Global Indoor Farming Market - 2021-2028
Indoor farming is a type of modern farming to grow crops or plants in an indoor environment. Indoor farming is operated in both small and large scale. It is climate friendly and protects the farm from weather-related vagaries which generally acts as a hindrance in conventional crop production. Indoor farming is widely practiced in urban areas owing to limited space for farming. In recent years, growth in technology of farming sensors, monitoring and regulating devices for each aspect of cultivation has promoted indoor farming. Reduction in use of herbicides and pesticides in crop or plant production is expected to gain popularity in the indoor farming market. Moreover, rising concerns about food security across the globe is one of the major trends expected to boost the indoor farming market.
Market Dynamics: Growing demand for maximizing crop yield
The scarcity of land for farming across the world is one of the primary factors catalyzing indoor farming growth. As the global population continues to develop and urbanize, farmers are opening indoor facilities closer to these urban areas creating a local, stable, and sustainable year-round food supply. In addition to this, the increasing instances of droughts, floods, and other natural disasters across the globe have raised concerns over food security. This, in turn, has prompted the growth of indoor farming across the globe. Moreover, overall decline in arable land per capita is expected to drive the indoor farming market growth. According to The World Bank Group, the overall arable land per capita has declined from 0.197 hectares in 2013 to 0.192 hectares in 2016. The scarcity of arable land owing to land degradation has urged the farmers to adopt new solutions to produce fresh food. The adoption of indoor farming techniques is expected to enable indoor farm owners to grow crops indoor in layers, stacked on racks, in a multi-story building, or a warehouse. This is anticipated to emerge as a significant trend in the market by 2027.
However, the high initial investment in the building of indoor farms and limitations on the growing variety of crops is expected to hinder the market growth. In addition, indoor farming often involves the use of advanced solutions such as cameras, sensors, automated systems, artificial intelligence, and hydroponic, aquaponics, or aeroponic systems. To operate these advanced systems, knowledgeable and skilled workforce is essential. Hence, lack of skilled workforce and limited crop range is expected to restraint the market growth.
Market Segmentation: Indoor vertical farms segment is expected to be the fastest growing segment with a CAGR of XX% during the forecast period
The global indoor farming market has been segmented by facility type into glass or poly greenhouses, indoor vertical farms, container farms, and indoor deep water culture systems among others. Indoor vertical farms is expected to be the fastest growing segment during the forecast period, owing to the growing adoption of environmentally-friendly production of fruits and vegetables. Besides, the changing food purchasing behavior of consumers resulting in an increasing demand for organic food is expected to drive the demand. Indoor farming protects crops from intense weather conditions through the usage of techniques, such as the controlled environment agriculture technology, where the facilities use control of light, artificial environmental monitoring, and fertigation.
On the other hand, glass or poly greenhouses facility type held the dominant market share of over XX% in 2020. A greenhouse- also called a hothouse-is a closed structure made up of transparent material and used to grow plants, crops, and flowers. In greenhouses, climatic conditions are controlled to enhance quality as well as quantity of produce. Greenhouses also facilitate higher yield production than traditional farming techniques.
Geographical Penetration: North America is expected to dominate the global indoor farming market
By geography, North America is expected to dominate the global indoor farming market in the year 2020, growing with a CAGR of xx% during the forecast period. The United States held highest market revenue share of XX% in the year 2020. With the help of high-efficiency LED lights and enhanced indoor management practices, the US growers have been able to adopt large-scale indoor farming. Such practices are expected to reduce energy lighting costs by 50%, thus, reducing the carbon footprint of controlled environment agriculture. As per the US Department of Agriculture (USDA), the average yield of conventional lettuce farming doubled by two folds, when cultivated through vertical farming. According to the UN Food and Agriculture Organization, drylands in Mexico occupy approximately 101.5 million hectares of land, thereby, thrusting the need for indoor farming practices. Canada has also seen a positive growth trend, contributing significantly to the world exports of hydroponically grown tomatoes.
Asia Pacific is estimated to witness the fastest CAGR of over XX% from 2021 to 2028. Countries such as China and Japan are estimated to witness considerable growth in the forthcoming years owing to the presence of a large number of indoor farms. In addition, the continuously rising population in the region has resulted in an increasing demand for organic food, which has led to the building of greenhouses as well as vertical farms to produce crops.
The market for indoor farming is highly fragmented, with the top players accounting for a minor share and the other small companies capturing the major share in the market. Some of the notable players in the market are AeroFarms, Bright Farms Inc., Bowery Inc., FreshBox Farms, Metropolis Farms Inc., Garden Fresh Farms, and Village Farms International Inc. The company's focus on building greenhouses and expanding indoor farms to meet the end-market requirements. For instance, Richel Group announced the design of a multi-span greenhouse in Mexico. The greenhouse is designed to meet the demands of the growers for the broader structures. The structure is favored owing to its optimal light transmission, circulation inside the structure, ease of air movement, and better climate control. In April 2020, AeroFarms has announced that it is set to build a 90,000 square foot indoor vertical farm in Abu Dhabi, UAE, as part of USD 100 million AgTech investment by Abu Dhabi Investment Office (ADIO). In December 2019, AeroFarms announced an investment of USD 42 million to build an indoor vertical farm in the Cane Creek Centre, a joint industrial park for the City of Danville and Pittsylvania County in the US.
COVID-19 Impact: Increase in demand for indoor farming
COVID-19 bolsters demand for locally-grown greens, enhancing the demand for vertical farming. Investors are finding the business attractive owing to the farms offering organic fruits and vegetables while consuming less water and per unit area of land when compared to conventional farming. Increased production capacity, localization, and short supply chain systems prove to be more robust during this crisis. Thus, during the pandemic, the market witnessed a significant impact on growth rate.