The global vertical farming market size was valued at USD 8.47 billion in 2022. It is estimated to reach USD 59.13 billion by 2031, growing at a CAGR of 24.1% during the forecast period (2023–2031).
Using limited space and resources for planting is known as vertical farming. It is a way of harvesting crops vertically on shelves and towers rather than conventional horizontal farming. In vertical farming, crops are cultivated indoors, underneath artificial light and temperature conditions. In other words, vertical farming aims to offer higher productivity in smaller spaces. Vertical farming predominantly focuses on efficiencies, such as growing crops more quickly than conventional farming, employing technology such as sensors, robots, and LEDs as sun replacement, with algorithms to optimize lighting and growing conditions.
Farmers using the vertical farming method can grow more food exponentially with the same amount of land due to improved space utilization. It can be more difficult to execute since it involves more control for temperature, humidity, and light to be very effective for crops in vertical farms. Furthermore, farmers can integrate many vertical farming systems to provide the best harvest. Some of them are hydroponic, aquaponics, and aeroponics. All these systems help vertical farming utilize space, grow effective crops, save resources, and ultimately increase efficiency around the farms.
The agriculture sector across the globe is witnessing various constraints, including not enough land to meet future food demand and negative environmental impacts of global deforestation, such as desertification and flooding, among others. However, with its potential benefits, vertical farming is anticipated to play a crucial role in focusing on the growing food demand while reducing environmental impact compared to conventional farming. Vertical farming is a growing system created to resist weather and climate. The benefits of vertical farming are year-round crop production for both human and livestock consumption, consistent quality, and predictable output.
Vertical farming offers faster growth cycles and faster harvests; hence, more crops can be grown yearly in a much smaller space than a conventional farm. In vertical farming, one of the highest-yielding farms grows over 350 times more crops per square yard than a conventional farm. In urban settings, vertical farms develop a farm-to-table order-based system, significantly reducing food packaging, waste, and fuel consumption used to transport food. Vertical farming is more productive and efficient than conventional farming, driving the market's growth.
Vertical farming is on the upswing, and systems such as vertical farms, aquaponics, hydroponics, recirculating aquaculture systems, greenhouses, and living space farming are mainly accomplished without the need for the sun. This is due to technological developments and smart agriculture that high-tech growers now use LED lights to grow crops. LED lights help to distribute energy to the large number of crops grown in confined and cramped places in vertical farms where sunlight is not used. These LED lights can also prolong the shelf life of the crops.
The evolution of vertical farming is primarily driven by the advances that have been made in LED technology in recent years. For several decades, indoor growing facilities that depended on artificial light were expensive. As a result, farmers used to produce only the most profitable crops, such as marijuana. However, nowadays, LEDs are so affordable and efficient that they are redefining the economics of vertical farming. Thus, the advancements in LED technology help to enhance market expansion.
The expense of building a vertical farm is a significant element of the startup cost and relies heavily on the materials used. The startup costs depend on the method used for growing crops, such as hydroponic, aeroponic, and aquaponics. For instance, hydroponic farming is a large-scale commercial operation typically more economical than other medium and small-scale operations. Some equipment includes lighting, climate control technology, shelving units, pumps, and water pipes. Furthermore, various factors that affect the operational and maintenance cost of vertical farming are no established economics, labor cost, dependency on technology, and pollination. Therefore, such factors are restraining the demand for the global vertical farming market during the forecast period.
Vertical farming can involve a combination of multiple technologies such as robotics, IoT, big data analytics, and AI so crops can grow without any agronomic constraint. With the help of big data analytics, IoT, and simulation modeling, the growing environment in vertical farms can be constantly monitored, reviewed, tested, and improved with the help of predictive analysis. In addition, IoT is the backbone of vertical farming as it is widely used in sensor and actuator technology in vertical farms. Various technology-based companies have a significant role in making the technology feasible for crop cultivation by integrating crop-specific solutions, relevant hardware, and devices for real-data collection, data analysis, and automatic application of actuators.
Furthermore, technology-based companies can deploy wireless sensors to collect interesting data, such as changes in the natural light and growing environment information, such as temperature and pH. In addition, various vertical farming manufacturers across the globe are collaborating with a technology-based company to construct an automated, compact, high-performance vertical farm. Such factors are anticipated to create tremendous opportunities for market development in the coming years.
The global vertical farming market is segmented by mechanism and product.
Based on the mechanism, the global vertical farming market is divided into hydroponics, aquaponics, and aeroponics.
The hydroponics segment is responsible for the largest market share and is anticipated to grow at a CAGR of 25.8% over the forecast period. Hydroponics is one of the central growing systems used in vertical farms. In a hydroponic system, plants are produced in a nutrient solution without soil. Hydroponic systems immerse plant roots in liquid solutions with different nutrients. As a substitute for soil, gravel, and sand are used as an alternative for maintaining the plants' roots. This, in turn, allows macronutrients, or the nutrients required in large amounts, to be taken and focused on by plants. Essential nutrients in a hydroponics system include potassium sulfate, potassium nitrate, monopotassium phosphate, calcium nitrate, and magnesium sulfate. In addition, micronutrients used in hydroponics include chlorine, nickel, copper, iron, manganese, sodium, zinc, boron, molybdenum, cobalt, and silicon. Since nutrients are used directly into the plant's roots through water, instead of being absorbed out of the soil, nutrients are more readily available for growth and health.
