Indoor Farming Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Farming Technique (Hydroponics, Aeroponics, Aquaponics, Soil-Based, Hybrid), By Facility Type (Greenhouse, Indoor Vertical Farm, Container Farm, Others), By Component (Irrigation Component, Lighting, Sensor, Climate Control, Others), By Crop Type (Fruits & Vegetables, Herbs & Greens, Flowers & Ornamentals, Others), By Region and Competition 2018-2028

Market Overview

Global Indoor Farming Market has valued at USD 33.85 Billion in 2022 and is anticipated to project impressive growth in the forecast period with a CAGR of 11.51% through 2028. Indoor farming is an agricultural method that involves cultivating crops in controlled environments such as warehouses, greenhouses, or other indoor facilities. It utilizes artificial lighting, climate control, and advanced technologies like hydroponics, aeroponics, or aquaponics. The primary objective is to achieve efficient and sustainable food production, particularly in urban areas where traditional farming methods may face challenges due to limited space, poor soil quality, or adverse weather conditions. Urban farming of this nature helps to reduce the carbon footprint associated with conventional agriculture by minimizing water, fertilizer, and pesticide usage, as well as transportation costs and food waste. These systems can vary in size, complexity, and crop variety, ranging from small-scale home gardening setups to large commercial operations. Commonly grown crops in indoor farming include leafy greens, herbs, microgreens, strawberries, tomatoes, cucumbers, and peppers.

Key Market Drivers

Rapid Urbanization & Limited Outdoor Agricultural Space  

The dawn of rapid urbanization coupled with limited outdoor agricultural space has positioned indoor farming as a promising solution to address global food security concerns. As cities expand and develop, available land for traditional agriculture is exponentially decreasing. This is sharpened by increasing urban populations who demand fresh, local produce. Indoor farming, with its space-efficient and controlled environment agriculture techniques, is poised to meet this demand. It offers the ability to grow crops, irrespective of weather conditions, and without the requirement of vast farmland. Importantly, urban-based indoor farming reduces the 'food miles' associated with delivering produce from rural farms to urban consumers, enhancing freshness and reducing carbon emissions. Indoor farming techniques like hydroponics, aeroponics, and aquaponics are resource-efficient, using a fraction of the water compared to traditional farming. Furthermore, indoor farms can be stacked vertically, maximizing production per square foot - a major advantage in land-scarce urban areas. The combination of these factors suggests a significant potential for indoor farming to not only sustain, but also thrive in the face of rapid urbanization and limited outdoor agricultural space. The expected result is a surge in demand for indoor farming practices globally, a trend set to redefine the future of agriculture.

Technological Advancements in Farming Techniques

Technological advancements in farming techniques are expected to significantly bolster the global demand for indoor farming. Innovative technologies, such as hydroponics, aeroponics, and aquaponics, have revolutionized traditional farming methods, thereby making indoor farming an increasingly viable option. These technological innovations not only offer the opportunity for year-round cultivation regardless of external climatic conditions but also promise higher crop yields compared to traditional farming. Indoor farming's ability to conserve water and minimize the use of pesticides further adds to its appeal, aligning it with the global trend towards sustainable practices. Additionally, as urbanization continues to limit available arable land, the space-efficient nature of indoor farming is poised to make it an increasingly popular choice. The ability of indoor farming to produce crops in close proximity to urban centers also reduces transportation costs and the associated carbon footprint, aligning this technology with the global push towards sustainability and carbon-neutrality. The amalgamation of these factors is expected to drive an increased demand for indoor farming globally.

