The US Vertical Farming Market By Technology (Hydroponics, Aeroponics, and Aquaponics), By Growth Mechanism (Indoor, and Outdoor), By Farming Structure (Building-based, and Container-based) By Component (Hardware, Software, and Services) By Crop Type (Vegetables, Fruits, Flowers, and Ornamentals, Herbs, and Other Crop Types), By Farm Size (Small-Scale, Medium-Scale, and Large-Scale), By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends, and Forecast 2024-2033

Report Overview

The global US Vertical Farming Market size is expected to be worth around USD 13.55 billion by 2033, from USD 1.73 billion in 2023, growing at a CAGR of 22.8% during the forecast period from 2023 to 2033.

Vertical farming is an innovative agricultural technique that involves growing crops in vertically stacked layers, utilizing controlled environment agriculture techniques without soil. This method enhances food quality and boosts crop yields.

Amidst the COVID-19 pandemic and global geopolitical shifts, the food and agriculture sector has faced disruptions in supply chains and food shortages. Consequently, there’s been a surge in the adoption of vertical farming technologies to enhance food security and expand farming capacity in urban areas. These factors are driving the growth of the vertical farming market, attracting significant interest from investors.

Key Takeaways

• The US vertical farming market was valued at 73 billion, and from 2024 and 2032, this market is estimated to register a CAGR of 22.8% in 2023.
• The US vertical farming market is projected to reach US$ 155 billion by 2033.
• Among technologies, hydroponics held the majority of revenue share of 0% in 2023.
• Among growth mechanisms, the indoor accounted for the majority of the market share with 9%.
• Based on farming structure, container-based accounted for the largest market share in 2023 with 3%.
• By crop type, vegetables are anticipated to dominate the market in the coming years. In 2023, it accounted for the majority of the share of 5%.
• Compared to traditional agriculture, vertical farming uses 70 to 95 percent less water and over 90 percent less land, while harvesting 80 percent more per unit of area.

Technology Analysis

The vertical farming market is segmented based on technology into hydroponics, aeroponics, and aquaponics. Among these, hydroponics held the majority of revenue share of 65.0% in 2023. This is due to its efficient water use, control over nutrient delivery, scalability, reduced disease risk, and the accessibility of the technology. These advantages have made hydroponics a preferred choice for those looking to maximize production in a controlled environment.

Hydroponics allows for more efficient use of water compared to traditional soil-based agriculture and even other vertical farming technologies such as aeroponics and aquaponics. The system recirculates water, significantly reducing consumption and waste. This efficiency is critical in areas where water scarcity is a pressing concern and for sustainable agriculture practices seeking to minimize environmental impact.

Growth Mechanism Analysis

Based on a growth mechanism, the market is segmented into indoor and outdoor. Among both, the indoor accounted for the majority of the market share with 74.9%. It is primarily attributed to its ability to mitigate several constraints faced by traditional agriculture. This includes the efficient utilization of space, control over environmental conditions, and year-round production irrespective of external weather conditions. Indoor vertical farming leverages controlled environment agriculture (CEA) technology to create optimal growing conditions for plants.

This includes precise control over temperature, humidity, light, and CO2 levels, which are not easily managed in outdoor settings. By optimizing these conditions, indoor farms can achieve higher yields, faster growth cycles, and consistent quality, contributing to their significant market share. Given these advantages—higher efficiency, control over growing conditions, reduced environmental impact, and proximity to consumers—the indoor segment’s dominance in the vertical farming market is a reflection of its alignment with current agricultural trends and consumer preferences.

Farming Structure Analysis

Based on farming structure, the market is further divided into building-based and container-based. Among these structures, container-based accounted for the largest market share in 2023 with 59.3%. Owing to its flexibility, scalability, and efficiency. This farming structure utilizes repurposed shipping containers to create controlled environment agriculture (CEA) systems. These containers are designed to optimize space by stacking vertically, making them highly efficient in terms of land use, which is particularly beneficial in urban areas where space is at a premium.

One of the key advantages of container-based systems is their modularity. Each container can operate as an independent unit, allowing farmers to easily scale their operations up or down by adding or removing containers. This flexibility makes it an attractive option for businesses of all sizes, from small-scale producers to large enterprises looking to expand their production capabilities.

Component Analysis

Based on components, the market is further divided into hardware, software, and services. Among these components, hardware accounted for the largest market share in 2023 with 60.8%. This can be attributed to several factors. Primarily, hardware encompasses the physical infrastructure essential for vertical farming operations, including structures, lighting systems, and irrigation setups, which are foundational to any vertical farming venture.

Moreover, advancements in hardware technologies have led to increased efficiency, productivity, and scalability in vertical farming practices, driving higher adoption rates. Additionally, the growing emphasis on precision agriculture and automation has spurred demand for sophisticated hardware solutions, further bolstering its market dominance within the vertical farming sector.

