Global Indoor Farming Market By Growing System (Aeroponics, Hydroponics, Aquaponics, Hybrid, and Soil-Based), By Facility Type, By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends, and Forecast 2023-2032

Report Overview

In 2022, the global indoor farming market size was valued at USD 33.9 billion and will reach USD 93.0 billion by 2032. Between 2023 and 2032, this market is estimated to register the highest CAGR of 10.9%.

Culturing crops indoors in a controlled environment is considered indoor farming. The farming of plants in layers that are loaded vertically is mentioned as “vertical farming.” It is commonly used as a soilless farming method, containing aeroponics, hydroponics, and aquaponics, in addition to controlled-environment agriculture, to achieve the largest possible rate of plant development.

Rising consumer awareness regarding the benefits of high-quality and fresh food is anticipated to propel the market’s growth. In addition, the increasing population over the globe, particularly in developing economies such as India and China, has led to a rise in food demand, which is anticipated to urge the growth of the global indoor farming market share during the forecast period.

Key Takeaways

• Market Developments: Market projections suggest that the indoor farming market will experience a compound annual growth percentage (CAGR) between 10.9% from 2023-2032.
• Overview of Indoor Farming: Indoor farming encompasses an assortment of crops and produce grown in controlled indoor environments, with factors like location, technology integration, and specific growth requirements having major influences on its landscape.
• Growing System Analysis: As of 2022, hydroponics held onto its market lead with its highest market share – this trend is predicted to remain prevalent during the forecasted period.
• Facility Analysis: The indoor vertical farming market size is projected to experience the fastest compound annual growth during its projected period, due to an increasing interest in using environmentally sustainable production methods for producing vegetables and fruit as well as shifting consumer purchasing patterns towards organic foods that should further drive its demand.
• Component Analysis: Due to advances in farming practices and technology, software sales are expected to experience compound annual compound annual compound annual compound annual compound compound annual compound average growth exceeding 13.5% from 2023-2032.
• Crop Type Analysis: Fruits and vegetables are anticipated to lead the indoor farming market during 2022, specifically tomato as it’s widely known for rapid production rates.
• Drivers: Indoor farming industry growth can be explained by factors including increasing consumer demand for locally sourced, pesticide-free produce; technological innovations that facilitate year-round cultivation; and environmental concerns related to sustainability in farming practices and their growing needs.
• Restraints: Indoor farming’s challenges include high initial investment costs and energy usage concerns as well as needing advanced technical knowledge and advanced technical expertise to become profitable. Economic instabilities as well as shifting consumer preferences present additional hurdles to market expansion.
• Recent Trends: Current indoor farming market trends include adopting advanced automation and AI technologies, sustainable agricultural practices, and an increase in organic and non-GMO produce as priority areas.
• Regional Analysis: As of 2022, Europe held the leading market share and is forecasted to remain so throughout its forecast period. Europe’s indoor farming market’s continued lead may be attributable to the increasing adoption of indoor farming technology market (such as Controlled Environment-Agriculture (CEA). CEA remains a primary driver for growth within this region.
• Important Players in Indoor Farming Market: Key players in the indoor farming market include established agricultural technology companies, vertical farming ventures, and research organizations. Each of these key players puts emphasis on collaborative efforts, technological innovations, and expansion plans as a way of remaining competitive within this rapidly expanding arena.

Drivers

Increasing Demand for Fresh and Locally Grown Produce

The requirement for locally grown and fresh products has grown in recent years owing to multiple factors, such as concerns over food safety, the willingness for healthier consumption, and the desire to decrease the carbon footprint of food transportation and production.

The indoor farming market can also help address the issue of deserts, which are areas where fresh produce is not easily available, by providing a local source of fresh produce.

Indoor farming agrees to the production of high-quality and fresh products constantly in a controlled environment, making it an attractive option for retailers and consumers in the global market.

Growing Demand for Nutritious Food

People are accepting healthy & pesticide-free, and active lifestyles produced globally. The demand for these products has improved indoor farming as new system additions help advance yields, costs, and efficiencies.

