Vertical Farming Market Analysis by Growth Mechanism (Aeroponics, Hydroponics, and Aquaponics); by Structure (Building-Based Vertical Farms, and Shipping Container-Based Vertical Farms); by Components (Lighting, Climate Control, and Sensors); and by Crop (Tomato, Berries, Lettuce & Leafy Vegetables, Pepper, Cucumber, and Microgreens) – Global Supply & Demand Analysis & Opportunity Outlook 2023-2035
Buy Now Report ID: 4795 | Published Date: Apr 06, 2023
The global vertical farming market size is estimated to reach ~USD 96.33 Billion by the end of 2035 by growing at a CAGR of ~28.00% over the forecast period, i.e., 2023 – 2035. In addition to this, in the year 2022, the market size of vertical farming was ~USD 4.98 Billion. The growth of the market can be attributed to growing demand for organic food owing to improved standard of living of the people and their concern towards health. For reasons related to their health, about 75% of adult bought organic food in 2022, in US. Hence, the demand for organic farming is estimated to increase. Producing crops of the highest quality while having the least negative influence on the environment is the goal of organic farming. In this, it is completely forbidden to use any dangerous synthetic chemicals, including pesticides, herbicides, fungicides, and other contaminants of the soil and water. On the other side, vertical farming represents a more contemporary approach to the established organic agricultural system.
Moreover, there has been growing scarcity of agriculture land which is why the demand for vertical farming is growing. Farmers may utilize about 98 percent less land and approximately 97 percent less water by using vertical agricultural techniques. Through constant or rolling harvesting throughout the year, they could produce agricultural yields that are about 239 times greater than those of conventional farms. Moreover, vertical farming delivers enhanced annual productivity and reliable year-round production. Just some seasonal fruits and vegetables were offered by convectional farming. Instead, with little reliance on weather or environment, vertical farms may grow a wide variety of crops all year round.
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Base Year |
2022 |
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Forecast Year |
2023-2035 |
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CAGR |
~28.00% |
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Base Year Market Size (2022) |
~ USD 4.98 Billion |
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Forecast Year Market Size (2035) |
~ USD 96.33 Billion |
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Regional Scope |
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Growth Drivers
Between 2012 and 2019, LED sector penetration grew, and it is anticipated that by 2025, it would have reached a penetration of almost 75 percent. Hence, with the growing adoption of LED lights, the production of LED lights is estimated to increase. Further, with the rise in production, the use of LED lights in vertical farming is also growing. LEDs are able to provide light at the best intensity and for a very long period since of their remarkable energy efficiency. Compared to alternative lighting options, these efficient lighting solutions could endure for almost six years. Given their low heat output and ability to fit in small places with vertically piled crops, LEDs are ideal for vertical farming.
Around 4.4 billion people, or 56% of the world's population, reside in cities. By 2050, approximately 7 out of 10 people would live in cities, with the urban population predicted to more than double from its current level. Owing to this population pattern, food would be more in demand in locations where land is more scarce. Vertical farming provides a solution to address this rising requirement for food without the need for big fields in these densely populated metropolitan areas.
In the United States, there were more than 15 million empty homes in 2022. The greatest vacancy rates were in Vermont, Maine, and Alaska, which range from about 23% to 20%. Hence, such abounded buildings or houses could be converted into spaces to carry out vertical farming further, boosting the market growth.
The Kerala State Horticultural Mission (SHM) launched a vertical garden programme where the recipient would receive an about 74% subsidy on the overall cost of building up the vertical garden and approximately 24% of the cost would be borne by the beneficiary.
Vertical farming leaves a smaller carbon footprint. This is owing to the fact that vertical farms rely on sustainable energy sources including solar and wind power. Conventional farming uses a lot of fossil fuels, which cause the atmosphere's damaging greenhouse gases to be released. Moreover, food waste could be significantly decreased with the help of green vertical farming. The enclosed aspect of the growing arrangement, which greatly reduces the likelihood of contamination resulting in crop failure, and the near proximity to the customers, which greatly minimizes transportation emissions, could cut food losses by up to 98% and the associated emissions by up to about 69%.
Challenges
The global vertical farming market is segmented and analyzed for demand and supply by components into lighting, climate control, and sensors. Out of which, the lighting segment is anticipated to garner the highest revenue by the end of 2035. The growth of the segment can be attributed to growing use of LED lights. The extraordinary advancements in light-emitting diode (LED) technology over the past few years have been a major factor in the phenomenal expansion of vertical farming. For many years, only the most lucrative crops were grown in artificial light-dependent indoor growing facilities since they were so expensive to run. However, LEDs are now so reasonably priced and effective that they are fundamentally altering the economics of indoor farming. For the following three decades from 2020 to 2050, it is anticipated that LED light prices would continue to decrease in the United States. In 2017, the price of a kilolumen was about USD 0.6. In 2050, it's predicted to fall to about 0.2 USD. Even more encouraging are the projected prices for LED fixtures and lamps that provide warm and cold light. By 2035, it is projected to fall to approximately 0.2 US dollars per kilolumen.
The global vertical farming market is also segmented and analyzed for demand and supply by structure into building-based vertical farms, and shipping container-based vertical farms. Amongst which, the shipping container-based segment is anticipated to have the significant growth over the forecast period. This growth is attributed to the structure's ability to support crop production regardless of location. One of the main benefits of container farming is that it could be moved easily and doesn't need a large plot of land or a special facility to start growing. Also, as competition expands, shipping container prices decrease since it is very inexpensive to acquire used containers, allowing more businesses to enter the market. However, such systems have some drawbacks, such as low comparative productivity and antagonism between light, heat, and layout. Hence, there are various technological improvement carried out which is estimated to boost the demand for shipping container-based vertical farms.
