The global Vertical Farming Market was valued at USD 5.5 Billion in 2022 and is projected to reach a value of USD 18.8 Billion by 2030 at a CAGR (Compound Annual Growth Rate) of 19.2% between 2023 and 2030.
Vertical Farming grows food in vertical layers, such as a used warehouse, skyscraper, or shipping container. Organic foods are considered healthier, more nutritious, safer, and better for the environment. Consumer food purchasing behavior is a critical factor influencing demand for organic food, and producers, policymakers, and suppliers must implement successful marketing strategies. Consumers frequently experience health problems related to obesity and heart disease. Moreover, increasing groundwater depletion and changing climatic conditions have compelled traditional growers to switch to alternative Vertical Farming methods. Increasing consumer health concerns and the abovementioned factors are expected to drive industry demand.
Vertical Farming Market Size, 2022 To 2030 (USD Billion)
Instead of traditional farming, indoor Vertical Farming can produce crops yearly, increasing productivity. Moreover, controlled environment agriculture technology, in which facilities use artificial environmental control, light control, and fertigation, can protect crops from extreme weather conditions. Critical factors driving the global Vertical Farming market growth are rising demand for high-quality food, independent agriculture techniques, and urbanization. These elements have increased the demand for food. Food demand is expected to rise significantly as the world's population grows by 2030. Vertical cultivation allows customers to grow crops in a warehouse or multi-story building.
Vertical Farming produces higher yields as cultivation occurs in a controlled environment in a hydroponic greenhouse, allowing for year-round cultivation and harvesting. Harvests can be produced 11-13 times per year in the controlled environment of a vertical hydroponic farm. This is expected to boost market growth by increasing demand for these Vertical Farming practices. The main advantage of Vertical Farming is that weather conditions do not affect it. The increased ability to adjust various parameters such as temperature, moisture content, and fertilizers required for plant growth in confined spaces is expected to drive rapid growth in demand for Vertical Farming systems. This results in a more consistent yield with higher nutrient content and better control over the onset of certain plant diseases. As a result, this significant advantage for farmers in maintaining sustained productivity is anticipated to accelerate Vertical Farming market revenue growth.
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The fourth quarter of 2022 economic data confirms that the recession has slowed demand for almost everything in the United States, including agriculture. The conflict between Russia and Ukraine has had global ramifications. Significant effects have been observed in key commodity markets' supply and price. The ongoing conflict has significantly impacted commodity prices in global agricultural markets. In conventional farming, space, light, water, carbon dioxide, and land are all readily available. These variables, however, necessitate a high supply cost for vertical farms. Indoor farms use artificial lighting. The cost of air cooling and heating to maintain proper temperature, precision monitoring, and other relevant software is also included. Structures must also be built to distribute nutrients and provide a platform for crop growth. As a result, vertical farm maintenance and resource supply are becoming prohibitively expensive.
Top Market Trends
1. Growing Popularity of AI-Controlled Vertical Farms: AI-controlled vertical farms help growers optimize crop yield by providing data on crop growth patterns, which crops yield the most, the climatic conditions required, and other factors. Growers can use this information to analyze and improve their yield. Artificial intelligence (AI) can assist the industry in dealing with the most difficult challenges, such as climatic changes and a lack of resources, by controlling major crop growth and predicting which crops will yield the highest yields. Artificial intelligence is also on the rise, with over 1,600 start-ups and tens of billions of dollars invested. The AI-controlled robots continuously monitor plant growth and adjust environmental factors to ensure greater efficiency and economic output. Thereby, artificial intelligence (AI) and the Internet of Things (IoT) is projected to be key trends in the global Vertical Farming market.
2. Declining Arable Land and Increasing Global Water Crisis: Population growth, urbanization, dwindling water supplies, and ongoing climate change contributed to declining arable land stocks per person. Raising productivity may be a solution given the ongoing decline in farmland available per person. As a result, there is a need to maximize yield from available land, which can be accomplished through Vertical Farming. Likewise, the world is rapidly approaching a water crisis. Climate change will exacerbate water scarcity and impact the food system. According to the World Bank, agriculture accounted for 70% of global freshwater withdrawals in May 2020. The World Economic Forum reported in March 2019 that 90% of the water from rivers, lakes, and groundwater is used for agriculture. As a result, water scarcity exacerbates the global food crisis. Vertical farms solve the problems caused by water scarcity and limited arable land. Vertical Farming technology improves water retention by controlling environmental conditions. Evaporation wastes less water in the atmosphere, relieving farmers of the need to source freshwater supplies constantly.
