Vertical Farming Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Global Vertical Farming Market Trends and Insights

Urbanization-Driven Demand for Local, Fresh Produce

Rapid city growth concentrates consumers near distribution hubs where land for open field cultivation is scarce. Vertical farms deliver greens within twenty-four hours, which preserves nutrient density and adds three to five days of shelf life compared with field produce hauled long distances. Gotham Greens operates thirteen facilities within fifty miles of major retailers, ensuring premium positioning for local label produce. Singapore earmarked USD 44 million (SGD 60 million) for controlled environment projects that must raise domestic food self-sufficiency to 30% by 2030^{[1]Source: Singapore Food Agency, “Agriculture Productivity Fund,” sfa.gov.sg}. Consumer surveys in North America and Europe show willingness to pay 15 to 15% more for pesticide-free greens grown nearby, reinforcing urban demand pull.

LED, Automation and Artificial Intelligence Cost Curve

Horticultural LED efficacy increased from 2.5 micromoles per joule in 2015 to 3.8 micromoles per joule in 2025, which reduced the electricity required per kilogram of lettuce by 35%. Deep reinforcement learning now adjusts spectrum and photoperiod in real-time, pushing energy use down to 6.42 kilowatt-hours per kilogram without compromising yield. Robotics for seeding, transplanting, and harvesting reduces labor's share of operating costs from the mid-forties to the mid-twenties. Capital costs for LEDs and software licenses have decreased sufficiently to reduce the payback period for a greenfield vertical farming market project from eight years in 2020 to five years in 2026.

Climate Resilient Food Supply Amid Extreme Weather

Repeated droughts cut California lettuce yields by 18% in 2024 and lifted wholesale prices by 22%. Vertical farms avoid weather shocks and use 95% less water than open field farms. The United Arab Emirates facility, Bustanica, supplies 1,000 kilograms of greens daily while consuming only 5% of the water required outdoors. Japan folded indoor farming into its MIDORI Strategy, which allocates USD 730 million (100 billion yen) for smart agriculture tools that bypass agrochemical reliance.

Government incentives and ag-tech investments

The United States Risk Management Agency expanded its controlled environment pilot to forty-eight counties and raised coverage to 85% of crop value, which lowers financing risk for mid-size operators ^{[2]Source: United Nations Department of Economic and Social Affairs, “World Urbanization Prospects,” un.org} . China’s 14th Five-Year Plan reserves USD 14 billion (CNY 100 billion) for urban agriculture infrastructure in tier one cities. Singapore and Japan deploy grant schemes that reimburse up to half of capital spending on LEDs and automation, accelerating capacity additions and enabling local entrants to challenge venture-backed incumbents.

High Energy Intensity and Capital Expense

Electricity forms roughly one quarter of vertical farming operating costs. In Germany and France, tariffs averaged USD 0.27 (EUR 0.25) per kilowatt hour in 2025, which squeezed profit margins ^{[3]Source: Eurostat, “Electricity Price Statistics,” ec.europa.eu}. Capital outlay for a new indoor facility ranges from USD 1,500 to USD 2,500 per square meter, nearly an order of magnitude above a passive greenhouse. Venture funding fell from USD 2.8 billion in 2022 to USD 680 million in 2023, forcing companies to retrofit with higher efficacy LEDs rather than build new capacity. AeroFarms' filing for bankruptcy in 2023 highlighted cash flow strain when revenue lags asset deployment.

Narrow Crop Portfolio Profitability Window

Leafy greens and microgreens command short cycles and high price per pound, yet account for 35% of vertical farming market revenue, which pushes wholesale prices down when capacity grows faster than demand. Berries promise a 26% CAGR but need higher light intensity and manual harvest, which adds 40% to the cost. Competing greenhouse tomatoes and cucumbers use sunlight, which keeps unit economics tough for indoor farms. Ultra premium strawberries at Oishii sell for USD 15 to USD 20 per eight-ounce pack, proving that vertical farming market players can thrive when price elasticity is limited.

Segment Analysis

By Growth Mechanism: Aeroponics Gains on Water Efficiency

Hydroponics is estimated to account for approximately 60% of the vertical farming market share in 2025, driven by simpler nutrient management and the ease of retrofitting existing facilities. Nutrient film and deep-water culture systems, utilized by companies such as Gotham Greens, continue to dominate large-scale operations. The hydroponics segment is growing at a mid-teens rate, supported by advancements in nutrient dosing and dissolved oxygen management, which are reducing the historical performance gap with aeroponics for leafy greens.

