Indoor Farming Market Size, Share & Trends Analysis Report By Facility Type (Greenhouses, Vertical Farms, Others), By Component (Hardware, Software, Services), By Growing Mechanism, By Crop Category, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global indoor farming market size was valued at USD 34,246.5 million in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 12.9% from 2023 to 2030. Increasing consumer awareness regarding the advantages of consuming fresh and high-quality food is expected to drive the growth of the market. The rising population across the globe, especially in emerging economies such as China and India, has led to an increase in food demand, which, in turn, is expected to spur the growth of the market for indoor farming in the forthcoming years.

However, the changing climatic conditions contribute to existing environmental problems, such as soil degradation and groundwater depletion, affecting the food and agriculture production systems. Governments encourage building indoor farms along with other initiatives to overcome this problem, which, in turn, is expected to fuel the growth of the market. Organic foods are perceived as healthier, nutritious, safer, and more eco-friendly. A critical factor that influences the demand for organic food is the food purchasing behavior of consumers, which is essential for producers, policymakers, and suppliers to implement successful marketing strategies.

According to The World Bank Group, the overall arable land per capita has declined from 0.197 hectares in 2013 to 0.192 hectares in 2016. The scarcity of arable land owing to land degradation has urged the farmers to adopt new solutions to produce fresh food. The adoption of vertical farming techniques is expected to enable indoor farm owners to grow crops indoors in layers stacked on racks, in a multi-story building, or a warehouse. It is anticipated that this will emerge as a significant trend in the market by 2030.

Indoor farms help grow the total crop yield per unit area by using the stacked layers of potted seeds, thereby driving the market. Indoor farming is the practice of growing plants or crops indoors on a small and large scale. Indoor farming implements methods such as aquaponics and hydroponics and utilizes artificial lighting for adequate light levels and nutrients. However, the high initial investment in the building of indoor farms and limitations on the growing variety of crops is expected to hinder the market growth.

Europe held the largest market share in 2022, owing to the adoption of technologies for greenhouses and vertical farms. Developed countries such as the U.K., Germany, the U.S., and Canada are the rapid and early adopters of farming technologies. However, emerging economies such as India, China, Mexico, and Singapore are observing a substantial growth in the adoption of technologies integrated into indoor farms, owing to the rising demand for fresh crops. The increasing disposable income and urban population in the emerging economies have increased the consumption and demand for healthy, fresh, and nutritious food, which is projected to drive the indoor farming market.

Facility Type Insights

The vertical farm segment is expected to exhibit the fastest CAGR from 2023 to 2030, owing to the growing adoption of eco-friendly production of fruits and vegetables. Besides, the changing food purchasing behavior of consumers resulting in an increasing demand for organic food is expected to drive the demand. Indoor farming protects crops from intense weather conditions using advanced techniques, such as the controlled environment agriculture technology, where the facilities use control of light, artificial environmental monitoring, and fertigation.

Farmers are implementing new crop production techniques, such as greenhouses and vertical farming, to meet rising food demand. The greenhouses facility type held the dominant market share in 2022. A greenhouse also called a hothouse, is a closed structure made up of transparent material and used to grow plants, crops, and flowers. In greenhouses, climatic conditions are controlled to enhance the quality and quantity of produce. Greenhouses also facilitate higher yield production than traditional farming techniques.

Component Insights

The hardware segment dominated the indoor farming component market in 2022 and is expected to remain dominant between 2023 and 2030, as hardware plays a significant role in maintaining the environment of indoor farms. The segment is further categorized into climate control systems, lighting systems, sensors, and irrigation systems, which enable the cultivation of indoor-grown crops. The climate control system is expected to be the fastest-growing segment during the forecast period, as it creates an environment conducive to plant growth. The system helps control the indoor climate with chillers, heaters, air-conditioning units, humidifiers, and air movement fans, among others.

The software segment is expected to exhibit a CAGR exceeding 15.1% between 2023 to 2030, owing to the upcoming trends in technologies and farming practices. The software traces the fruit and vegetables back to a grower, crop batch/patch, area of land/field, and supplier details. The segment has been further bifurcated into web-based and cloud-based software. The cloud-based software segment is estimated to register significant growth in the forthcoming years, as it collects millions of data points in real-time, which can be examined with machine learning techniques to determine the changes in particular environmental parameters that affect the yield and taste of the final product.

Growing Mechanism

The hydroponics segment registered a largest market share in 2022 and is expected to remain dominant over the between 2023 and 2030. Hydroponics is the popular farming method due to low installation costs and ease of operations. In this process the soil is replaced by a mineral solution inserted around the plant roots for growing plant. Hydroponics is promoted as a method to prevent climate change, to lessen environmental harm and species extinction brought on by overexploitation and intensive farming. Compared to the traditional soil grown production hydroponics benefits in efficient usage of water, facilitates a micro-climate, require less labor, needs no soil, and produces higher quality food. Additionally, the hydroponics method eliminates the risk of soil organisms causing diseases. Growing awareness among consumers regarding the effects of pesticides is expected to boost the demand for hydroponics. 

