Each year, more arable land is lost to desertification and erosion from human industrial activities across the globe. In the last 40 years, 33% of the world’s arable land has been lost to erosion or population. In addition to that, 4 Billion people (two thirds of the world’s population) experience major water shortages for at least one month each year. Based on the current situation, it is expected that by 2025, half of the world’s population will be facing water scarcity. Further, by 2050, the world’s population is projected to grow to 9.7 Billion people. Feeding them is going to be a major concern for many industries. However, indoor farming can be a viable option to overcome these threats. Indoor farming is a technique of growing crops/plants on both large and small scales, in-home or commercially entirely indoor. It is also known as indoor gardening. It is, on the other hand, is particularly popular in major cities because plots of land of any size are scarce for growing and farming. The majority of indoor farming employs a combination of hydroponics and artificial lighting to supply plants with the nutrients and light that they would receive if cultivated outside.
Some indoor farming systems, such as those used in greenhouses, can, however, combine natural and artificial resources. So indoor farming provides protected areas for growing crops like greenhouses, vertical farms either in a building or in a shipping container and deep water culture. So in order to fight water scarcity and loss of arable land, this is one of the great techniques. The method of growing plants and crops on a large scale entirely indoors and with the help of various growth mechanisms and artificial lights is known as indoor farming. In comparison to traditional farming, 70 to 95% of the water used in indoor farming is recycled. Also, there is no issue of pests or any other diseases because in this method, 90% less or no soil is used. Most commonly, fruits, vegetables, and herbs are grown in indoor farms. However, other varieties of plants can also be grown by the same method. Indoor farming is popular in those regions where it is difficult to find agricultural land.
According to the report title “Global Indoor Farming Market Outlook, 2027”, published by Bonafide Research, the global indoor farming market is expected to expand at a CAGR of 14.61% from 2022 to 2027. Indoor farming includes vertical farms, greenhouses and other indoor farming facilities. This controlled environment facilities are totally under observation all the time to produce more crops. For optimum plant growth, greenhouse environmental control involves controlling and modifying day and night temperatures, relative humidity, and CO2 levels. During the winter and summer, extremes in temperature and humidity are common. A well-designed production facility will tend to maintain a temperature range of 55 to 85 ?, with humidity levels high enough to prevent water stress but low enough to prevent disease and fungus outbreaks in the crop. Increasing consumer awareness regarding the benefits of consuming fresh and high-quality food is anticipated to boost the market growth in the forecast period. In addition to that, governments are encouraging the building of indoor farms across the globe with other initiatives. Indoor farms help grow the total crop yield per unit area by using stacked layer formation, which accelerates the market growth.
In growth mechanism, the indoor farming market includes hydroponics, aeroponics, aquaponics, soil-based and hybrid facility systems. Hydroponics is used in vertical farm, deep water culture method as well as in some greenhouses. Similarly, aeroponics & aquaponics are also used in both the facility type. Among them, hydroponics is the second-fastest growing mechanism type with more than 15% of CAGR by the forecast period. The soil-based mechanism will dominate the market in 2021. A hybrid crop is the result of two different varieties of plants that are cross-pollinated to create an offspring of hybrid that contains the best traits of each of the parents. In all aspects of life, hybridization can be immensely helpful. Farmers use hybridization to produce better crops for their farms, but botanists cross-breed flower seeds to create a variety of beautiful, brightly colored plants, manufacturers use hybridization to produce beans that can resist certain common diseases, and scientists have developed grains that contain more nutrition for those living in famine-stricken areas. According to the Agriculture Alliance, first-generation hybrid plants yield up to 25% more, develop quicker, and are far more resistant to a variety of diseases and illnesses, including viruses, bacteria, fungi, and nematode infestation.
The global indoor farming market is segmented into five major regions, including North America, Europe, Asia-Pacific, South America, and the Middle East & Africa. Among these regions, Europe is anticipated to lead the market with more than 30% of the market share owing to higher adoption of advanced technologies and increasing awareness of organic food consumption across the region. The Asia-Pacific region, on the other hand, is expected to be the fastest-growing region for the indoor farming market. Increasing population across this region has increased the demand for indoor farming.
Europe is seeing a significant rise when it comes to indoor farming. Many countries compete to dominate the market, which results in the birth of many new farms. The number of indoor farms across the region is still relatively small. However, the sector is increasing at a rapid pace. Producing locally-grown greens all year round can be done without soil or sunshine in Europe due to the high emergence of indoor farming. While set-up and operational costs are increasing, there is a high demand amongst European environmentally conscious consumers. Further, changes in climate conditions, changes in temperature and water adversely across the region are creating higher demands for alternative farming methods. Further, various aggrotech companies are making efforts to curb the challenges by adopting indoor farming. They are also investing in research and development to combine technologies with food systems to enhance productivity and sustainability. For instance, in May 2021, LettUs Grow Ltd (an indoor farming technology provider) announced its partnership with Harper Adams University. The aim of the partnership is to undertake the trial of various irrigation systems and technologies. Also, higher investment by the company is expected to create new opportunities for the market. For instance, in an urban environment such as London, indoor farms can guarantee a constant fresh supply to its population at any time. In addition to that, a growing number of indoor farming companies are currently operating in British cities, where they deliver fresh, pest-free produce to local supermarkets and consumers. Currently, the UK is home to the world’s largest high-rise farm as well as some of the world’s most innovative indoor farms across the region.
