Hydroponics Market Drivers, Restraints, Opportunities & Challenges

The Hydroponics Market size is estimated to account for a value of USD 9.5 billion in 2020 and is projected to grow at a CAGR 11.3% from 2020, to reach a value of USD 17.9 billion by 2026. Factors such as the higher yield as compared to conventional agriculture practices, controlled environment farming, and improved yield and higher produce with limited land resources are some of the key factors driving the growth of the hydroponics system market during the forecast period.

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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. CEH techniques directly affect the crop harvest cycle. Since climatic changes show a minimal effect on such systems, crops can be produced all year round, thereby again increasing the produce.

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. However, the yield obtained from these systems are higher, and the produce can also be marketed as premium products, thereby raising the ROI for growers.

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 he productions and also bring about variety of cultivations possible. Strategic partnerships with research labs and institutes further drive the growth of the hydroponics market.

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. To combat the instances of waterborne diseases, growers are resorting to using screen or paper filters and additional filtration systems to curb the spread of waterborne diseases in the system.

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Key players hydroponics market 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.

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