Green Gold: Monetizing Urban Agriculture with Vertical Farming

The global vertical farming produce market was valued at USD 1.02 billion in 2019 and is projected to grow at a compound annual growth rate (CAGR) of 25.7% from 2020 to 2027. This strong growth is driven by rising investments from key stakeholders and supportive government initiatives in the form of subsidies and grants. The integration of advanced technologies in agriculture has attracted numerous venture capitalists and private investors, further boosting market expansion. Additionally, many vertical farming companies are eligible for low-interest loans that help offset the costs of machinery, facilities, and equipment, contributing to increased production and distribution of vertically grown crops.

The COVID-19 pandemic significantly accelerated demand for vertically farmed produce. Widespread supply chain disruptions led to crop waste in traditional field farming. In contrast, vertical farming operations, located close to urban centers and involving minimal human contact, ensured product freshness and safety. Companies like AeroFarms and Bowery Farming, Inc. capitalized on this advantage, gaining consumer trust and boosting sales during the pandemic.

The market is also expanding due to the adoption of vertical farming in regions with unfavorable natural conditions for traditional agriculture. For example, in the Middle East, vertical farming is being increasingly used to grow a wide range of crops that do not typically thrive in the region's harsh climate. Badia Farms, one of the leading companies in the Middle East, cultivates crops such as arugula, kale, red cabbage, basil, and wasabi cress using vertical farming techniques. These methods enable high-yield, climate-resilient cultivation that supports local food security.

Detailed Segmentation:

The tomatoes segment led the global vertical farming produce market in 2019, accounting for over 19% of the total revenue. This dominance is primarily due to the consistently high global demand for tomatoes across all regions, which surpasses that of other crops such as lettuce, spinach, peppers, cucumbers, and herbs. In addition, the global per capita consumption of tomatoes remains high, further reinforcing their widespread consumer demand.

In terms of growth mechanism, the hydroponics segment held the largest share of the market, contributing to over 45% of total revenue in 2019. This method involves growing plants without soil, using a nutrient-rich mineral solution surrounding the roots. The increasing awareness among consumers about the harmful effects of pesticides and artificial ripening agents has led to greater demand for vegetables grown hydroponically. As a result, hydroponic systems are expected to retain their market leadership over the forecast period.

From the structure perspective, the building-based segment was the leading contributor to market revenue in 2019, accounting for over 60% of the total share. Vertical farms established within buildings can generate large volumes of produce to meet the demands of a wide consumer base, thereby driving up sales revenue within this segment.

Regionally, North America dominated the market in 2019, with a revenue share of more than 33%, and is projected to maintain this leading position in the coming years. This growth is largely driven by North American consumers’ growing preference for pesticide-free and soil-free vegetables and fruits, aligning with broader health and wellness trends.

Key Companies Market Share Insights

The new farm would be dedicated to research development and commercialization of local crops. Some of the prominent players in the vertical farming produce market include: