The US Indoor Farming Industry: A Current Snapshot

The US Indoor Farming Industry: A Current Snapshot

US indoor farming industry 2021Source

By Riyana Razalee 

Everyone talks about the indoor farming boom and the statistics are startling. Allied Market Research projects the global vertical farming industry to reach $1.38 billion by 2027 with a CAGR of 26.2% from 2021 to 2027. While KD Market Insight’s data shows the controlled environment agriculture market’s projected growth from $74.5 billion in 2020 to $172.1 billion by 2025. It comes as no surprise that these numbers are catching the eyes of not just those within the agriculture industry – be it farms, agriculture input companies, or investors – but also those from other fields of work.

As the industry expands, we thought we’d do a quick scan to see some interesting things that have been happening within this boom.

Controlled environment agriculture is growing at an unprecedented rate, so much so, the U.S. Department of Agriculture established a new Office of Urban Agriculture and Innovative Production in 2020. In tandem, over $3 million worth of grants were made available through this department in 2020 alone. The following year, in May, the department announced up to $4 million of grants to support the development of urban agriculture and innovative production projects.

As for policies related to the organic debate, no changes have been announced thus far since March this year when the US District Court for Northern California ruled that hydroponic farming is eligible for the National Organic Program (NOP), the regulatory framework that governs the production and sale of ‘organic’ foods in the US.

According to PitchBook, “As of late August this year, indoor farming deals are up 15.5% YoY to 112 and capital invested (TTM) has skyrocketed 403.4% YoY to $2.71 billion”. In 2020, U.S. indoor-farming ventures received $929 million in investments, more than double the investments in 2019, according to PitchBook data.

Everyone from celebrities (eg: Natalie Portman and her investment in Bowery) to investment groups have been putting their money into this industry. Why? There is less fear of the unknown with the industry, some of the larger costs of running an indoor farm, such as LED lighting, has dropped significantly over the last decade. As explained by iFarm, “Haitz’s Law now forecasts that the cost per lumen for LED light will fall by a factor of 10 each decade, while the light produced increases 20-fold. Currently, a well-designed horticultural LED system can be up to about 55% efficient – meaning 55% of the energy put in becomes photons, which plants use to grow, and 45% becomes heat. Fifty-five percent efficiency is already impressive when compared with incandescent light bulbs.” Furthermore, there have a been a few indoor farms that are clearly finding success through their business strategy, with some even going public on the stock market.

Natalie Portman invests in BowerySource

Growing with Grocers or Growing with Schools
For many indoor farms, they’ve continued to team up with several grocers either to stock their produce in-store or to set up their own modular vertical farms on-site at the grocers’ various outlets. An example of this is Kroger that has begun sourcing fresh produce from Ohio-based indoor farm, 80 Acres Farm. Through this partnership, 80 Acres Farm and Kroger will bring 10 million fresh produce servings to communities across the Midwest. Kroger also made waves through their partnership with Infarm that now supplies smaller-sized vertical farms set up within Kroger stores. To further support this, Infarm recently created new modular distribution centers for growing and supplying leafy greens and other produce to grocers located in and around urban markets, adding another layer of accessiblity and ease for grocers looking for these types of partnerships. 

A large catalyst for the growth of the industry, but one that receives less coverage, is universities. As schools have opened up in the last few months, more time and research has been put into indoor farming projects run by these schools. Some examples include UC Davis’ 320 sq ft shipping container which is being used to “train the next generation of farmers to have skills in engineering, computer science and plants to develop innovative solutions for food security”, or University of Arizona’s University of Arizona 770 ft vertical farming facility located within its Controlled Environment Agriculture Center, partially funded by a $2.7 million grant from the U.S. Department of Agriculture' Specialty Crop Research Initiative.

University of Arizona Indoor Farming Controlled Environment Agriculture Center


Growing Berries Indoors
Technology-wise, there’s been a slow but steady increase in visibility on the future of berries in the industry. AppHarvest was instrumental in this, announcing its 4th facility to grow berries in June this year. But, it is still proving to be a hard nut to crack, involving a significant amount of technological advancements which requires high levels of financial investments. This is clearly exemplified in the research partnership between AeroFarms and Hortifruit, a Chilean producer of fresh berries. Together, they hope to identify ways to grow blueberries and caneberries indoors, while still optimizing operations. To further show the need for funding in this area, Oishii, a company that specializes in strawberries grown in vertical farms, raised $50 million which will go towards expanding R&D for indoor berry growing. As Dr Paul Gauthier, Founder of the Princeton Vertical Farming Project noted,  “It takes an expert understanding of what plants need to grow and thrive and many cycles of trial and error”.

Oishii berries indoor farming

So where do we go from here? It’s easy for a lot of industry movements to grow in silos. But what we believe will be the glue that sticks everything together is closed-loop agriculture. Farms are noticing it, talking about it, and most importantly, doing something about it – and we want to support this movement by providing products and services that make the transition to closed-loop agriculture seamless for indoor farms.

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