3. Vertical Farming Yields More Than Traditional Farming: Vertical Farming employs LED lighting and climate control, constantly adjusting temperature and humidity. It provides a year-round supply of fresh, pesticide-free, locally grown vegetables, allowing for greater control over the plants' growing environment. Besides, Vertical Farming has a huge production benefit. Vertical Farming has been shown to increase agricultural output by 240 times, using 99% less land, 95% less water, and zero pesticides. This means vertical farms produce more crops despite higher operating costs, resulting in higher profits. Vertical farms replant crops repeatedly without regard for crop rotations. Aside from that, this type of farming is also an excellent option when agricultural land is scarce. Vertical Farming systems are ideal and can be located in cities as they do not require much space. Vertical farms are also well-positioned to increase food supply chain resilience by expanding local food production. They can be set up anywhere and use less land and water than traditional farms.
The global Vertical Farming market can be categorized on the following: Structure, Growth mechanism, Component, and Region. Based on Structure, the market can be categorized into Building- and Container-Based Vertical Farms. Moreover, based on the Growth Mechanism, the market can be split into Hydroponics, Aeroponics, and Aquaponics. Furthermore, based on Components, the market can be Irrigation Components, Lighting, Sensors, Climate Control, Building Materials, and Others. Likewise, based on Region, the market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.
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Based on Structure
Container-based Vertical Farms Structures to Lead with the Largest Market Share attributed to its Transportability
The container-based segment will dominate the Vertical Farming market over the forecasted period. Crops can be grown in shipping containers in a highly controlled and contained environment, independent of external climatic conditions. Increasing desertification and rapid changes in rainfall patterns are estimated to propel shipping containers. Besides, the ease of transporting shipping containers and the reduced reliance on groundwater is expected to drive demand for shipping containers for Vertical Farming. Shipping containers are widely used in the development of indoor farms. Several companies have converted shipping containers into farms with drip irrigation systems, LED lighting, and vertically stacked shelves to cultivate various plants. These containers are linked to a growth management system, which uses a computer or smartphone to monitor and control all systems remotely. Building-based vertical farms will have the highest CAGR during the forecast period, as rapidly growing city construction projects across the globe are used to deploy farms. In addition, abandoned buildings in cities are frequently used to create vertical farms. Countries with unsupported crop environments are early adopters of building-based vertical farms, paving the way for the widespread adoption of these types of farms.
Based on the Growth Mechanism
Hydroponics to Account for the Largest Market Share Owing to Lower Installation Costs and Ease of Operations
During the forecast period, the hydroponics segment will dominate the global Vertical Farming market due to its ease of installation and cost-effective vertical farm setup. Mineral nutrients dissolved in water are fed directly to the plant's roots in a hydroponics system, allowing the plant to grow mostly upward, promoting faster growth, harvesting, and yield. Hydroponics systems, which use an inert growth medium to anchor the plant's roots, are used indoors and outdoors to grow herbs, foliage, and food items all year. This mechanism has several benefits, including reducing water usage due to the system's water recycling capabilities. Besides, nutrition levels can be completely controlled, resulting in lower nutrition costs and consistently high yields. In addition, increasing desertification is expected to change farming practices and contribute to revenue growth in the global Vertical Farming market. The aquaponics segment will grow with the fastest-growing CAGR during the forecast period. Aquaponics combines hydroponics and aquaculture, removing the need for harmful chemicals in cultivation. Aquaponics is used to grow plants such as lettuce, peppers, chives, kale, cucumbers, mint, and peas. Aquaponics water contains fish waste, which becomes nutrient-rich and extends crop production time. This creates a natural, sustainable system that eliminates the need for chemicals in food production.
Based on Component
Lighting Segment Will Account for the Largest Market Share owing to the Climate Control Capabilities of the LED Lightening System
The lighting segment will dominate the global Vertical Farming market throughout the forecast period. The use of LED lighting systems to reduce operational costs and power consumption is becoming more popular. LED lighting systems produce less heat than traditional light sources, making them ideal for farms. Consumer demand for out-of-season food drives demand for climate control components. Climate control components aid in the monitoring of the climate as well as the control of lights and humidity. The advanced climate control systems, which can be managed via mobile or computer, are expected to drive the growth of hydroponics components. Vertical Farming automation aims to reduce time to market, reduce distribution, production, and environmental costs, and standardize high quality. The Internet of Things (IoT) has emerged as a mainstream technology that drives several industries, including transportation, manufacturing, and agriculture. The spread of IoT has transformed the agricultural industry.