Aeroponics is projected to grow at a compound annual growth rate (CAGR) of 18% through 2031, benefiting from 40% higher water efficiency compared to hydroponics and yield improvements of up to 20% above baseline levels. AeroFarms employs high-oxygen mist delivery systems, enabling it to capture approximately 70% of the microgreens market in the northeastern United States. Meanwhile, aquaponics remains a niche system, as regulatory classification of its output as conventional produce limits organic price premiums, thereby constraining its overall contribution to the vertical farming market.

Note: Segment shares of all individual segments available upon report purchase

By Structure: Containers Scale Through Franchising

Building-based projects accounted for the largest share of the vertical farming market in 2025, representing approximately 70% of the total supply. Gotham Greens operated over half a million square feet across thirteen facilities. Additionally, 80 Acres Farms incorporated on-site solar capacity and robotics at its Ohio operations, reducing grid electricity usage by 40% and labor costs per kilogram by 25%. These advancements highlight the cost efficiencies achieved by large-scale facilities.

Container farms are projected to grow at a compound annual growth rate (CAGR) of 19% through 2031, driven by their plug-and-play functionality and rapid deployment capabilities. Hospitality chains are increasingly adopting these modules on-site to eliminate food miles, catering to consumers who prioritize visible sustainability. However, large building-based farms continue to maintain a lower cost per metric ton of production.

By Components: Artificial Intelligence Platforms Displace Legacy Controls

In 2025, lighting constituted the largest segment of the vertical farming market, accounting for approximately 40% of total spending. Companies such as Signify and ams OSRAM provided high-efficacy diodes integrated with responsive controls, while Everlight Electronics supported growth in the Asia-Pacific region with cost-effective white-spectrum chips. Climate hardware, including HVAC systems and carbon dioxide enrichment, represented about one-quarter of total expenditure. The remaining share was allocated to nutrient delivery infrastructure and sensors.

Software and artificial intelligence subscriptions are projected to grow at a compound annual growth rate (CAGR) of 20% through 2031 as operators transition from fixed climate recipes to more adaptive solutions. Intelligent Growth Solutions reported achieving 32% energy savings at a test site in the United Kingdom by dynamically adjusting light spectrum and airflow in real time.

Note: Segment shares of all individual segments available upon report purchase

By Crop: Berries Command Premium but Demand Automation

Lettuce and leafy greens are projected to maintain the largest share of the vertical farming market through 2031, accounting for approximately 35% of crop revenue in 2025. Their short 21-day growth cycles and strong retail partnerships contribute to high utilization of their production lines. Microgreens offer the highest gross margins. However, expanding beyond specialty and foodservice channels remains a significant challenge. Tomatoes and peppers face slower growth due to competition from greenhouse producers in Mexico, Canada, and the Netherlands, where access to free sunlight provides a cost advantage.

Berries represent the fastest-growing crop segment, with a 16% CAGR from 2026 to 2031, driven by the Plenty–Driscoll’s partnership, which integrates indoor strawberries into established distribution networks. Additionally, Oishii has demonstrated that consumers are willing to pay 200%–300% price premiums for superior flavor, particularly when supply is limited.

Geography Analysis

North America is projected to account for 41% of the vertical farming market revenue in 2025, driven by the expansion of controlled-environment crop insurance programs, which now cover 48 counties and approximately 85% of production value. Long-term supply agreements between vertical farming operators and national grocery retailers have contributed to securing consistent production volumes and stabilizing cash flows. Furthermore, Canada and Mexico are utilizing provincial and federal funding to support urban vertical farming initiatives in cities such as Toronto, Montreal, and Mexico City.

Asia-Pacific leads on growth with a 18% CAGR from 2026 to 2031. China has earmarked USD 14 billion (CNY 100 billion) to weave urban agriculture into supply chains and Singapore channels USD 73 million (SGD 100 million) toward automation and genetics to achieve the thirty by thirty food target. Japan intends to cut pesticide use by half and sees indoor farms as a direct path toward that outcome. Taiwan’s YesHealth Group runs large hydroponic units under a national smart agriculture push.

Europe delivered mid-teens growth, though electricity costs nearing USD 0.27 per kWh limit profitability. Sweden’s Ljusgarda offsets heating costs by using waste heat from a neighboring data center, while Nordic Harvest leverages soft loans for sustainable agriculture in Denmark. The Middle East counts on the Bustanica and Red Sea Farms initiatives to meet Vision 2030 nutrition goals, while Kenya and South Africa focus on urban nutrition and smallholder training rather than export markets.