

“We make high-quality leafy greens at the same cost as the traditional farming areas in California or the southern coasts of Spain or Italy. The food doesn't have any sand or dirt on it and it is not shipped for three weeks because it is grown in the urban environment, where the biggest demand for food is, making it fresher and healthier,” Anthony added.

Will it work? It's hard to say. The concept would suggest farming could become distributed, the same way computing and energy have become decentralized. But unlike computers, vegetables don't grow everywhere. Compensating for sunlight and water requires electrical and mechanical systems. How much that will undercut the benefits remains to be seen. Also, some critics have said that the volumes of food from urban vertical agriculture will always be proportionally modest. It's for farmer's markets, one academic told us.

Still, it does help break the association between prime crop land and food. And as food demand rises in certain countries, it is unlikely that those people will rely entirely on imported food.

It also provides insulation against climate change. According to Anthony, “Nobody knows what climate change will do to certain farming periods. Will there be too much cold weather in certain places, which will freeze crops? Will there be storms that will flood the land?"