VERTICAL FARMING MARKET ANALYSIS

The global vertical farming market size was valued at US$ 11.55 Billion in 2021 and is anticipated to witness a compound annual growth rate (CAGR) of 10.30% from 2022 to 2030. Vertical farming market is expected to witness strong growth in coming years. The rising urbanization and increasing consumption of organic food are driving growth of the vertical farming industry. The growing need to produce food locally and the lack of land to grow crops are other factors driving market growth. Furthermore, the increased usage of advanced technology such as Aeroponics, Hydroponics, and the Internet of Things (IoT) are further boosting the revenue of the market.

Global Vertical Farming Market: Regional Insights

The global vertical farming market is expected to dominate by the Asia Pacific region. Growing urbanization is the major driver of the market. Several countries in the region have limited land resources and have witnessed an increasing need for localized food production. This, in turn, has led to the growth of the vertical farming industry in the region. Additionally, the need to produce more food on a smaller land space has encouraged entrepreneurs to invest in the industry. The China vertical farming market was valued at USD 328.8 million in 2020 and is anticipated to reach a value of USD 599.0 million by 2026, while registering a CAGR of 10.8%, during the forecast period.

North America is expected to witness fastest growth in the global market over the forecast owing to the growing trend of “fresh-from-farm-to-table”.  Moreover, the growing demand for organic food, increased interest in the nutraceutical industry, and the growing demand for biopharmaceutical products in the U.S is again driving regional market growth. Furthermore, the country has also witnessed an influx of automation technologies in the agriculture sector.  The vertical farming market in the United States was valued at USD 1,235.6 million in 2020, and it is estimated to reach USD 2,143.4 million by 2026, recording a CAGR of 9.8% for the forecast period, 20212026.

Figure 1. Global Vertical Farming Market, by Region 2021

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Global Vertical Farming Market Drivers:

Rapid Growth Of Precision Farming To Augment Market Growth

Strong growth of precision farming is driving growth of the vertical farming market.  Advent of harvesting robots, automatic seed planters, and greenhouse roof washers is creating high demand for vertical farming. Also, the automating movement of the plants is gaining popularity which includes seeding, unit tasks of transplanting, harvesting, packaging, and cleaning. All these factors are propelling market growth.

Decreasing Agricultural Land Area to Foster Market Growth

According to Food and Agriculture Organization, there is a decline in land resources for agriculture. Policymakers are facing the challenge of maintaining sustainability and feeding the rapidly growing world population, which is projected to reach around 9.7 billion by 2050. Rapid urbanization, changing climatic conditions, and reducing water supply have contributed to the decreasing arable land, this in turn boosting growth of the vertical farming market.

Global Vertical Farming Market Opportunities:

Increasing cannabis cultivation via vertical farming is expected to provide significant growth opportunities for key players in the market. For instance, in April 2020, Agrify Corporation, the most innovative provider of advanced cultivation and extraction solutions for the cannabis industry, announced that it has signed an agreement  with Greenlight Cannabis to provide premium grow solutions and related services for Greenlight’s cultivation facilities.

Rising adoption of technology-driven agriculture and a steady economic growth are expected to hold potential growth opportunities in the market. For instance, in September 2020, Urban Crop Solutions announced the release of their ModuleX Plant Factory - a “best-in-class” vertical farming system focused on helping entrepreneurs achieve profitability faster.

Global Vertical Farming Market Trends:

Increasing Trend Of Nano-Farming

The industry is also influenced by the increasing trend of nano-farming. Nano-farms are small-scale farms with stacked vertical gardens, usually made of wood. Such farms are designed to produce crops year-round. Besides, this technology can reduce the surface area needed for farming and helps farmers control the level of moisture and fertilizers.

Development Of The Nutraceutical, Cosmetic, And Medicinal Industries

Other factors that contribute to the growth of the vertical farming market are advancement in technology and the emergence of several new players. Moreover, the industry is expected to benefit from the development of the nutraceutical, cosmetic, and medicinal industries. It will also benefit from the escalating production of biopharmaceutical products.

Global Vertical Farming Market Restraints:

Restriction On Types Of Crops Grown & Technical Expertise

In vertical farming only limited varieties of crops are produced. Also, there is limited technical expertise among the laborers and farmers around the globe. These factors are projected to hinder the market growth over the forecast period.

High Capital Investment And Operating Costs

Vertical farms require high startup costs and this is one of the greatest challenges for this market. Another key challenge is energy consumption which increase overall cost production. Hence, the market is expected to face high initial investment requirements.

Figure 2. Global Vertical Farming Market, By Growth Mechanisms, 2021

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Global Vertical Farming Market Segmentation:

The global vertical farming market report is segmented into growth mechanism, structure, component, crop, and geography

Based on growth mechanism, the market is segmented into Aeroponics, Hydroponics, and Aquaponics. Out of which, Hydroponics is expected to dominate the global market over the forecast period and this is attributed to the fact that it helps the farmers to grow variety of crops such as leafy greens, all year round crops, and flowering plants regardless of the environmental condition. The global hydroponics-based vertical farming was valued at USD 5,567.5 million in 2020 and is expected to reach a value of USD 10,035.9 million by 2026, registering a CAGR of 10.6%, during the forecast period.

