Vertical Farming Produce Market Size, Share & Trends Analysis Report By Crop (Tomato, Lettuce, Bell & Chili Peppers, Strawberry, Cucumber, Leafy Greens, Herbs), By Structure, By Growing Mechanism, And Segment Forecasts, 2020 - 2027

Report Overview

The global vertical farming produce market size was valued at USD 1.02 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 25.7% from 2020 to 2027. Rising investments from key investors and numerous smart agriculture government initiatives through subsidies and grants are some of the key drivers attributed to market expansion. Growing technology integration within the market space has encouraged several venture capitalists and independent financiers to invest considerable amounts. Numerous vertical farming companies are entitled to low-interest loans to assist the company with machinery, facility, and equipment costs. Therefore, increasing financial aids have contributed to the overall growth of the industry and increased circulation of vertically grown crops.

The COVID-19 pandemic outbreak has contributed to an increase in the demand for vertically grown produce. Massive disruptions experienced in global supply chains have been witnessed since the COVID-19 pandemic. As a result, the crops grown through traditional farming in the fields are turning into waste. On the contrary, companies such as AeroFarms and Bowery Farming, Inc. are capitalizing on the advantage of the crops grown in the heart of urban areas. As the crops in vertical farms are grown and harvested with less human exposure, safety, and freshness associated with them have motivated consumers to opt for vertically grown produce.

The growth of the global vertical farming produce market can also be attributed to the rising adoption of alternative farming methods in the countries with unfavorable farming conditions. For instance, the Middle East is witnessing a rapid adoption of vertical farming methods to cultivate crops that cannot be grown in the region's natural climate. Badia Farms is one of the largest companies in the region, producing numerous crops, including arugula, kale, red cabbage, red radish, green mustard, red mustard, basil, amaranth, pepper cress, sorrel, wasabi, cress, coriander, and lettuce. The vertical farming method enabled the farmers from the Middle East to cultivate a variety of such crops at a high yield rate.

As vertical farms eliminate synthetic fertilizers, soil, and harmful pesticides, the consumers are emphasizing the consumption of vegetables from the local vertical farms. However, farmers from under-developed and emerging economies find it challenging to adapt to vertical farming technology, mainly due to the lack of information and technical know-how. Further, to set up a vertical farm, these farmers require a cost-intensive budget for procuring advanced products that include LED grow lights, temperature, and humidity sensors, among others. Thus, the overall efforts and cost for setting up the farm become a challenge for small scale farmers from these regions, which in turn is anticipated to pose a challenging factor for the steady growth of the market.

Crop Insights

The tomatoes segment led the market and accounted for more than 19% of the global revenue share in 2019. This high share is attributable to the high average demand for tomatoes in all regions compared to other crops such as lettuce, spinach, peppers, cucumbers, herbs, and so on. Further, the global per capita consumption for tomatoes is very high, which results in higher demand from consumers across the globe. Numerous large-scale indoor vertical farming companies have captured the opportunities to cater to the rising demand for tomatoes. The companies such as BrightFarms; Plenty Unlimited Inc.; and Signify Holdings are actively involved in vertical farming and selling of tomatoes in urban regions.

The demand for vertically grown leafy vegetables is very high across the globe. All leafy vegetables, including lettuce, spinach, kale, arugula, chard, chives, and mint, have accounted for more than 30% of the market revenue share among overall crops in 2019. The lettuce segment is estimated to witness the highest CAGR over the forecast period. The growth is attributed to the capability of growing lettuce economically in small-scale and large-scale vertical farms for the masses. Additionally, the cultivation time for all leafy vegetables is very short in the controlled environment of indoor vertical farms. As a result, the farmers can sell such leafy vegetables at a lower average price in the market, thereby attracting the customer base.

Growth Mechanism Insights

The hydroponics segment dominated the market with a revenue share of more than 45% in 2019 and is expected to remain dominant over the forecast period. Hydroponic farming is a method of growing plants without soil, where the soil is replaced by a mineral solution inserted around the plant roots. Increasing awareness among consumers regarding the effects of pesticides and artificial ripening agents over their health is expected to drive the demand for hydroponically grown vegetables. The method eliminates the need for such products, thereby providing nutritionally superior produce.

The hydroponics segment is also estimated to witness the highest CAGR from 2020 to 2027. Low installation cost and ease of operation of these systems are some of the notable factors that will boost the near future adoption. Followed by this, the aeroponics segment is anticipated to witness considerable growth over the forecast period. This mechanism is similar to hydroponics; however, in aeroponics, there is no need for the growing medium as roots of plants are hung in a dark chamber and sprayed with nutrient-rich solution periodically. Lettuce, chives, peppers, kale, mint, cucumbers, and peas are some of the largest cultivated plants through aquaponics.

