Vertical Farming Market Size, Share, Forecast, & Trends Analysis by Component (Hardware {Lighting}, Software), Growth Mechanism (Hydroponics, Aeroponics, Aquaponics), Structure, Crop Type (Tomato, Berries, Lettuce, Microgreens) - Global Forecast to 2031

Vertical Farming Market Size & Forecast

The Vertical Farming Market is expected to reach $43.88 billion by 2031, at a CAGR of 22.6% from 2024 to 2031. 

The growth of the vertical farming market is driven by the decrease in arable land & the growing need to increase crop yield, population growth & rapid urbanization, the rising demand for chemical-free fruits & vegetables, and increasing water scarcity & changing climatic conditions. However, the high capital investment requirements for implementing large-scale farms and the need for technical knowledge for efficient farm management restrain the market’s growth.

Moreover, technological advancements in vertical farming and the increase in urban farming & the growing consumption of fresh foods are expected to generate growth opportunities for the stakeholders in this market. However, the high energy consumption of vertical farms and the limited types of crops grown are major challenges in the vertical farming market.

Additionally, the growing emphasis on sustainability & reducing the environmental impact of farming is a prominent trend in this market.

Vertical Farming Market Growth Drivers

Decrease in Arable Land & the Growing Need to Increase Crop Yield

Arable land is one of the most important resources required to increase agricultural productivity. Numerous cultivation techniques and inputs, such as synthetic fertilizers and crop protection chemicals, have emerged during the last decade, resulting in the overutilization of land resources, soil pollution, and diminished agricultural productivity.

According to Food and Agriculture Organization (FAO) projections, per capita arable land may decrease from 0.21 hectares per person in 2023 to 0.18 hectares per person in 2050. According to the FAO’s Global Assessment of Land Degradation and Improvement (GLADA) report, globally, around two billion hectares of agricultural land have degraded since the 1950s. Land degradation is one of the world’s most critical environmental problems, which will continue to worsen without rapid remedial action. Land degradation releases soil carbon and nitrous oxide into the atmosphere, making it a significant contributor to climate change. According to scientists at the Global Environment Facility, unsustainable agriculture methods result in the loss of 24 billion tons of productive soil each year. If this trend continues, 95% of the world’s land areas could become degraded by 2050.

The Eastern & Central Asia, Latin America, and Caribbean regions have witnessed significant degradation, affecting around 20% of the total land. According to the United Nations Convention to Combat Desertification (UNCCD), in the sub-Saharan Africa and Latin America & Caribbean regions, 163 million hectares and 108 million hectares, respectively, were lost to land degradation from 2015 to 2023. This loss was mainly attributed to the diversion of cultivable land for non-agricultural purposes, including construction, industries, and other development.

According to the World Bank, by 2050, the global population will reach 9.8 billion, with a significant increase in the demand for food. This increase is expected to exert immense pressure on the already depleted arable land. Therefore, there is an immense need to increase agricultural production with the help of advanced cultivation methods. In recent years, vertical farming has gained traction due to its several advantages, such as lower land & water requirements and more limited use of pesticides compared to traditional farming. Vertical farming has the potential to produce over 350x more food per square yard compared to traditional farming. Also, it involves growing food in controlled environments with zero chemical pesticides and lower fertilizer use.

Thus, the decrease in arable land & the growing need to increase crop yield have boosted the adoption of alternative agricultural production techniques, such as vertical farming.

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Population Growth & Rapid Urbanization

The world population is growing rapidly. According to the United Nations Department of Economic and Social Affairs, the global population is expected to reach 8.6 billion by 2030, 9.8 billion by 2050, and 11.2 billion by 2100. This population growth is expected to further increase the pressure on the world’s agricultural resources for the production of more and different types of food. The demand for nutrient-dense and residue-free food products has also increased due to consumers’ growing health awareness, socio-economic changes, increased incomes, and rapid urbanization driven by migration from rural to urban areas. Urbanization has led to the growth of towns and cities, increasing the demand for fresh foods.

Rapid urbanization has created challenges such as land shortage and food insecurity, making vertical farming a promising solution. Vertical farming, with its innovative approach of cultivating crops in vertically stacked layers, offers increased crop yield per unit, making it a viable method to address the food requirements of urban areas. Therefore, population growth and rapid urbanization are boosting the demand for vertical farming, driving the growth of this market.