Restraints

High Capital Costs and Operational Expenses

Indoor farming needs major investment in infrastructure, such as HVAC systems, lighting, and hydroponic equipment. The cost of operating and setting up an indoor farm can be a major restrain to the entry of new players in the market, restricting the scalability of current operations.

On the other hand, the cost of supplies and equipment is anticipated to reduce, making indoor farming further accessible to a broader range of entrepreneurs and investors.

Growing System Analysis

The Hydroponics Segment Accounted for the Largest Market Share During the Forecast Period

The hydroponics segment recorded the largest market share in 2022, which is anticipated to continue leading the segment during the forecast period. Hydroponics is a widespread farming technique owing to ease of operations and low installation costs.

In this process, the soil is substituted by a mineral solution implanted around the plant roots for raising the plant. Hydroponics is endorsed as a method to avoid climate change and to reduce environmental harm and extinction of species brought on by overexploitation and intensive farming.

Compared to conventional soil-based farming, hydroponics benefits in the effective utilization of water produces higher quality food, needs no soil, requires less labor, and assists a micro-climate. In addition, the hydroponics method reduces the risk of soil organisms affecting diseases. Rising awareness among consumers about the impacts of pesticides is anticipated to propel the requirement for hydroponics.

Facility Type Analysis

The Indoor Vertical Farming is Expected to Conquer the Global Indoor Farming Market

The indoor vertical farm type is anticipated to record the fastest CAGR during the forecast period due to the rising adoption of eco-friendly production of vegetables and fruits. In addition, the shifting behavior of food purchasing by consumers causing a rising requirement for organic food is projected to propel the demand.

Indoor farming helps to protect crops from extreme weather conditions by using advanced techniques, such as the controlled environment agricultural technology, where the services use control of light, artificial environmental observing, and fertigation.

Farmers are adopting new crop production techniques, such as vertical farming and greenhouses, to meet growing food requirements. The greenhouse facility segment held the dominating market share in 2022. A greenhouse, also called a hothouse, is a closed structure made of transparent material and used to grow crops, flowers, and plants.

In greenhouses, climatic conditions are controlled to boost the quantity and quality of production. Greenhouses also simplify higher yield production as compared to traditional farming techniques.

Component Analysis

The Hardware Segment is Anticipated to Dominate the Market During the Forecast Period.

On the basis of components, the hardware component conquered the indoor farming component market, and it is anticipated to dominate during the forecast period, as hardware plays a substantial role in sustaining the environment of indoor farms.

The hardware component is further classified into sensors, irrigation systems, climate control systems, and lighting systems, which allow the cultivation of indoor crops. The system supports indoor climate control with heaters, chillers, air movement fans, air-conditioning units, and humidifiers, among others. The climate control system is anticipated to record the fastest growing segment between 2023 to 2032, as it generates an environment beneficial to plant growth.

Due to future farming practices and technology trends, the software segment is anticipated to record a CAGR of more than 13.5% from 2023 to 2032. The software tracks the vegetables and fruits crop batch/patch, back to a grower, supplier details, and area of land/field. The segment has been moreover divided into cloud-based and web-based software.

The cloud-based software segment is expected to record major growth in the upcoming years, as it collects huge of data points in real-time, which can be processed with machine learning techniques to regulate the changes in particular environmental limits that affect the taste and yield of the final product.

Crop Type Analysis

The fruits and vegetables segment is anticipated to dominate the market in 2022

The fruits and vegetables segment is anticipated to lead the market for indoor farming during the forecast period. The tomato segment held the highest market share in 2022, as it is the key cultivated crop due to its rapid production rate.

The growing production of ordinarily grown vegetables and fruits, such as lettuce, tomatoes, cucumbers, leafy greens, chili peppers, and bell peppers, is propelling the market growth. These crops are grown on a huge scale and deliver the utmost profit from their cultivation to the players involved in their production.

The flowers and ornamentals segment is expected to account considerably for market growth during the forecast period. This segment will record more than 30% of the market share in the future. The growing use of flowers and ornamentals for aesthetic and decorative purposes is expected to propel the market growth.