In the Asia-Pacific region, the indoor farming industry is nurtured by machine learning and artificial intelligence. It also aims to revolutionize the communities across the region. Acknowledging the benefits of indoor farming, Asian countries, particularly in China and Japan, are fast adopting this technology with hundreds of indoor vertical farms. Further, water scarcity and a decline in arable lands across the Asia-Pacific region direct the market towards the increasing adoption of indoor farming. Farmers face a lack of rain, drought, climate change, insufficient irrigation systems, financial challenges, crop failures, increased dependency on chemical fertilizers, and limited crop varieties for years across Asia. However, the emergence of innovative indoor farming technology has paved the way towards higher market growth with sustainability. With the population of the Asia-Pacific region expected to reach 5 Billion by the upcoming timeframe, the responsibility to supply food to an ever-growing population is becoming difficult. The indoor farming industry is anticipated to be the viable option to overcome these threats. Across the region, the indoor farming sector is expecting a huge boom in investments and interest from manufacturers, suppliers, and retailers. This is largely due to advancements in technology such as sensors and smart energy systems that have improved the efficiency of growing products.
On the other hand, North America is said to be the largest market for indoor farming technologies as the region has plans to add 500-plus acres over the next 5 years for indoor farms. The region pays high prices for fresh produce. However, key technologies such as lighting (which are cheaper) and the cost of capital are low compared to other regions. There is a strong pipeline of commercial-scale growing facilities that are being developed across the region. In addition to that, current projects are focused on the leafy green market, with a growing investor appetite for indoor farming solutions such as BrightFarms and Little Leaf Farms. The indoor farming industry in the North American region is sustained by the growth in the use of technology such as the internet of things (IoT) in indoor farming, a rapidly expanding populace, and an increase in the annual production of crops. The feasibility of setting up an indoor farm combined with the technological prowess to do so have driven the market growth across the North American region.
Based on the countries, USA is estimated to dominate the global indoor farming market by holding more than 16% market share by 2027. In the USA, controlled environment agriculture is growing at an unprecedented rate. In 2020, the US Department of Agriculture established a new office of Urban Agriculture and Innovation Production. Also, more than USD 3 Million in grants were made in the same year. Indoor farming ventures in the USA received USD 929 Million in investments. In addition to that, in May 2021, the Urban Agriculture and Innovation Production department announced up to USD 4 Million in grants to support the development. Kroger has begun sourcing fresh produce from an Ohio-based indoor farm (80 acres). In the USA, there are more than 41 thousand indoor farms covering over 1.3 Billion square feet of growing area. Research into solving the challenges of growing plants in CEA like a spacecraft inspired NASA (National Aeronautics and Space Administration) to build the first indoor farm in the United States. Further, NASA research is expected to spur a new generation of indoor farms across the country.
As for South America, growing demand for indoor farming in highly populated urban countries, AI-controlled farms, and thriving demand for locally grown products are the major driving forces. In addition to that, the market is projected to expand as the customer demand for organic food is complemented by rising disposable incomes and an accelerating population. However, South America is anticipated to grow at a moderate growth rate during the forecast period owing to a lack of awareness about indoor and vertical farming across the region. The vast majority of the farmland is still available in South America, resulting in the expansion of local and national crop production economies. Despite being widely used in agriculture, indoor farming is virtually unknown in South America. Many market players and industry leaders are trying to change this scenario by bringing their expertise and experience into the market. For instance, in 2018, Bunster and Sjogren launched AgroUrbana, which is believed to be South America’s first indoor large-scale farm. Since then, the momentum has increased and recently, AgroUrbana crossed USD 4 Million in series A funding with the aim of implanting indoor farming production across the region. The company currently operates a 3000 square foot climate-controlled pilot facility in Santiago that grows lettuce varieties using hydroponics and artificial lighting systems.
The Middle East and Africa were important sites of early settled agriculture and are the origin and diversity centers for several major cereal and legume crops. On the total land of the Middle East & Africa region, only one-third is agricultural land while only 5% is arable. The rest of the land is either urban or dry desert. In addition to that, for countries like the UAE, which depends on imports for more than four-fifths of its food supply, indoor farming can offer unprecedented benefits. Indoor farms offer the prospect of growing more produce locally and making better use of the region’s limited water resources. Generally, plants in indoor farming facilities are grown in cells stacked for space, savings, and efficiency. Further, the higher requirements for large production of food crops due to lack of arable land due to geographical factors are some of the major driving forces for the indoor farming market. Many major market players are adopting this efficient crop production technique to fuel the market's growth. For instance, Pure Harvest in Abu Dhabi has ambitious plans to become a regional powerhouse across the Middle East and Africa with fruits and vegetables grown in a controlled indoor environment, as the Emirates seeks to reduce reliance on food imports. In the Middle East and Africa, there are certainly enough opportunities for indoor agriculture compared to other parts of the world. As indoor farming facilities are still emerging across the region, it creates higher demand for the research and development sector to expand the industry at a higher pace.
Indoor farming is maintained by hardware and software components. The software & service segment will grow with the highest CAGR in the forecast period. The hardware components like lighting, climate-controlling systems, sensors and other components for irrigation & fertigation system. These are the major component for better-produced output. They maintain the temperature, humidity, moisture content and proper air-circulation. The lighting segment is dominating the market share of the hardware segment in terms of value. Some of the major players are LumiGrow, Heliospectra AB, Kessil lighting, SANlight and Osram Sylvania Inc. provides the best agrisolution. By crop category, the major segments are fruits, vegetables & herbs and flowers & ornamentals. Fruits and vegetables would capture around 60% of the market share in crop type. The report includes leafy greens, lettuce, tomatoes, cucumber, strawberry, bell &chili pepper, herbs, micro-greens, flowers and ornamentals.