The hydroponics market is estimated to account for a value of USD 9.5 billion in 2020 and is projected to grow at a CAGR 11.9% from 2020, to reach a value of USD 16.6 billion by 2025. The hydroponic system market is projected to witness significant growth due to the increasing need for components installed for crop cultivation, the input nutrient and grow media for hydroponic systems, and the value of crop cultivated from these systems. Based on the system model, the hydroponic systems market can be classified into aggregate and liquid systems, wherein aggregate systems utilize a grow media for plant growth support and nutrition, while liquid hydroponic systems do not require a grow media.

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Key Market Players:

Key players in this market include include major players such as Signify Holdings (Netherlands), Argus Control Systems (Canada), Heliospectra AB (Sweden), Scotts Miracle Gro (US), American Hydroponics (US), LumiGrow (US), Emerald Harvest (US), Hydroponic Systems International (Spain), Advanced Nutrients (Canada), Vitalink (UK), Hydrodynamics International (Spain), Logiqs B.V (Netherlands), Grobo (US), and American Hydroponics (US). These major players in this market are focusing on increasing their presence through expansions & investments, mergers & acquisitions, partnerships, joint ventures, and agreements. These companies have a strong presence in North America, Asia Pacific and Europe. They also have manufacturing facilities along with strong distribution networks across these regions.

Market Dynamics:

Driver: Higher yield as compared to conventional agriculture practices, emphasized even more after the outbreak of Covid-19 pandemic.

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.

Restraint: High capital investment for large-scale farms

Different types of equipment including HVAC systems, fans, ventilation, irrigation systems, control systems, rails, and lights are the key cost factors in a hydroponic farm. On average, a 500 sq. ft. hydroponic farm can cost up to USD 110,000 for a base level system that is not fully automated. This huge cost for the initial set up of the system is a major factor refraining farmers from investing in these systems.

Opportunity: Development of innovative hydroponic technologies

With the increased adoption of hydroponics globally, manufacturers and researchers are working on improving the efficiency of hydroponics technology to increase the quality and quantity of the produce. Many companies in the market are investing heavily into R&D for obtaining state-of-art technologies that boost the porductions and also brong about variety of ciultivations possible.

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Challenge: Spread of waterborne diseases and algae in closed systems

In a closed hydroponic system, the threat of waterborne diseases poses a major problem to growers. Considering that the nutrient-enriched water is recirculated throughout the system, any kind of waterborne disease that enters the nutrient reservoir often affects the whole crop as it has the capability to spread throughout. Growers often keep their plants spaced out to prevent crowding, which is often how pathogens enter the system.

Asia has the largest greenhouse vegetable growing area of 224,974 ha across the globe, followed by Europe with 173,561 ha as per the report on protected horticulture by FAO in 2017. Thus, with the high number of greenhouses in Asia Pacific, the growth opportunity for hydroponic market is the highest and hence, the region is expected to grow at the highest rate during the forecast period.