According to a new report published by Allied Market Research, titled, Vertical Farming Market: Global Opportunity Analysis and Industry Forecast, 2017-2023, the global vertical farming market was valued at $1.5 billion in 2016, and is projected to reach $6.4 billion by 2023, growing at a CAGR of 23.6% from 2017 to 2023. The hydroponics segment contributed nearly 42% of the share in 2016.
Continuous rise in population and increase in urbanization globally have increased the requirement of food, and food security has gained importance for the governments globally. The traditional farming is exhaustive, both in terms of available arable land and volume of production. Vertical farming is an improved substitute for traditional farming, which produces more yield, with no need for land, pesticides, and other chemicals. This method of farming has gained popularity in the recent years with decline in water level and problem of drought becoming severe. Vertical farming is expected to become an enhanced substitute of traditional farming, as it produces 70% more crop and uses almost 90% less water as compared to the traditional farming.
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Increase in popularity of organic foods, rise in urban population, and limited arable land for traditional agriculture are the major factors that drive the growth of the vertical farming market. However, requirement of high initial investment to set up a vertical farm and technologies used being in developmental phase restrain the market growth. Furthermore, all crops cannot be grown by this method, and is limited to crops such as tomatoes, lettuces, and green crops, thus hampering growth of the market. Decline in water level and increase in government initiatives to promote vertical farming globally are anticipated to provide new opportunities for the market growth.
In 2016, hydroponics vertical farming contributed over 42% share in the market, and is expected to maintain its dominant position throughout the analysis period, owing to its capability to produce more nutritious eatables in less space consumption. Moreover, this growth mechanism uses 10 times less water than conventional farming.
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Moreover, Asia-Pacific is the major revenue contributor, owing to the government initiatives and cooperation from private companies. The market growth in the region is attributed to factors such as alarming rate of water level depletion, presence of drought-stricken areas, and increase in environmental concerns.
Lighting component segment dominated with over 25% share in 2016. Lighting devices are an essential component of vertical farming, as they facilitate growth of plants by acting as a substitute to sunlight. These devices use an LED lighting system that produces dual band color spectrum at the same time, and maintains efficiency and low heat dissipation. Lighting systems provide photosynthetic wavelengths in accordance to crop growth, thereby maximizing the crop yield and ensuring minimum power consumption. Thus, farmers opt for LED lighting systems over other lighting technology for vertical farming.
Key Findings of the Vertical Farming Market:
- In terms of revenue, lighting component contributed the maximum market share in 2016, and is expected to maintain its lead throughout the forecast period.
- Aeroponics is expected to grow at the highest CAGR during the forecast period.
- In 2016, the hydroponics growth mechanism segment held nearly two-fifths market share, which was the highest among all the growth mechanisms.
- In 2016, Asia-Pacific accounted for over 45% share globally, and is expected to dominate the market in the future.
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In 2016, in terms of revenue, Asia-Pacific accounted for nearly half of the vertical farming market, and is expected to retain its dominant position, owing to the presence of well-established vertical farming companies, government initiatives, and rise in demand of organic food.
The major companies profiled in the report include AeroFarm, FarmedHere, Illumitex, Inc., Koninklijke Philips N.V., Sky Green, Everlight Electronics, Green Sense Farms, American Hydroponics, Hort Americas, Agrilution, and others.