Hydroponics Market is Booming: Explore Opportunities!
by Mit K. SEOThe
hydroponics
market is projected to reach USD 16.0 billion by 2025, from USD 8.1
billion in 2019, at a CAGR of 12.1% during the forecast period. The market is
driven by factors such as the growing acceptance of controlled environment
agriculture and increasing technological advancements in hydroponic systems.
Target Audience:
• Hydroponics equipment manufacturers
and suppliers
• Hydroponics distributors importers
and exporters
• Research institutions
• Government bodies
• Distributors
• End users (Farmers, farming organizations,
and contract farmers)
Key Players:
• Argus Control Systems (Canada)
• Heliospectra AB (Sweden)
• Scotts Miracle Gro (US)
• American Hydroponics (US)
• LumiGrow (US)
• Aerofarms (US)
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Market Dynamics:
Higher yield as compared to
conventional agriculture practices
According
to the FAO, due to the increasing population, food production is expected to
rise by 70% before 2050. On the other hand, natural prerequisites of
agriculture, viz., arable land and water have been depleting, with rapid
urbanization across the globe. To feed the increasing population, the
productivity of food crops needs to be increased in the existing arable land,
and also alternative farming techniques such as urban farming need to be
encouraged.
Hydroponic
systems or soil-less agriculture reduce the farmer’s consumption of resources,
thereby enabling this farming technique to be adopted by a large number of
stakeholders, ranging from home gardeners to professional growers, and
supermarkets to restaurants. According to the UN reports on global population,
plants grown in hydroponic systems have achieved 20%–25% higher yield than the
traditional agriculture system, with its productivity being 2–5 times higher.
Also, owing to controlled environmental conditions, the effect of climatic
changes can be balanced with the help of these systems, thereby not affecting the
annual crop production. CEH techniques directly affect the crop harvest cycle;
hence, for hydroponic systems, crop harvest cycles are shorter in comparison to
traditional farming techniques, thereby increasing the annual yield. Also,
since climatic changes show a minimal effect on such systems, crops can be
produced all year round, thereby again increasing the produce.
Lack of government policy
and tax breaks in developing countries
Hydroponic
farming is seen as a key factor in improving food security in developing
regions; however, while government support through tax cuts is present in
developed countries, the same cannot be said for developing countries. The
availability of the best equipment is fairly limited and often needs to be
imported, which attracts taxes adding to the costs for hydroponic growers. The
lack of tax cuts and incentives is also a key factor that hinders the growth of
hydroponics in developing regions as the high set-up costs and running costs
can often render operations unfeasible. The need for basic training and
technical knowledge is necessary for operating hydroponic farms, which although
is present in developing countries, does not add significantly to the value of
hydroponic farms. The high costs of production often result in high costs of
the final product, which in itself can draw consumers away in price-sensitive
markets.
Entrance of new players in
the market
Due
to increased popularity and adoption of hydroponics, many new players are
entering the market. For instance, Larry Ellison, founder, chairman, and CTO of
Oracle, launched a hydroponic farming start-up, named Sensei in Los Angeles.
The company plans to build 10 greenhouses covering 200,000 square feet on the
Hawaiian island of Lanai and instead of measuring output by volume, Sensei will
measure nutrition per acre.
Various
investors are also supporting hydroponics start-ups globally. For instance, in
June 2017 a high-tech indoor, vertical farming start-up, Bowery Farming,
announced it had raised USD 20 million in a Series A1 co-led by General
Catalyst and GGV Capital, and including GV, First Round Capital, and other seed
round investors. In July 2017, a San Francisco-based indoor vertical farming
start-up, Plenty, raised the largest agtech funding round in history – a USD
200 million Series B led by SoftBank Vision Fund – the USD 93 billion all-stage
tech fund headed by a Japanese investor, Masayoshi Son. Other participants in
the round include affiliates of Louis M. Bacon, the founder of Moore Capital
Management, and existing investors Eric Schmidt’s Innovation Endeavors,
Finistere, DCM, Data Collective, and Bezos Expeditions. Plenty has plans to
open 500 hydroponics farms in all the major cities of more than 1 million
inhabitants, globally.
Many
start-ups have also emerged in the Asia Pacific region, the fastest-growing
region for the hydroponics market. For instance, Future Farms based in Chennai,
India has developed effective and accessible farming kits to facilitate
hydroponics. The company develops indigenous systems and solutions, made from
premium, food-grade materials that are efficient and affordable for Indian
growers. Junga FreshnGreen, an agri-tech start-up, is a joint venture with a
leading Netherlands-based Agricultural technology company – Westlandse Project
Combinatie BV (WPC). It is setting up high-technology farms in India. The
company will create a hydroponics model that can cultivate farm fresh
vegetables that have a predictable quality, having little or no pesticides, and
unaffected by weather or soil conditions.
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Europe is projected to
dominate the hydroponics market by 2025.
The
hydroponics market in Europe is projected to witness significant growth during
the forecast period due to the growing adoption of CEA for horticultural crops
and increasing development of new innovative technologies that target specific
crop needs. The adoption of hydroponics has been the highest in the
Netherlands, followed by Spain and Turkey. According to industry experts,
almost 90% of the greenhouses in the Netherlands are converted to hydroponic
structures, and a majority of this area is used for flower and vegetable
cultivation. Though the area under cover is high in Spain, Italy, and France,
the adoption of hydroponics across these greenhouses is not more than 20% in
these countries, thereby providing fair growth potential for this region.
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Created on Jul 15th 2020 07:28. Viewed 279 times.