Our in-depth analysis of the global vertical farming market includes the following segments
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By Growth Mechanism |
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By Structure |
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By Components |
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By Crop |
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The market share of vertical farming in North America, amongst the market in all the other regions, is projected to have the highest growth by the end of 2035, backed by growing demand for nutritional food, along with surge in investment in facilitating ecosystem for future food. The availability of freshly harvested veggies across retail outlets is anticipated to rise across the nation as consumer preferences shift towards "fresh-from-farm-to-table" products (which is also the pioneer in adopting this concept). Moreover, there has been population in this region which is demanding more food. However, with the growing demand for food, the scarcity of agriculture land is also growing which would further boost the demand for vertical farming in this region. Farmland is lost on average about 1,999 acres every day in US. The US lost approximately 2 million acres of agriculture in the year 2021 alone.
The Asia Pacific vertical farming market is estimated to be the second largest, to have the highest growth. In metropolitan areas of Asia Pacific, a new urban environment has recently arisen. Many megacities started initiatives to support the new ecosystem services, including transporting clean, fresh vegetables and offering the most efficient and sustainable food supply options in this region. One of the most important areas of concentration is energy sustainability research, which includes optimizing energy efficiency to satisfy the needs of citizens and businesses. One of agriculture's most remarkable innovations, indoor urban vertical farming (IUVF), is totally dedicated to supplying urban dwellers' food demands at the lowest possible environmental and energy costs in Asia Pacific region. Moreover, with the new features and technologies, vendors may draw in new clients and increase their presence in developing countries, propelling the Asia Pacific vertical farming market.
Additionally, the market in Europe region is also estimated to have significant growth over the forecast period. Increasing use of automation and digitization in vertical farming would probably fuel market expansion in this region during the anticipated term. In vertical farming, automation and digitization decrease time, lower distribution and environmental costs, boost output, and standardize high quality. Moreover, agriculture is now driven by vertical farming, which has made the Internet of Things (IoT) into a mainstream technology in Europe region. The development of IoT has transformed the agricultural industry and accelerated market expansion in this region. Moreover, the vertical farming market has been expanding in many ways throughout Europe as a result of rising populations and per capita incomes, which have shifted customer tastes for healthier, organic, and environmentally friendly meals. Vertical farming market now have a number of new prospects owing to this in this region.
Since their strategic partnership was announced on February 15th, 2023, HYVE Indoor Farming Systems, a solutions-based manufacturer of Controlled Environment Agriculture (CEA) systems, and AGEYE technologies, a pioneer in automated platform monitoring for vertical farms and greenhouses, have announced their first joint indoor vertical farming project. An indoor farm in Nebraska is the initiative, and it would start right away. The project's size would be about 12,000 square foot grow facility with a primary concentration on leafy greens.
A Valmont Industries, Inc. company, Valley Irrigation, announced its joint venture with private holding company Kusto Group and advanced its engagement with the Republic of Kazakhstan. The comprehensive, multi-year project would lay the groundwork for making the nation an agricultural hub in Central Asia by enhancing sustainability and resource conservation, introducing cutting-edge farm technologies to regional farmers, and improving sustainability and resource conservation.
In 2023, market players might incur losses due to huge gap in currency translation followed by contracting revenues, shrinking profit margins & cost pressure on logistics and supply chain.
Controlling Inflation has become the first priority for global economies from last quarter of 2022 and to be followed in 2023. With skewed economic situations, rise in interest rate by governments to control spending and inflation, spiked oil and gas prices, high inflation, geo-political issues including U.S. & China trade war, Russia-Ukraine conflict to intensify the global economic issues.
The interest rates in the U.S. may be less sensitive in 2023 as compared to 2022; sigh of relief for businesses. Positive business sentiments, healthy business balance sheets, growth in construction spending (private construction value in 2022 stood at $1,429.2 billion, 11.7 percent (±1.0 percent) above the $1,279.5 billion spent in 2021, Residential construction in 2022 was $899.1 billion, up by 13.3 percent (±2.1 percent) from $793.7 billion in 2021, non-residential construction touched $530.1 billion, 9.1 percent (±1.0 percent) above the $485.8 billion in 2021.) showcases minimal impact of recession in the country.
Similarly, spiked spending in the European and major Asia economics including, India, China & Japan to showcase less impact on the global demand.
Author Credits: Shivam Bhutani, Anil Kumar
Ans: The major factors driving the growth of the market are growing production of LED lights, rise in urban population, surge in abounded buildings, and others.
Ans: The market size of vertical farming is anticipated to attain a CAGR of ~28.00% over the forecast period, i.e., 2023 – 2035.
Ans: High cost to set vertical farming, lack of awareness among people, and lack of well equipped system are estimated to be the growth hindering factors for the market expansion.
Ans: The market in the North American region is projected to hold the largest market share by the end of 2035 and provide more business opportunities in the future.
Ans: The major players in the market are Deere & Company, CropMetrics, Trimble, Inc., CropX, Inc., and more.
Ans: The company profiles are selected based on the revenues generated from the product segment, the geographical presence of the company which determines the revenue generating capacity as well as the new products being launched into the market by the company.
Ans: The market is segmented by growth mechanism, structure, components, crop and by region.
Ans: The lighting segment is anticipated to garner the largest market size by the end of 2035 and display significant growth opportunities.
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