Aquaponics segment is also expected to witness significant growth in the near future and this is owing to the rapid urbanization and increasing population. The global aquaponics-based vertical farming market was valued at USD 3,198.2 million in 2020 and is expected to reach a value of USD 5,635.6 million by 2026, registering a CAGR of 10.1%, during the forecast period.

Based on structure, the market is segmented into Building-based Vertical Farms and Shipping Container-based Vertical Farms. Out of which, Building-based Vertical Farms is expected to dominate the global market over the forecast period and this is attributed to the growing awareness about food safety coupled with the growing urban population. The global building-based vertical farming market was valued at USD 6,618.0 million in 2020 and is expected to reach a value of USD 11,582.5 million by 2026, registering a CAGR of 10.0%, during the forecast period.

Based on component, the market is segmented into Lighting, Climate Control, Sensors, and Other Components. Out of which, Lighting is expected to dominate the global market over the forecast period. Fluorescent lamps and high-intensity discharge (HID) lamps are common light sources in vertical farming. The lighting components of the market studied were valued at USD 3,102.0 million in 2020 and is expected to reach a value of USD 5,667.6 million by 2026, registering a CAGR of 10.8%, during the forecast period. The lighting components, in the global vertical farming market, accounted for 53.1% share in 2020.

Climate Control segment is also expected to witness significant growth in the near future. Some of the most popular climate control systems available are programmable logic controllers, manual control systems, and automated building management systems (BMSs).

Based on crop, the market is segmented into Tomato, Berries, Lettuce and Leafy Vegetables, Pepper, Cucumber, Microgreens, and Other Crop Types. Out of which, Tomato is expected to dominate the global market over the forecast period and this is attributed to the fact that tomato is one of the popular crops grown through a vertical farming system across the world. The tomato segment of the market was valued at USD 577.0 million in 2020 and is expected to reach a value of USD 982.2 million by 2026, registering a CAGR of 9.4%, during the forecast period. The segment in the global vertical farming market, accounted for share of 12.1% in 2020.

Berries segment is also expected to witness significant growth in the near future and this is owing to the growing demand for superfood worldwide. The berries segment of the market studied was valued at USD 293.3 million in 2020 and is expected to reach a value of USD 554.8 million by 2026, while registering a CAGR of 10.2%, during the forecast period.     

Global Vertical Farming Market: Key Developments

In November 2021, The Signify (PHILIPS) launches virtual Center of Excellence for smarter, more sustainable urban vegetable farming in Singapore and Asia. The center will provide profound research insights and advanced lighting solutions for growers in Singapore and Asia.

In March 2021, Signify develops Philips GreenPower LED toplighting force.  It  is  an  expansion  to  its  range  of  Philips GreenPower  LED  toplighting  products,  providing growers  a  new  range  for  light-loving  crops.  The product   helps   growers   optimizing   growth predictability, improving crop quality and increasing yield.

In September 2020, The Signify signed a cooperation agreement with Yunnan AiBiDa Greenhouse Technology Co., LTD, to formally become a research partner using Philips GreenPower LED products as supplementary lighting for its greenhouse floriculture production. This agreement helps in improving crop growth efficiency and quality in western China.

In April 2021, AeroFarms and Hortifrut made multi-year partnership to jointly research and develop blueberry and caneberry production in fully-controlled indoor environments and vertical farms in USA.

In April 2020, The AeroFarms had invested USD 100 million in one of the largest R&D indoor vertical farming projectS in Abu Dhabi. It will be a 90,000 square foot indoor vertical farm, which is a part of AgTech investment.

In April 2020, AeroFarms had built its largest indoor vertical farm by investing USD 42 million in Danville-Pittsylvania County located in commonwealth of Virginia in the United States.

Global Vertical Farming Market: Key Companies Insights

The global vertical farming market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis. Some of the key players in the global vertical farming market are Signify Holding (PHILIPS), Aerofarms, Sky Greens, IGS limited, Everlight Electronics Co., Ltd., Freight Farms, Agrilution, American Hydroponics, Urban Crops Solutions, Vertical Farm System, Gronska stadsodling ab, V-Farm, GrowUp Farms Ltd, Vertical Future Ltd, SweGreen, Jones Food Company, InFarm, Agricool, Future Crops, GrowY, and Intelligent Growth Solutions Limited

*Definition: Vertical farming is a form of agriculture that is grown indoors, in a climate controlled environment. Typically, this is done by growing plants in vertical layers in a tower life structure. This allows for a year-round harvest, without compromising flavor or quality. The main goal of vertical farming is to produce more food per square meter. Vertical farms can help meet the growing global demand for fresh food. Producing crops close to consumers also helps reduce the use of fossil fuels and the pollution associated with transportation.