Aquaponics is known as a combination of aquaculture and hydroponics. Aquaculture is fish farming, and hydroponics is planting without any soil. Aquaponics is a successor of hydroponics as it integrates plant production while using aquatic organisms to help their growth. The plant's environment will likely imitate its natural habitat in a closed-loop system. The combination of the natural aquatic organisms without using soil helps the plants focus on the intake of natural materials and nutrients. In addition, as plants flourish in aquaponics, they help filter water for the fish. When broken down by bacteria, fish waste is a fertilizer for plants, limiting the need for an external supply of nutrients. Hence, aquaponics operations are not suited for producers involved in cultivating plant life.
Based on product, the global vertical farming market is segmented into lighting devices, hydroponic components, climate control, sensing devices, and others.
The lighting devices segment owns the highest market share and is expected to exhibit a CAGR of 26.4% during the forecast period. Most common indoor operations used in vertical farming rely on high-pressure sodium (HPS) lamps as an alternative to sunlight. However, light-emitting diodes (LEDs) are revolutionizing controlled growth techniques for several reasons in the farming sector. In recent years, the efficiency of LED lighting has increased in converting electricity into light, making productive controlled environment agriculture (CEA) farms. LED lights are cost-effective and can become the supplemental light source in greenhouses and sole light sources in CEA vertical farms.
With the advances of full adjustable spectrum LED lamps, plant light can be customized by adjusting settings such as duration, light intensity, wavelength, and illumination schedule. Thus, the farmers can adapt to a unique environment that fits the needs of their plant crop species. Also, after witnessing a sharp shift toward vertical farming, various companies are trying to penetrate the market by launching products with unique technologies and expanding their LED light business globally. All such factors will likely increase the demand for vertical farming during the forecast period.
In vertical farming, sensing devices such as sensors are implemented to control the environment and provide data 24/7. Soil moisture sensors, dashboards, and predictive software can scan the farm for high-quality remote sensing via smartphones and applications. Vertical farms rely highly on sensor data to determine and maintain ideal growing conditions. Sensors such as pH, moisture, and temperature sensors offer thousands of data points that help farmers improve crop quality, grow yields, and use resources efficiently. Sensors and data are necessary to measure the conditions essential for plant growth, such as climate, plant temperature, nutrient composition of the irrigation water, light level and spectrum, plant morphology, and deficiencies. Such factors are increasing the demand for sensors in vertical farming during the forecast period.
North America Dominates the Global Market
Based on region, the global vertical farming market is bifurcated into North America, Europe, Asia-Pacific, the U.K., China, the Middle East and Africa, and Rest-of-the-World.
North America is the most significant global vertical farming market shareholder and is anticipated to exhibit a CAGR of 28.9% during the forecast period. North America is one of the prominent regions for the growth and development of the global vertical farming market. There is a high emphasis on alternate farming techniques in North America, which creates an increased adoption rate for vertical farming in the region. Vertical farming and food production is an ideal solution to the region's demand for food due to their ability to provide high-quality, nutritious, and fresh crops close to urban centers where highly perishable items are sent to the market quickly. In addition, the North American region is expected to dominate the global vertical farming market due to many leading companies operating in the region, such as AeroFarms, Squareroot, and American Hydroponics.
Europe is projected to exhibit a CAGR of 26.7% over the forecast period. In recent years, the global vertical farming market in the Europe region has been growing steadily. The number of vertical farms in Europe is still relatively small, but the sector is increasing rapidly. However, in recent years, farms have experienced rapid expansion. There are increasing investments and a concurrent proliferation of startups. Following a global trend, the development of this industry is mainly due to the simultaneous drop in the price of LED lighting technologies and the growing consumer demand for fresh, healthy, and local produce grown with limited inputs. Currently, there are two international nonprofit industry associations for vertical farming in Europe: the Association for Vertical Farming (AVF) and the Farm Tech Society (FTS). The FTS focuses on the controlled environment agriculture (CEA) industry, of which vertical farming is a subgroup, while the AVF focuses on vertical farming only.
In Asia-Pacific, countries such as India have the highest population globally, creating higher food demand in these regions. This is expected to drive the global vertical farming market in the Asia-Pacific region. The global vertical farming market in the Asia-Pacific region is enormous, considering countries' dependence on agriculture. Agriculture is a primary occupation for a large population in the countries located in this region. These countries have adopted modern farming techniques in the face of rapid urbanization and an increased number of abandoned farms. These techniques are essential in helping the agricultural and farming sector to sustain, grow and improve production. In addition, the agricultural industry in the region is a necessary contributor to the overall GDP of the region, recording extraordinary growth in the years 2008-2019. Moreover, India is one of the largest food producers globally, catering to around 20% of the global population. Such factors are anticipated to fuel the Asia-Pacific market growth.
The U.K. is one of the significant markets for vertical farming in the European region. Since 2010, conventional farming activities in the U.K. have been hindered due to climate irregularities. This creates a massive challenge for the farmers in increasing their agricultural production. Alternate farming techniques such as vertical farming act as a huge solution to the current situation of the farmers in the U.K. Agriculture can be produced more abundantly by vertical farming without relying on climatic conditions.
The Middle East and Africa are highly deprived regions of the economy compared to other developed areas. In much of the region, the early development of irrigation-based civilizations laid the groundwork for intensive agricultural systems still in use today. Since most of the population relies on agriculture, the scope for this region's global vertical farming market is anticipated to increase.
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