Based on Region
Europe to Lead Global Market Revenue Due to Rising Installation Of Automated Vertical Farms
The global Vertical Farming market is expected to be dominated by the region of Europe in terms of growth and revenue. The increasing food demand, urbanization, unfavorable weather for conventional farming, the desire to reduce the importation of fresh produce, and the need for new productive farming activities are all predicted to significantly impact the growth of the Vertical Farming market in Europe. Vertical Farming has the potential to contribute significantly to urban food security by allowing year-round cultivation and lowering food miles in Europe. Besides, the growing use of nanotechnology and robotics in agriculture increases regional market demand. The application of nanotechnology helps improve food packaging as well as disease and pest control. The European Environment Agency has launched several initiatives to build vertical farms to address the challenges of population growth and climate change while producing food in an environmentally friendly manner. The European Union (EU) has also made long-term investments in projects to promote urban agriculture. For example, the European Forum on Urban Agriculture (EFUA) is a four-year project funded by the European Union's Horizon 2020 Research & Innovation Programme from 2020 to 2024. The goals of EFUA are to maximize the potential of urban agriculture by improving networking, knowledge, deployment, and policies in the field. As a result, the demand for Vertical Farming in the region has increased over recent years.
The Asia Pacific dominated the global Vertical Farming market in 2022, with a revenue share of more than 30.2%, and is expected to continue to do this throughout the forecast period. Growing awareness of the importance of alternative farming due to a lack of fertile agricultural land in the region and an increasing population is expected to drive demand. The decline in arable land for agriculture in countries such as China, India, and some Asian countries is expected to increase demand for this innovative farming system. Water scarcity and rising food demand in India, South Korea, China, and Japan are anticipated to open up new market opportunities throughout the region.
The key players in the global Vertical Farming market include - 4D BIOS Inc. (China), Aero Farms (U.S.), Illumine Inc. (U.S.), American Hydroponics (U.S.), Everlight Electronics Co. Ltd. (Taiwan), Hort Americas (U.S.), Koninklijke Philips N.V (Netherlands), Urban Crop Solutions (U.S.), SKY GREENS (Singapore) among others.
Recent Market Developments
· July 2022: Heliospectra AB, a global leader in intelligent lighting technology for Vertical Farming, has announced a new seller collaboration with MineARC Systems, a global leader in manufacturing and supplying controlled environments. Heliospectra's market-leading LED lighting & lighting control solutions will be represented in Australia by the company.
· August 2021: AeroFarms and Nokia Bell Labs collaborated to combine their expertise and broaden their joint capabilities in networking, automation technologies, and integrated machine vision & machine learning techniques to identify and monitor plant interactions at the most advanced levels.
· May 2021: Signify assists Ljusgarda, a Vertical Farming pioneer based in Sweden, in increasing productivity with high-tech solutions such as greenhouse LED manufacturing modules and the GrowWise Control System.
Segmentation of the Global Vertical Farming Market
- Structure (Building-based Vertical Farms, Container-based Vertical Farms)
- Growth Mechanism (Hydroponics, Aeroponics, Aquaponics)
- Component (Irrigation Component, Lighting, Sensor, Climate Control, Building Material, Other Components)
- Region (North America, Europe, Asia Pacific, Latin America, Middle East & Africa)
|Regions & Countries Covered
- North America - (U.S., Canada, Mexico)
- Europe - (U.K., France, Germany, Italy, Spain, Rest Of Europe)
- Asia Pacific - (China, Japan, India, South Korea, South East Asia, Rest Of Asia Pacific)
- Latin America - (Brazil, Argentina, Rest Of Latin America)
- Middle East & Africa - (GCC Countries, South Africa, Rest Of Middle East & Africa)
- 4D BIOS Inc. (China)
- Aero Farms (U.S.)
- Illumine Inc. (U.S.)
- American Hydroponics (U.S.)
- Everlight Electronics Co. Ltd. (Taiwan)
- Hort Americas (U.S.)
- Koninklijke Philips N.V (Netherlands)
- Urban Crop Solutions (U.S.)
- SKY GREENS (Singapore)
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