Rise in Capability to Grow a Wide Variety of Crops

Indoor farming has emerged as a revolutionary agricultural practice that holds the potential to address food security problems across the globe. One of the prominent factors driving the demand for indoor farming is the escalating capability to cultivate a diverse range of crops. No longer confined to a handful of plant varieties, indoor farming now accommodates a vast array of crops, ranging from leafy vegetables to fruits and medicinal plants. This versatility is primarily due to technological advancements in farming techniques, such as hydroponics, aeroponics, and aquaponics. These state-of-the-art techniques facilitate controlled environment agriculture, enabling the growth of crops in any climatic condition, thereby breaking the barriers of geographical limitations and seasons. Moreover, indoor farming reduces the risk of crop damage due to pests, diseases, and unpredictable weather conditions, ensuring consistent crop yield all year round. Consequently, the potential to grow a wide diversity of crops under controlled conditions is projected to propel the demand for indoor farming worldwide. It represents a promising solution to food production challenges in regions with adverse climatic conditions for traditional farming. Thus, as the capability to grow a wide variety of crops indoors increases, so too does the global demand for this innovative, sustainable approach to agriculture.

Decreased Use of Pesticides & Herbicides

Indoor farming, a method of producing food in vertically stacked layers, is gaining worldwide recognition for its capacity to increase yield with minimal environmental footprint. One of the primary driving factors for this shift is the reduced reliance on harmful pesticides and herbicides typically associated with traditional farming. As awareness about the detrimental effects of these chemicals on both human health and the environment grows, more and more consumers are demanding produce grown without their usage. In this context, indoor farming stands as a promising alternative, providing controlled environments where pests and diseases can be managed effectively with minimal or no use of synthetic pesticides. Furthermore, indoor farming eliminates the risk of crop damage from external factors such as unpredictable weather, pests, and diseases, reducing the need for herbicides. As a result, the demand for indoor farming is expected to surge globally, encouraged by consumer concern for food safety and sustainable farming practices. This transition towards a more organic and environmentally conscious farming approach is likely to redefine the future of agriculture, making indoor farming not merely an alternative, but an integral part of global food production.

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Key Market Challenges

High Initial Investment

High initial investment in indoor farming is a significant factor expected to reduce its global demand. Indoor farming, though a promising solution to urban space constraints and climate change issues, requires substantial upfront capital. Costs associated with advanced farming technologies, such as hydroponics, aeroponics, or aquaponics, and energy-efficient lighting systems, can be prohibitively high. Moreover, the necessary infrastructure, including climate-controlled environments and automated systems for nutrient delivery, adds to the initial expense. These high start-up costs serve as a deterrent for potential entrants, particularly small-scale farmers, who may lack the requisite capital. Additionally, the return on investment (ROI) in indoor farming is not immediate, with profitability often only achievable in the long term. This aspect could further discourage entrants, particularly in developing economies. Lastly, the ongoing operational costs, including those for energy, labor, and maintenance, further increase the financial burden, potentially outweighing the benefits of indoor farming. In the face of these factors, the high initial investment required for indoor farming is expected to depress its global demand.

Space Constraints

One of the significant challenges that could potentially decrease its global demand is space constraints. The indoor farming model requires substantial indoor space to be effective, and in densely populated regions, especially urban areas, space availability is a critical concern. High population density often translates into an increased demand for housing, public facilities, and commercial spaces, leaving little room for indoor farming operations. Urban land is a precious commodity, and the high costs associated with acquiring adequate space for indoor farming can make it an unattractive proposition, especially in comparison to traditional farming methods. Additionally, the infrastructure needed for indoor farming, including complex lighting and irrigation systems, can require significant initial investment. These spatial and financial constraints could decrease the global adoption of indoor farming, despite its potential benefits such as year-round production and reduced dependency on weather conditions. While technological advancements may eventually alleviate some of these concerns, the issue of space constraints is a significant hurdle that the industry must overcome to increase global demand.