The aquaponics segment is anticipated to grow with the significant CAGR during the forecast period. Aquaponics is the combination of both hydroponics and aquaculture, which reduces the use of harmful chemicals for cultivation. The minimal water wasted compared to traditional farming is one of the major advantages of aquaponic agriculture. Aquaponics utilizes about 90% less water than conventional farming, despite the name's implication. Further, plants such as cucumbers, tomatoes, peppers, flowers, strawberries, melons, and herbs (mint, basil, wheatgrass, oregano, chives, sage, parsley) are grown through aquaponics.

Crop Category Insights

The fruits, vegetables, and herbs segment is expected to dominate the market for indoor farming between 2023 to 2030. The increasing production of commonly grown fruits, vegetables, and herbs such as tomatoes, lettuce, leafy greens, cucumbers, bell peppers, and chili peppers, is driving the segment growth. These crops are grown on a large scale and deliver maximum profit from their cultivation to the companies involved in their production. The tomato segment held the largest market share in 2022, as it is the major cultivated crop, owing to its rapid production rate.

The flowers and ornamentals segment is expected to contribute significantly to market growth during the forecast period. The segment accounted for more than 28.20% of the market share in 2022. The increasing use of flowers and ornamentals for decorative and aesthetic purposes is expected to drive market growth. The segment has been further segregated into perennials, annuals, and ornamentals. Ornamental flowers held the largest market share in 2022, owing to increasing sales.

Regional Insights

Europe held the largest market share in 2022 and is estimated to remain dominant during the forecast period. The rising adoption of technologies for indoor farms, such as Controlled Environment-Agriculture (CEA), which controls the environmental factor, is responsible for regional growth. Increasing focus on adopting technologies, such as active heat systems and LEDs, to improve the yield is driving the market. Several initiatives are undertaken by the regional government for building indoor farms to overcome challenges, such as growing population, climate change, and food production in an environmentally -unfriendly way. Farm owners are at the forefront of investing in technologies, such as LED lighting and crop monitoring sensors, which are expected to lower labor costs.

Asia Pacific is estimated to witness the fastest CAGR from 2023 to 2030. Countries such as China and Japan are estimated to witness considerable growth in the forthcoming years owing to the presence of many indoor farms. In addition, the continuously rising population in the region has resulted in an increasing demand for organic food, which has led to the building of greenhouses and vertical farms to produce crops. The rising awareness about the significance of alternative farming methods due to the availability of less fertile agricultural land is expected to further fuel regional demand.

Key Companies & Market Share Insights

The key market players engage in the strategies such as partnerships, business expansions, new product developments, and contracts to expand their market share. The companies focus on building greenhouses and expanding indoor farms to meet the end-market requirements. For instance, Richel Group announced the design of a multi-span greenhouse in Mexico. The greenhouse is designed to meet the demands of the growers for the broader structures. The structure is favored owing to its optimal light transmission, circulation inside the structure, ease of air movement, and better climate control. Some of the prominent players operating in the global indoor farming market are:

• Argus Control Systems Ltd.

• Certhon

• Richel Group

• Netafim

• General Hydroponics

• Hydrodynamics International

• Illumitex

• Lumigrow

• Signify Holding

• Bowery Inc.

Indoor Farming Market Report Scope

Global Indoor Farming Market Segmentation

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest trends and opportunities in each of the sub-segments from 2017 to 2030. For the purpose of this study, Grand View Research has segmented the global indoor farming market based on facility type, component, growing mechanism, crop category, and region:

• Facility Type Outlook (Revenue, USD Million, 2017 - 2030)

  • Greenhouses

  • Vertical Farms

    • Shipping Container

    • Building-based

  • Others

• Component Outlook (Revenue, USD Million, 2017 - 2030)

  • Hardware

    • Climate control systems

    • Lighting systems

    • Sensors

    • Irrigation systems

  • Software

    • Web-Based

    • Cloud-Based

  • Services

    • System Integration & Consulting

    • Managed Services

    • Assisted Professional Services

• Growing MechanismOutlook (Revenue, USD Million; 2017 - 2030)

  •  Aeroponics

  •  Hydroponics

  •  Aquaponics

• Crop Category Outlook (Revenue, USD Million, 2017 - 2030)

  • Fruits, Vegetables, & Herbs

  • Tomato

  • Lettuce

  • Bell & Chili Peppers

  • Strawberry

  • Cucumber

  • Leafy Greens

  • Herbs

  • Others

  • Flowers & Ornamentals

  • Perennials

  • Annuals

  • Ornamentals

  • Others

• Regional Outlook (Revenue, USD Million, 2017 - 2030)

  • North America

  • U.S.

  • Canada

  • Mexico

  • Europe

  • U.K.

  • Germany

  • France

  • Spain

  • Asia Pacific

  • China

  • Japan

  • India

  • South America

  • Brazil

  • Middle East and Africa (MEA)