Crop Type Analysis

In terms of crop type, the market is divided into vegetables, fruits, flowers and ornamentals, herbs, and other crop types. Among these, vegetables held the majority of revenue share of 44.5% in 2023. This prevalence can be attributed to several factors. For instance, vegetables enjoy a fundamental position in human diets worldwide, fostering consistent demand.

Additionally, heightened awareness regarding health and nutrition has propelled the consumption of fresh produce, with vegetables being a primary component. Furthermore, advancements in agricultural techniques and technologies have enhanced yield and quality, bolstering the profitability of vegetable cultivation. These combined factors underscore the enduring appeal and economic significance of vegetables within the broader agricultural landscape.

Farm Size Analysis

The vertical farming market is segmented based on farm size into small-scale, medium-scale, and large-scale. Among these, small-scale held the majority of revenue share of 50.2% in 2023. This phenomenon can be attributed to several factors.

Primarily, small-scale setups often require lower initial investments and operational costs, making them more accessible to a wider range of entrepreneurs and investors. Furthermore, their flexibility allows for implementation in various settings, including urban environments where space constraints may limit larger operations.

Additionally, advancements in technology have enhanced the efficiency and productivity of small-scale vertical farms, further driving their market dominance.

Key Market Segments

By Technology

• Hydroponics
• Aeroponics
• Aquaponics

By Growth Mechanism

• Indoor
• Outdoor

By Farming Structure

• Building-based
• Container-based

By Component

• Hardware
  • Lighting Systems
  • Climate Control Systems
  • Hydroponic Components
  • Other Hardware
• Software
  • Growth Monitoring
  • Climate Management
  • Other Software
• Services
  • Consultation & Design
  • Installation & Integration
  • Other Services

By Crop Type

• Vegetables
• Fruits
• Flowers and Ornamentals
• Herbs
• Other Crop Types

By Farm Size

• Small-Scale
• Medium-Scale
• Large-Scale

Drivers

Increasing Adoption of Organic Foods

The increasing adoption of organic foods is serving as a significant driver for the growth of the vertical farming market. Organic foods, cultivated without synthetic fertilizers, pesticides, or growth regulators, are gaining traction due to various factors. Primarily, consumers’ elevated living standards, augmented disposable income, and heightened awareness of health-related concerns, such as obesity and heart diseases, are fueling the demand for organic produce.

Vertical farming emerges as an ideal solution for cultivating organic foods, particularly microgreens, renowned for their high polyphenol content—a class of antioxidants known for reducing the risk of various diseases including heart disease, Alzheimer’s disease, diabetes, and certain cancers. In vertical farms, the growing conditions are meticulously regulated using sensors, humidity controllers, and coolers, eliminating the need for pesticides. This controlled environment shields crops from external climatic variations, ensuring consistent and high-quality organic produce.

Restraints

High Initial Investment

The costs associated with vertical farming surpass those of traditional farming methods, a discrepancy likely to persist for the foreseeable future. These expenses can be categorized into capital investment costs required for establishing the farm and operating costs associated with its ongoing management. Initially, at smaller scales, farm expenses are predominantly driven by capital investments.

However, as farms expand, operating costs, such as lighting, air and water management, and labor, become increasingly dominant. As the scale of vertical farm installations grows, operating costs become so significant that upfront investment in enhancing the efficiency of environmental management equipment becomes economically viable in the long term.

High investment and operating costs pose significant challenges for vertical farms. Moreover, real estate properties situated closer to urban centers elevate initial investment expenses. Given the nature of optimizing plant growth in vertical farming, substantial investments in technology and energy are necessary to regulate growing conditions, encompassing temperature, light, humidity, oxygen, and CO2 levels.

Opportunity

Legalization of Cannabis

The legalization of cannabis in North America, particularly in the United States, signifies a pivotal moment for the growth trajectory of the vertical farming market. Cannabis cultivation stands as a prime example of crops that can thrive within vertical farming and hydroponic systems.

Growers of marijuana utilizing vertical farming methods benefit through numerous advantages, including increased yield, more frequent crop cycles, enhanced root health, superior produce quality, consistency in output, and protection against adverse weather conditions and pests. As the trend of cannabis legalization gains momentum across states and potentially at the federal level, there arises a significant demand for year-round production of premium cannabis products.

The burgeoning cannabis industry experiences substantial tailwinds propelled by the momentum of state-level legalization efforts. The momentum has been building steadily, particularly on the West Coast, with California leading the charge through the enactment of the Compassionate Use Act of 1996. This legalization momentum has accelerated notably in recent years, fueled by the recognition of the plant’s myriad medical benefits.

Trends

Technological Advancements

Technological advancements play a pivotal role in shaping the landscape of the vertical farming industry. These innovations have significantly enhanced productivity and efficiency while simultaneously reducing labor and resource inputs such as water.