Key Market Trends

Rise in Control Over Crop Cultivation & Management

The rise in control over crop cultivation and management through the advancement of indoor farming is expected to significantly increase its global demand. Indoor farming, a method of cultivating crops within indoor systems, offers precise management of environmental factors such as light, humidity, temperature, and nutrient control. This level of precision ensures the production of high-quality crops year-round, regardless of external weather conditions. Moreover, indoor farming allows for the cultivation of a greater diversity of crops than traditional farming methods, including crops that are typically not suitable for certain climates or regions. As global food demand continues to surge, indoor farming's ability to grow more with less will be a critical factor in meeting this demand sustainably. By optimizing resource usage, such as water, energy, and land, indoor farming demonstrates its potential to address the challenges of food security and environmental sustainability. Furthermore, indoor farming mitigates the risks of crop failure due to pests, diseases, or adverse weather, providing a more reliable and consistent food source for communities.

The reliability, increased productivity, and efficiency of indoor farming are expected to attract more investors and stakeholders to this innovative approach. As awareness grows about the benefits of indoor farming, including reduced environmental impact and shorter supply chains, the global demand for indoor farming is projected to continue its upward trajectory.

Enhanced Crop Yield & Productivity

Indoor farming, a revolutionary approach to agriculture, is gaining traction globally due to its potential to significantly enhance crop yield and productivity. By controlling environmental factors such as light, humidity, and temperature, indoor farming provides optimal growth conditions for crops, leading to faster maturation and larger yields. This method also eliminates the risks associated with traditional farming, such as adverse weather, pests, and diseases, making it a more reliable and efficient farming technique. Furthermore, indoor farming's ability to grow crops year-round, independent of seasonal constraints, is expected to meet the increasing global food demand, thereby driving its market growth. Additionally, indoor farming's space-efficient nature allows for farming in urban areas, opening new opportunities for local food production and reducing the need for long-distance transportation, further enhancing its appeal. Given these advantages, it is anticipated that the demand for indoor farming will surge globally as we strive to feed a rapidly growing population while minimizing our environmental footprint.

Segmental Insights

Farming Technique Insights

Based on the Farming Technique, the hydroponics segment accounted for the largest market share in 2022 and is projected to maintain its dominance. Hydroponics is a popular farming method due to its low installation costs and operational ease. This technique involves replacing soil with a mineral solution that surrounds the plant roots for cultivation. Hydroponics is advocated as a means to mitigate climate change, reduce environmental impact, and combat species extinction caused by overexploitation and intensive farming. In comparison to traditional soil-based production, hydroponics offers advantages such as efficient water usage, creation of a controlled micro-climate, reduced labor requirements, absence of soil dependency, and production of higher quality food. Moreover, the hydroponics method eliminates the risk of soil-borne diseases. Increasing consumer awareness about the adverse effects of pesticides is expected to drive the demand for hydroponics.

The aquaponics segment is projected to witness significant growth during the forecast period. Aquaponics combines hydroponics and aquaculture, reducing the need for harmful chemicals in cultivation. One of the major advantages of aquaponic agriculture is its minimal water wastage compared to traditional farming methods. Despite its name, aquaponics utilizes approximately 90% less water than conventional farming. Furthermore, aquaponics enables the cultivation of various crops such as cucumbers, tomatoes, peppers, flowers, strawberries, melons, and herbs (mint, basil, wheatgrass, oregano, chives, sage, parsley).

Facility Type Insights

Based on the Facility Type, the Indoor Vertical Farm segment is expected to exhibit the fastest compound annual growth rate (CAGR) in the coming years. This can be attributed to the increasing adoption of eco-friendly methods for the production of fruits and vegetables. With consumers' changing food purchasing behaviour and a growing demand for organic food, the demand for indoor farming is expected to rise significantly.  Indoor farming offers a solution to protect crops from intense weather conditions through the use of advanced techniques like controlled environment agriculture technology. This technology allows for precise control of factors such as light, temperature, humidity, and fertigation, ensuring optimal growth conditions for crops.