Vertical Farming Market Trends

Growing Emphasis on Sustainability & Reducing the Environmental Impact of Farming

The heavy use of synthetic agricultural inputs has raised environmental concerns. The extensive use of synthetic agricultural inputs directly affects the environment as residues of chemical fertilizers stay in the soil and cause soil pollution, contaminate surface & groundwater, and are released into the atmosphere through vitalization. These residues left in the soil release ammonia, methane, nitrous oxide, and elemental nitrogen into the environment. Growing awareness about the adverse effects of agrochemicals on plant physiology, soil quality, animals, and human beings is driving the adoption of sustainable farming practices. Also, urban areas continue to grow and increase environmental pressures. The adoption of sustainable practices like vertical farming is becoming increasingly crucial to mitigating the impacts of urbanization and high fertilizer usage on the environment and promoting long-term sustainability. Thus, the growing focus on sustainability & reducing the environmental impact of farming is a prominent trend positively influencing the vertical farming market.

Vertical Farming Market Opportunities

Technological Advancements in Vertical Farming

There have been significant technological advancements in vertical farming. Modern technologies have transformed agriculture in recent years. Advances in vertical farming have made it more efficient, sustainable, and profitable. Advanced technologies allow for precise control over growing conditions and enable efficient crop management, reducing the need for manual labor and increasing efficiency. Technologies such as precision framing, climate control, and water management are being increasingly adopted in vertical farming. Precision farming utilizes advanced technologies, including Global Positioning System (GPS), Geographic Information System (GIS), sensors, robotics, and data analytics to optimize agricultural practices and enhance crop productivity. The integration of automation and precision technologies has enhanced efficiency, productivity, and sustainability in vertical farming. Additionally, the use of automation in vertical farming allows for precise nutrient and water delivery. Also, it contributes to sustainability by reducing water usage, eliminating the need for pesticides, and optimizing resource utilization.

Further, the integration of AI technologies, such as machine learning, computer vision, IoT, and robotics, enhances vertical farming. Machine learning algorithms help in predicting crop yields, optimizing resource usage, and enabling data-driven decision-making. These algorithms can adapt processes to dynamic environmental conditions, contributing to the efficiency and sustainability of vertical farming practices. The integration of IoT devices enables precise environmental monitoring, nutrient management, and irrigation control, contributing to resource efficiency. These benefits are expected to further increase the demand for vertical farming solutions. Therefore, technological advancements in vertical farming are generating growth opportunities for the stakeholders in this market.

Increase in Urban Farming & Growing Consumption of Fresh Foods

Migration from rural areas has led to growth in urban populations. Currently, over 50% of the global population lives in urban areas. By 2045, the world's urban population is expected to reach 6 billion. The rising demand for locally grown fresh produce among urban populations has boosted the need for urban farming initiatives. Urban farming can ensure food security by creating local sources of fresh produce, reducing reliance on long-distance transportation, and enhancing the overall sustainability of the food system. Urban farming not only provides access to high-quality, chemical-free produce but also increases community involvement, augments green infrastructure development, and ensures a more sustainable urban environment.

Thus, the increase in urban farming & the growing consumption of fresh foods are supporting the adoption of vertical farming solutions, generating growth opportunities for the players operating in this market.

Vertical Farming Market Analysis: Key Findings

By Component: The Hardware Segment to Dominate the Vertical Farming Market in 2024

Based on component, the vertical farming market is segmented into hardware, software, and services. In 2024, the hardware segment is expected to account for the largest share of 54.7% of the vertical farming market. The large market share of this segment can be attributed to the growth in urban farming, the increasing availability of technologically advanced components, the growing adoption of precision farming techniques, and the rising demand for advanced LED lighting and autonomous irrigation systems.

However, the software segment is projected to witness the highest growth rate of 24.1% during the forecast period 2024–2031. The growth of this segment is driven by the increasing adoption of precision technologies and advanced farming practices. Software solutions play a crucial role in monitoring and managing various processes in vertical farms, enabling farmers to optimize resource utilization, automate tasks, and make data-driven decisions, driving the growth of this segment.

