The global vertical farming market is projected to register a CAGR of 5.4% during the forecast period (2021-2026). The Outbreak of Covid-19 has affected the supply chain of Vertical Farming. The global pandemic has shown an impact on the proper functioning of various industries across the globe. With the closure of restaurants, catering, and hospitality in most parts of the world, the foodservice industry has fallen abruptly. However, companies have started using the E-commerce platform for their sales to the customers. The increased demand for organic products among the consumers fueled by the improved standard of living and higher disposable income has paved way for the development of vertical farming, wherein organic farming is practiced widely. Microgreens are among one of them cultivated by vertical farming methods, which are a rich source of polyphenols, a class of antioxidants that helps to lower the risk of diseases such as heart disease, Alzheimer's disease, diabetes, and certain cancers. Thus, due to the numerous health benefits, there is an increasing demand among the health-conscious consumers in the region which drives the market in the forecast period. North America is projected to be the largest and fastest-growing market. Vertical farming is an environment-friendly and profitable technology. It has been promoted by the various governments and non-governmental organizations for its benefits in terms of food security. The need for food supply against the explosive population increase by 2050 has catalyzed the growth of the vertical farming market. Fund flows towards the market for bringing development and technological advancement in this specific sector.
Key Market Trends
Rapid Pace of Development of Precision Farming Technologies
The introduction of harvesting robots, automatic seed planters, and greenhouse roof washers have been instrumental in reducing operating costs and increasing revenues, in the vertical farming market. The automating movement of the plants is gaining popularity. It includes unit tasks of transplanting, seeding, packaging, harvesting, and cleaning, which, in turn, boosts the vertical farming market. The use of hydroponics allows the long-term cultivation of a wide range of crops, grown in vertical farming. Recent developments in the field of hydroponics, to cater to casual indoor growers, simplifying technology, and economics are increasing this segment's growth in the global vertical farming market. The development of customized lighting systems for research testing, comprising top-lighting, inter-lighting, and tissue culture, is accelerating the growth of the global market segment of lighting devices. These plants are grown in stacks of hydroponic trays, under pink LED lights. The LED lightings’ reduced heat output and energy use have made this technology feasible. In April 2019, companies, such as Samsung, launched a wide range of horticultural LEDs, that produce a broad spectrum of light to support healthy plant growth.
North America Dominates the Market
The United States market dominated the North American region. Growing concerns toward food security and nutrition are expected to open a number of novel opportunities for the industry to prosper. The United States is anticipated to invest a significant share in facilitating the ecosystem for future foods. As more of the consumer insights develop toward “fresh-from-farm-to-table”, the availability of freshly harvested vegetables across retail outlets is expected to increase in the country (which is also the pioneer in adopting this concept). The onset of urban population dwellings across cities, such as New York, Chicago, and Milwaukee, has propelled the environment for vertical farming with activities, such as revamping derailed vacant warehouses, derelict buildings, and high rises, which has, in turn, led to an increase in the production of fresh grown foods altogether. Over the past few years, the vertical farming concept has laid its hands across the booming cannabis market, where companies are including alternative options to garner more revenues. Major players in the Canadian vertical farm industry are Canada’s Modular Farms, based in Toronto, and Nova Scotia’s TruLeaf, leading the trail followed by startups, such as Ecobain Gardens, that grew from a 1300 sq. ft. in 2013 to 6000 sq. ft. in 2018, by engaging the fresh herb mix concept.
The market is highly fragmented, with major revenue-generating companies which are Infarm, Aerofarms, Signify Holdings (Phillips), Illumitex, Inc., Everlight Electronics Co, Ltd., Vertical Farm Systems, Green Sense Farms LLC, Agrilution, and Urban Crops Solutions, among others, cornering just some part of the market share, while the rest of the market is shared among numerous players. In the fast-growing Vertical Farming market, companies are not only competing on the basis of product quality or product promotion, but they are also focused on other strategic moves, in order to acquire a larger share and expand their acquired market size. Many commercial growers are adopting technologies that involve high capital expenditure, such as advanced hydroponic systems and electronic traceability systems. Additionally, growers are heavily investing in LEDs and other innovative lighting products, in order to reduce their exposure to associated risks by carefully monitoring and investing in new technologies. Partnerships and collaborations will enable growers to provide year-round supplies, thereby strengthening their position in the market. The new players that are entering the indoor vertical farming market can fetch profits by choosing the most profitable crops and by using the correct facility systems.
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