Indoor Farming Technology Market

According to MarketsandMarkets, the indoor farming technology market is projected to reach USD 32.3 billion by 2028 from USD 20.3 billion by 2023, at a CAGR of 9.7% during the forecast period in terms of value.  Owing to the increase in demand for fresh foods with high nutritive value, the need for higher yields using limited space and water, and the lesser impact of external weather conditions drive the indoor farming technology market.

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Market Dynamics

Driver : Rising demand for fresh foods with higher nutritive value

Indoor farming refers to the cultivation of crops or plants of both large and small sizes. Indoor farming is used on a wide scale to supplement local food sources and give consumers nutritious, fresh products. Because this farming method manages plant-fertilizing nutrients, the food generated using this technology is extremely nutritious. Indoor farming allows for the cultivation of a wide range of crops, including leafy vegetables, herbs, vegetables, fruits, micro greens, and flowers. Indoor vertical farming methods produce organic food that is free of agrochemical contamination. As a result, the increasing consumer demand for pesticide and herbicide-free food, as well as the growing need to reduce the carbon footprint of traditional agricultural practices, are driving forces for indoor vertical farming. For example, in 2016, Fujitsu Limited (Japan) established a vertical farming initiative in which lettuce with a low potassium level was cultivated, resulting in exceptionally nutritious lettuce with no unpleasant taste for people with kidney disease.

Restraint : There are restrictions on the types of crops that can be planted.

Indoor farming is not an appealing alternative for some farmers because it can only cultivate a restricted number of crops. Furthermore, controlled-environment farming can only generate a limited number of fruit and vegetable kinds. There are also restrictions on the plant species that can be grown indoors. Some fruits and plants, for example, have numerous edible components such as leaves, stems, and roots. These plant species would waste vertical farming space and resources. Before beginning the plantation, numerous aspects such as temperature adjustment, adequate water supply management, identification and provision of nutrients to the plants, the growth mechanism to be used, and individual harvest time of plants must be considered. As a result, growing various varieties of plants in indoor farms may be problematic. Fruits and vegetables are the best plants for vertical farming since they grow quickly. Water and sunlight are scarce and crops such as sugarcane, rice, and wheat require a lot of water and take a long time to harvest, making them challenging to cultivate utilizing indoor farming.

Opportunity : Development of innovative and cost-effective technologies

Many indoor farming methods lack a long commercial track record, and studies are still being undertaken to determine the impact of these technologies on plant shelf life. The impact of LED illumination on plants was evaluated in a study conducted at the Illumination Research Centre (New York), and the results were favorable. However, the technology is still in its early stages and requires further development before it can be considered ideally helpful and financially viable. To reduce the carbon footprint of indoor farming, new technologies must be created. Growers are more interested in investing in technologies that will reduce their labor expenses, as labor is necessary on large-scale farms for monitoring, maintenance, fertilizer supply, and harvesting. As a result, there is a potential opportunity to create completely automated urban farms based on vertical farming and controlled environment agriculture.

Challenge : Insufficient funding

Finding an investor is difficult in many agriculture-related firms, which may function as a barrier, leading to fewer growers investing in indoor farming. Furthermore, restricted funding hinders the speed of research and development for indoor farming in public institutions and colleges, limiting the availability of data and knowledge that would otherwise entice cultivators to invest. However, in the current context, some sources of high finance are available for players in the indoor farming technology market arena. For example, one of the indoor farming players, Aerofarms (US), obtained USD 50 million from Goldman Sachs Group (US) and Prudential Financial, Inc. (US).

Indoor Farming Technology Market Ecosystem

Prominent companies in this market include well-established, financially stable manufacturers of indoor farming technology. These companies have been operating in the market for several years and possess state-of-the-art technologies, a diversified product portfolio, and strong global sales and marketing networks. Prominent companies in this market include Scotts Company LLC (US), Signify Holding (Netherlands), EVERLIGHT ELECTRONICS CO., LTD (Taiwan), NETAFIM (Israel), Heliospectra AB (Sweden), Argus Control Systems Limited (Canada), Lumigrow, Inc (Canada), weisstechnik (US), Priva (Netherlands), LOGIQS.B.V. (Netherlands).

Lesser impact of external weather conditions

Indoor farming frequently uses growing technologies such as hydroponics and artificial lighting to deliver nutrients to plants. Furthermore, it protects crops from adverse weather conditions and maintains optimal levels in the enclosed facility. Most places experience occasional rainfall shortages as a result of the steady shift in global climate conditions. Changes in rainfall and temperature may reduce agricultural productivity in countries such as India, the United States, Australia, and the Philippines. With global weather patterns becoming more unpredictable and global warming becoming a growing problem, indoor farming is a viable solution. Because the same water is used in irrigation systems, indoor farming conserves drinking water, which is becoming a limited resource. Indoor farming is a viable solution for many drought-stricken countries. Crop production in indoor farming takes place in a controlled atmosphere, and productivity is largely independent of outside weather conditions. Because the vertical growing platforms are set at ambient temperatures, fewer crops are lost due to hurricanes, hail, drought, and snap freezes.