The segment has been additionally divided into ornamentals, perennials, and annuals. Ornamental flowers held the major market share in 2022 due to rising sales.

Key Market Segments

Based on the Growing System

• Aeroponics
• Hydroponics
• Aquaponics
• Hybrid
• Soil-Based

Based on Facility Type

• Greenhouse
• Indoor Vertical Farms
• Container Farms
• Indoor Deep Water Culture System
• Other Types

Based on Component

• Hardware
• Software & Service

Based on Crop Type

• Fruits & Vegetables
• Herbs & Microgreens
• Flowers & Ornamentals
• Other Crop Types

Opportunity

Energy Consumption and Environmental Impact

Indoor farming can be energy-intensive, demanding huge amounts of electricity to power heating, cooling, and lighting systems. This excessive energy consumption can lead to enlarged greenhouse gas releases and elevated operating costs.

In spite of this, as the industry continues to advance, there is a rising focus on including sustainable practices such as using renewable energy sources and incorporating energy-efficient technologies. In addition, waste produced from indoor farming, such as nutritional wastewater, can be recycled and used for other purposes, decreasing environmental impact.

Trends

Technological Developments in Indoor Farming

The technological developments in indoor farming have made it potential to enhance the increasing environment and decrease operational costs. Indoor farming can also combine sustainable practices such as utilizing renewable energy sources and recycled water, decreasing the environmental effect of food production.

For instance, LED lighting is more efficient in energy and generates less heat than conventional lighting, decreasing energy consumption costs. Artificial Intelligence and automation can help to improve plant growth and decrease labor costs in the global indoor farming market.

Regional Analysis

Based on the region, Europe occupied the key market share in 2022 and is anticipated to conquer the market in the forecast period. The growing acceptance of technology for indoor farms, such as Controlled Environment-Agriculture (CEA), is accountable for regional growth.

A growing focus on accepting technologies, such as active heat systems and LEDs, to advance the yield is propelling the market. The regional government undertakes several initiatives for building indoor farms to overcome challenges, such as rising population, climate change, and food production in an environmentally unfavorable way. Farm owners are in the lead of investing in technologies, such as crop monitoring sensors and LED lighting, which are anticipated to reduce labor costs.

Asia Pacific is expected to witness the fastest CAGR during the forecast period. Developing countries such as Japan and China are anticipated to witness considerable growth in the upcoming years due to the existence of multiple indoor farms.

In addition, the continuously growing population in the region has resulted in a growing demand for organic food, which has led to the building of vertical farms and greenhouses to produce crops. The growing awareness about the importance of alternative farming methods owing to the availability of less fertile agricultural land is estimated to cause additional growth in regional demand.

Key Regions and Countries

• North America
  • The US
  • Canada
• Europe
  • Germany
  • France
  • The UK
  • Spain
  • Italy
  • Russia & CIS
  • Rest of Europe
• APAC
  • China
  • Japan
  • South Korea
  • India
  • ASEAN
  • Rest of APAC
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of MEA

Key Players Analysis

The major market players involved in the strategies, such as new product developments, partnerships, contracts, and business expansions to grow their market share. The companies focus on building greenhouses and increasing indoor farms to meet the end-market demands.

Market Key Players

• Hydrodynamics International
• Argus Control System Limited
• Richel Group
• Signify Holding
• Everlight Electronics
• Illumitex
• LumiGrow
• Signify Holding
• Vertical Farm Systems
• General Hydroponics
• Scotts Miracle-Gro
• Other Key Players

Recent Developments

• February 2022: Another vertical farming operation revealed its plans to hit Nasdaq by way of SPAC. This week, Florida-based Kalera announced plans to merge with Agrico Acquisition Corp. in a deal that values the tech firm at $375 million.
• April 2022: Local Bounti, a U.S. indoor agriculture company combining vertical and greenhouse growing technologies, has acquired California-based complementary indoor farming company Hollandia Produce Group, which operates under the name Pete’s.

Report Scope