By Growth Mechanism: The Hydroponics Segment to Dominate the Vertical Farming Market in 2024

Based on growth mechanism, the vertical farming market is segmented into hydroponics, aeroponics, and aquaponics. In 2024, the hydroponics segment is expected to account for the largest share of 61.1% of the vertical farming market. The large market share of this segment can be attributed to the increasing penetration of controlled-environment agriculture, the benefits of hydroponics, such as low water consumption and low risk of soil-borne diseases, and technological advancements in hydroponics. Hydroponics enables year-round crop production despite changing climatic conditions. It yields high-quality produce and reduces excess resource utilization.

However, the aeroponics segment is projected to record the highest growth rate of 27.8% during the forecast period 2024–2031. The growth of this segment is driven by population growth and the consequent increase in the demand for fresh foods, decreasing arable land, and the lower water requirements of aeroponics compared to other growth mechanisms such as hydroponics and aquaponics.

By Structure: The Shipping Container-based Vertical Farms Segment to Dominate the Vertical Farming Market in 2024

Based on structure, the vertical farming market is segmented into building-based vertical farms and shipping container-based vertical farms. In 2024, the shipping container-based vertical farms segment is expected to account for the larger share of 56.0% of the vertical farming market. The large market share of this segment can be attributed to factors such as technological advancements in shipping container-based vertical farming, extensive acceptance of the method across several countries, and the rising demand for locally sourced fresh produce. Furthermore, shipping container-based vertical farming is being increasingly practiced as it can be implemented in any location, regardless of challenging climatic or weather conditions. Also, it is suitable for locations facing difficulties in traditional farming. These structures are easy to transport and do not require dedicated building space. These benefits drive the adoption of shipping container-based vertical farming, supporting the growth of this segment.

By Crop Type: The Tomato Segment to Dominate the Vertical Farming Market in 2024

Based on crop type, the vertical farming market is segmented into tomato, berries, lettuce & leafy vegetables, pepper, cucumber, microgreens, herbs, and other crop types. In 2024, the tomato segment is expected to account for the largest share of 16.6% of the vertical farming market. The large market share of this segment can be attributed to the extensive use of vertical farming in tomato crop cultivation, the increasing demand for tomatoes, and the high yields and natural pest suppression in vertical farming.

Geographic Analysis

North America to Dominate the Vertical Farming Market in 2024

Based on geography, the vertical farming market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. In 2024, North America is expected to account for the largest share of 29.5% of the vertical farming market, followed by Europe and Asia-Pacific. The vertical farming market in North America is expected to reach $3.10 billion in 2024. North America's significant market share can be attributed to the extensive vertical farming carried out across the region, the increasing adoption of precision farming techniques and advanced technologies, and the growing demand for locally sourced fresh and organic produce.

However, Asia-Pacific is slated to register the highest growth rate of 23.6% during the forecast period due to population growth, rapid urbanization, the growing adoption of modern agricultural techniques, the increasing number of vertical farms in China, Japan, and Singapore, and the rising demand for exotic and organic crops.

Vertical Farming Market: Key Companies

This report includes a competitive analysis based on an extensive assessment of the leading players’ product portfolios, geographic presence, and key growth strategies adopted in the last 3 to 4 years. Some of the key players operating in the vertical farming market are Signify Holding B.V. (Netherlands), Heliospectra AB. (Sweden), AmHydro (U.S.), Freight Farms, Inc. (U.S.), Intelligent Growth Solutions Limited (U.K.), Everlight Electronics Co., Ltd. (China), ams-OSRAM AG (Austria), Vertical Farm Systems Pty Ltd (Australia), Urban Crop Solutions BV (Belgium), Vertical Future (U.K.), 4D Bios Inc. (U.S.), and Argus Control System Ltd. (Canada).

Vertical Farming Industry Overview: Latest Developments from Key Industry Players

• In May 2024, iFarm (UAE) launched a condensate reuse unit for vertical farms. It is a patented dehumidification system for reusing water evaporated through plants.
• In October 2023, Aerospring Hydroponics (Singapore) launched aeroponic vertical systems.
• In October 2023, Freight Farms, Inc. and Agrinam Acquisition Corporation entered into a definitive business combination agreement, under which Agrinam will acquire all of the issued and outstanding shares of Freight Farms.
• In November 2022, Freight Farms, Inc. (U.S.) raised $17.5 million in a Series B3 funding round co-led by Aliaxis SA and Ospraie Ag Science.
• In September 2022, Innovation Agri-Tech Group (IAG) (U.K.) launched GrowFrame 360, an aeroponic precision growing technology.

Vertical Farming Market Research Summary

Key questions answered in the vertical farming market report: