The global plant factory market size is estimated to be valued at USD 121.8 billion in 2021 and projected to reach USD 172.5 billion by 2026, recording a CAGR of 7.2% during the forecast period.
Various factors have played a major role in driving the plant factory market growth across the globe. It is an efficient alternative to the rising concerns on food security and shrinking arable land since it provides growers the ability to cultivate crops even in the absence of soil. One of the major drivers is that it provides a higher yield compared to traditional agricultural techniques, owing to the increase in harvest cycles. Furthermore, plant factories eliminate the use of artificial ripening agents and pesticides, which helps create nutritionally superior vegetable products.
Drivers: Higher yield as compared to traditional agriculture practices
Plant factories reduce the farmer’s consumption of resources, thereby enabling this farming technique to be adopted by most stakeholders, ranging from home gardeners to professional growers and supermarkets to restaurants. According to the UN reports on the global population, in 2018, plants grown in hydroponic systems have achieved a 20%–25% higher yield than the traditional agriculture system, with its productivity being 2–5 times higher. Also, owing to their controlled environmental conditions, the effect of climatic changes can be balanced with the help of these systems, thereby not affecting the annual crop production.
Restraints: High capital investments
The investment required to set up a plant factory is substantial; the equipment needed for a plant factory is extensive and often expensive to buy and maintain. Different types of equipment, including HVAC systems, fans, ventilation, irrigation systems, control systems, rails, and lights, are the key cost factors in a plant factory. On average, a 500-sq. ft. plant factory can cost up to USD 110,000 for a base level system that is not fully automated. Larger and more automated farms can cost upwards of USD 500,000–800,000 per 1,000 sq. ft., depending upon the level of autonomous function to be achieved. The costs in this instance are considering only the set-up costs of the farm; however, when upgrades are factored in, it can result in a recurring cost for the farm as the equipment will need to be upgraded every 3–4 years to improve the yield and productivity of the farm.
Opportunities Increased adoption of plant factories by restaurants and grocery stores amid the Covid-19 pandemic
The pandemic has successfully highlighted the impact food industry businesses can have when the supply and distribution chains are affected, and hydroponic, aquaponic, greenhouse systems are the best alternative that they could adopt. Thus, the market is estimated to grow with such scenarios in the food and agriculture industries changing rapidly. Restaurants and grocery stores are starting to incorporate plant factory systems such as hydroponic systems into their business models as a way to provide fresh produce. This also reduces transportation and packaging costs.
Challenges: Risk of equipment failure and delay in the learning curve among growers
A challenging factor that restricts market growth involves higher risks of equipment failure, resulting in limiting the production, further resulting in hindering adoption rates. For instance, if a piece of the system fails, such as a water pump, then it might lead to results, including the death of the plants, within a matter of hours. Without soil, there is no water or nutrient storage for plants to feed on. Much like any typical grow room, in case of a power outage, the backup must be ready. This might result in additional costs, consequently affecting the cost of production and profit margins.
Key players in this market include AeroFarms (US), BrightFarms (US), Gotham Greens (US), Bowery Farming (US), AppHarvest (US), Plenty Unlimited Inc. (US), Mirai Co. Ltd. (Japan), Kalera (Norway), Farminova (Turkey), Taiksha Ltd. (Japan), Iron Ox (US), Agricool (France), Crop One (UAE), Vertical Harvest (US), Smallhold (US), Oishii (US), Badia Farms (UAE), Farmone (US), Sky Greens (Singapore), and Dream Harvest Farming LLC (US).