Structure Insights

The building-based segment led the market and accounted for more than 60% of the global revenue share in 2019. Vertical farms inside a building can produce large volumes of vegetables for the vast customer base, increasing the segment's sales revenue. Further, the building-based structure can accommodate a large number of crops, which helps minimize the cultivation cost due to economies of scale. The building-based farm structure is widely accepted in Japan, China, and other Asian countries. It is also the fastest-growing segment in terms of revenue owing to substantial investments in new building-based farm locations. Companies, such as AeroFarms, Badia Farms, and Plenty Unlimited Inc., hold the largest building-based vertical farms across the globe, and numerous other companies are heavily investing in building-based large-scale farms. These farm operators use aeroponics to cultivate crops, thereby reducing water consumption by 90% compared to traditional outdoor agriculture.

The shipping container is gaining wide popularity among start-ups and small-scale farmers. The growing attraction is attributed to the ability to grow crops anywhere irrespective of the geographic location. One of the primary benefits of the container-based structure is that the farms are easy to transport, and farmers do not require a dedicated building to start the business. Moreover, the surplus availability of unused and old shipping containers across the globe, coupled with their low prices, allows small-scale farmers to enter the market space. However, the inability to achieve favorable controlled environmental and low comparative output results in lower quality of produce, thereby reducing the demand.

Regional Insights

North America dominated the market and accounted for over 33% share of global revenue share in 2019 and is anticipated to maintain its dominance over the forecast period. The customers from the North American region are increasingly consuming vegetables and fruits free from pesticides and soil contamination. The U.S. market has witnessed a significant emergence of new vertical farms across the country. The early adoption of urban farming in the country results in a high market share. The Asia Pacific regional market also held a significant revenue share in 2019, owing to the rising number of vertical farms in Singapore, China, and Japan. The local governments are undertaking several initiatives to build vertical farms to overcome the challenges, such as the growing population in urban areas, climate change, pollution, and food production in an environmentally unfriendly way.

The Middle East is anticipated to grow at a substantial CAGR of 26.6% from 2020 to 2027. The growth can be witnessed through the emergence of vertical farm designers, builders, and cultivation companies in the UAE and Saudi Arabia. Some of the notable stakeholders in the region include Badia Farms, Tower Farms, Fresh Oasis, and Green Factory, among many others. The Middle Eastern market is anticipated to open significant growth opportunities for vertical farming. The farmers from this region are now able to cultivate crops such as lettuce and other leafy greens, which are difficult to grow through traditional agriculture.

Key Companies & Market Share Insights

The market is highly fragmented with numerous companies. All the major players belong to the U.S., which have large vertical farming facilities. However, the government subsidies, financing, investments, and ease of vertical farm setup have enabled the emergence of small-scale container farms and start-ups worldwide. More than 90% of the global revenue share is divided among such small market players from various countries. Further, the established market players are engaged in regional expansions, acquisitions, and partnerships to gain competitive advantage. For instance, In June 2019, SPREAD Co., Ltd. announced a partnership agreement with J Leaf Corporation, a JXTG Group member, engaged in the production and sale of vertically grown products. The partnership was aimed at constructing a Techno Farm in Narita, Japan. Further, In April 2020, AeroFarms announced to build an indoor vertical farm covering an area of 90,000 sq. Ft. in Abu Dhabi. The new farm would be dedicated to research & development and commercialization of local crops. Some of the prominent players in the vertical farming produce market include:

• AeroFarms

• Agricool

• BADIA FARMS

• Bowery Farming Inc.

• BrightFarms

• Gotham Greens

• GrowUp Urban Farms Ltd.

• InFarms

• Plenty Unlimited Inc.

• Sky Greens

• Spread

• YesHealthFarms

Vertical Farming Produce Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global vertical farming produce market report based on crop, structure, growing mechanism, and region:

• Crop Outlook (Revenue, USD Million, 2016 - 2027)

  • Tomato

  • Lettuce

  • Bell & Chili Peppers

  • Strawberry

  • Cucumber

  • Leafy Greens (excluding lettuce)

  • Herbs

  • Other Crops

• Structure Outlook (Revenue, USD Million, 2016 - 2027)

  • Shipping Container

  • Building-based

• Growing Mechanism Outlook (Revenue, USD Million, 2016 - 2027)

  • Aeroponics

  • Hydroponics

  • Aquaponics

• Regional Outlook (Revenue, USD Million, 2016 - 2027)

  • North America

    • The U.S.

    • Canada

    • Mexico

  • Europe

    • The U.K.

    • Germany

    • France

    • Norway

    • Switzerland

  • Asia Pacific

    • China

    • Japan

    • Hong Kong

    • Singapore

  • South America

    • Brazil

  • Middle East

    • Saudi Arabia

    • UAE

  • Africa