Higher crop yields with minimal room and water

Indoor farming has a better yield than traditional agricultural methods, which is one of its key advantages. Indoor farming facilities produce optimal growing conditions for farmers, allowing them to develop a crop from seed to harvesting stages in less time and with higher yields in each cycle while having a limited land area. According to USDA data, the average output of greenhouse hydroponic tomatoes in 2016 was 10.59 pounds per square foot, while traditionally grown tomatoes yielded 185 pounds per square foot. As a result, by stacking additional layers and expanding the growing area, indoor farms can boost overall crop yield. According to the Food and Agriculture Organization of the United Nations, food output must increase by 70% before 2050 to meet global food demands. This expansion is required because urbanization is consuming arable land while lowering the total agricultural land area. As a result, indoor farming is a feasible option for helping to satisfy the food needs of the world's growing population. Indoor farming tackles the issue of restricted space by allowing certain plants to be cultivated in smaller spaces. For example, in vertical farming, each facility constructed reduces the demand for land use by a hundredfold. When compared to conventional farming, there is less water waste. Because indoor farms recirculate and reuse water, they require 95% less water to grow the same crops as outdoor farms. When plants or crops are produced in vertical greenhouses, the transpiration process occurs, allowing farmers to reuse the water for irrigation. Because the odds of water waste are reduced, this strategy aids in resource conservation. In 2014, agricultural irrigation had the biggest proportion of worldwide water reuse, followed by landscape irrigation. Agricultural and landscape irrigation accounted for 52.0% of the overall share. This demonstrates that the amount of water reuse in agriculture is greater.

Asia Pacific to boost market growth during the forecast period.

The Asia Pacific region is expected to grow at the fastest rate, as demand for indoor farming technology has increased due to increased investment by overseas business lines in agricultural operations to exclusively meet crop growers' demands for export-quality crops. Furthermore, the farming business in the Asia Pacific region has been changing away from traditional agricultural practices and towards technology and innovative ways. These adjustments result in the upgrading of crop management techniques to increase crop premium value. In 2020, the Asia Pacific region's indoor farming technology market accounted for approximately 30.7% of the global market in terms of value.

The key players in this market are Scotts Company LLC (US), Signify Holding (Netherlands), EVERLIGHT ELECTRONICS CO., LTD (Taiwan), NETAFIM (Israel), Heliospectra AB (Sweden), Argus Control Systems Limited (Canada), Lumigrow, Inc (Canada), weisstechnik (US), Priva (Netherlands), LOGIQS.B.V. (Netherlands), Certhon (Netherlands), Bluelab (New Zealand), Barton Breeze (India), Green Sense Farms Holdings, Inc. (US), Greener Crop Inc. (Dubai), Sensaphone (US), Freight Farms, Inc (US), Climate Control Systems Inc (US), Sky Greens (Singapore), SANANBIO (China). The study includes an in-depth competitive analysis of these key players in the indoor farming technology market with their company profiles, recent developments, and key market strategies.

Key Market Players

The key players in this include Scotts Company LLC (US), Signify Holding (Netherlands), EVERLIGHT ELECTRONICS CO., LTD (Taiwan), NETAFIM (Israel), Heliospectra AB (Sweden), Argus Control Systems Limited (Canada), Lumigrow, Inc (Canada), weisstechnik (US), Priva (Netherlands), LOGIQS.B.V. (Netherlands). These players in this market are focusing on increasing their presence through agreements and collaborations. These companies have a strong presence in North America, Asia Pacific, and Europe. They also have manufacturing facilities along with strong distribution networks across these regions.

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Scope of the Report

Report Scope:

Indoor Farming Technology Market:

By Growing System

• Hydroponics
• Aeroponics
• Aquaponics
• Soil-based
• Hybrid

By Facility type

• Glass or poly greenhouses
• Indoor vertical farms
• Container farms
• Indoor DWC systems

By Component

• Hardware
  • Climate Control Systems
  • Lighting Systems
  • Communication Systems
  • Sensors
  • System Controls
  • Irrigation Systems
  • Other hardware
• Software & Services

By crop type

• Fruits & vegetables
  • Leafy greens
    • Lettuce
    • Kale
    • Spinach
    • Other leafy greens
  • Tomatoes
  • Strawberries
  • Eggplants
  • Other fruits & vegetables
• Herbs & microgreens
  • Basil
  • Herbs
  • Tarragon
  • Wheatgrass
• Flowers & ornamentals
  • Perennials
  • Annuals
  • Ornamentals
• Other crop types

By Region

• North America
• Europe
• Asia Pacific
• South America
• RoW

Recent Developments

• In May 2022, Signify Holding acquired the fluence for offering indoor farming lighting solutions that help Signify's position in the attractive North American horticulture lighting market and they also acquired Pierlite that strengthens Signity's position in the Australian and New Zealand lighting markets.
• In January 2023, Priva partnered with Aranet to serve the growing demand for more, and new greenhouse sensors to generate data are the main driver of the collaboration between Aranet and Priva. This partnership will bridge the gap between wireless sensor platforms and other data sources in greenhouses.
• In December 2021, Hawthorne acquired RIV Capital Inc (Canada) as the company is specialized in cannabis with a portfolio of 13 companies across various segments of the cannabis value chain. This gives an advantage to Hawthorne.

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