Key advancements in the field encompass automation, data analytics, advanced LED light systems, and the integration of artificial intelligence (AI). Automation has revolutionized vertical farming practices by minimizing human intervention in essential processes. In traditional setups, crops are grown on static multi-level racks, necessitating human labor for various tasks.

However, with automation, tasks such as moving plants between zones according to their growth cycle are performed automatically, substantially reducing labor requirements and increasing operational efficiency. Technological advancements continue to drive innovation and progress within the vertical farming industry, paving the way for more sustainable and efficient agricultural practices. By embracing these cutting-edge technologies, stakeholders in vertical farming can unlock new opportunities for growth and development, ensuring a brighter future for the sector.

Moreover, key players are investing heavily in research and development (R&D) to pioneer cutting-edge solutions in lighting, hydroponic systems, climate control, and automation. For instance, the adoption of AI-driven analytics for optimizing growth conditions and predictive maintenance is enhancing yield and reducing operational costs. These innovations are critical for improving the scalability and profitability of vertical farming operations, thereby attracting more investment and expanding market share.

Geopolitical Impact Analysis

Geopolitical Tensions Significantly Impact the Growth of the Vertical Farming Market Owing to The Pause in Manufacture and Supply Chain Activities

The geopolitical landscape exerts a significant influence on the dynamics of the US vertical farming market. This impact is multifaceted, encompassing aspects such as trade policies, international relations, and global supply chain dynamics, which collectively shape market operations, investment flows, and technological advancements within this burgeoning sector.

Primarily, trade policies and tariffs play a critical role. The imposition of tariffs on agricultural inputs and technology can affect the cost structures of vertical farming operations in the US. For instance, tariffs on imported LED lights, which are crucial for indoor farming, can increase operational costs, thereby impacting profitability. Conversely, trade agreements that lower these tariffs can enhance the market’s competitiveness by reducing input costs.

Furthermore, geopolitical tensions and disruptions in global supply chains have underscored the importance of food security and self-sufficiency. The COVID-19 pandemic and subsequent supply chain disruptions have vividly demonstrated the vulnerability of relying on global supply chains for essential goods, including food. In this context, vertical farming presents a compelling solution by enabling localized food production, reducing dependence on imports, and mitigating the risks associated with geopolitical tensions and global supply chain vulnerabilities. This has attracted increased interest and investment in the sector, driving its growth.

The third major impact is related to investment flows. Geopolitical stability and favorable government policies can attract foreign and domestic investment into the vertical farming sector. For example, government incentives for sustainable agriculture practices or innovation grants for agricultural technology can stimulate investment in vertical farming operations. Additionally, geopolitical instability in other regions can divert investment flows to the US market, perceived as a safer investment destination. This influx of capital is vital for research and development, infrastructure expansion, and technology adoption, propelling the market forward.

Key Players Analysis

In the Vertical Farming Market, Key Players Are Evolving and Asserting Their Dominance Through A Combination Of Strategic Initiatives, Innovation, And Market Adaptation.

In the rapidly evolving landscape of the US vertical farming market, key players are employing a variety of strategies to expand their market share and establish dominance. These strategies encompass technological innovation, strategic partnerships, market expansion, sustainability initiatives, and diversification of product offerings. Collaboration with technology providers, research institutions, and distribution networks is another pivotal strategy.

By forging partnerships, vertical farming companies can leverage external expertise in technology development, gain access to new markets, and streamline their supply chains. As the market continues to mature, these strategic efforts are expected to drive further consolidation, innovation, and growth, thereby shaping the future trajectory of the vertical farming industry in the US.

Market Key Players

Key players in the US vertical farming market are navigating the competitive landscape through a multifaceted approach centered on technological innovation, strategic partnerships, market expansion, sustainability initiatives, and customer engagement. These strategies are not only aimed at enhancing operational efficiencies and product offerings but also at building a resilient and sustainable business model that can adapt to changing market dynamics and consumer preferences.

The following are some of the major players in the industry

• Signify N.V.
• EVERLIGHT Electronics Co., Ltd
• AGRIFY Corp.
• Plenty Unlimited, Inc.
• Intelligent Growth Solutions Limited
• Sky Greens
• Freight Farms
• Gavita International B.V.
• AeroFarms
• BrightFarms
• Greenlux Lighting Solutions
• Valoya, Inc.
• Heliospectra AB
• Urban Crop Solutions
• Bowery Farming
• AmHydro
• CubicFarm Systems
• Other Key Players

Recent Development

• In November 2022, Agricultural infrastructure supplier Intelligent Growth Solutions (IGS) has partnered with HarvestUp to construct a vertical farm at a Missouri technical college campus.
• In February 2022: Plenty Unlimited Inc. has secured up to 120 acres of land in Virginia to construct the largest indoor vertical farm campus, where they will grow strawberries, leafy greens, and tomatoes.

Report Scope