In response to the rising food demand, farmers are implementing new crop production techniques, including greenhouses and vertical farming. Among these, greenhouses have held the dominant market share in 2022. A greenhouse, also known as a hothouse, is a closed structure made of transparent material that provides an ideal environment for the growth of plants, crops, and flowers. By controlling climatic conditions inside the greenhouse, farmers can enhance the quality and quantity of their produce. Notably, greenhouses also enable higher yield production compared to traditional farming techniques. The adoption of innovative farming methods like indoor vertical farming and greenhouses is expected to continue to grow as the agricultural industry strives to meet the increasing global demand for food while ensuring sustainable and efficient production.

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Regional Insights

North America accounted for the highest global indoor farming market share in 2022. With the help of high-efficiency LED lights and advanced indoor management practices, growers in the United States have embraced large-scale indoor farming. These innovative practices are not only expected to significantly reduce energy lighting costs by about 50%, but also contribute to a substantial decrease in the carbon footprint of controlled environment agriculture.

According to the US Department of Agriculture (USDA), conventional lettuce farming yields have doubled when cultivated through vertical farming techniques. This remarkable increase in productivity has sparked further interest in indoor farming, making it a thriving industry in the United States. Currently, greenhouse crop production dominates the indoor farming landscape, with a particular focus on urban areas like New York, Chicago, and Milwaukee. The rise of urban population dwellings in these cities has created opportunities for indoor farming by transforming abandoned warehouses, derelict buildings, and high-rises into vibrant centers of agricultural production. Furthermore, the growing demand for greenhouse tomatoes in the United States has fueled the market for hydroponic operations. As a result, indoor farming continues to be one of the fastest-growing industries in the country, offering a sustainable and efficient approach to food production.

Recent Developments

• April 2021: Aerofarms entered into a partnership with Hortifrut SA, a certified B corporation in Chile. The collaboration will focus on research and development of blueberry and cranberry production in fully controlled vertical farms and indoor environments.
• May 2021: BrightFarms inaugurated its latest indoor farm in Hendersonville, North Carolina. Spanning across 6 acres, this greenhouse facility is projected to yield 2 million pounds of lettuce annually. Additionally, in 2019, Bright Farms expanded its construction unit by establishing three new sustainable greenhouse farms in Massachusetts, New York, and North Carolina.
• May 2021: Bowery Farming, a New York City-based vertical farming startup, announced a USD 300 million Series C round of funding. Bowery has expressed intentions to utilize the funds for further expanding its network of intelligent indoor farms throughout the United States.

Key Market Players

• LumiGrow Inc.
• Signify Holding BV
• Argus Control Systems Ltd.
• Netafim Ltd
• Logiqs BV
• Vertical Farm Systems
• General Hydroponics, Inc.
• Heliospectra AB
• Bright Farms Inc.
• Bowery Farming Inc.

Report Scope:

In this report, the Global Indoor Farming Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

·         Indoor Farming Market, By Farming Technique:

o   Hydroponics

o   Aeroponics

o   Aquaponics

o   Soil-Based

o   Hybrid

·         Indoor Farming Market, By Facility Type:

o   Greenhouse

o   Indoor Vertical Farm

o   Container Farm

o   Others

·         Indoor Farming Market, By Component:

o   Irrigation Component

o   Lighting

o   Sensor

o   Climate Control

o   Others

·         Indoor Farming Market, By Crop Type:

o   Fruits & Vegetables

o   Herbs & Greens

o   Flowers & Ornamentals

o   Others

·         Indoor Farming Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  France

§  United Kingdom

§  Italy

§  Germany

§  Spain

o   Asia-Pacific

§  China

§  India

§  Japan

§  Australia

§  South Korea

o   South America

§  Brazil

§  Argentina

§  Colombia

o   Middle East & Africa

§  South Africa

§  Saudi Arabia

§  UAE

§  Kuwait

§  Turkey

§  Egypt

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Indoor Farming Market.

Available Customizations:

Global Indoor Farming market report with the given market data, TechSci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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