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

United States Vertical Farming Market Trends and Insights

Rising Demand for Locally-Grown Pesticide-Free Produce

Consumer willingness to pay price premiums for pesticide-free salads has established a stable revenue stream for operators in the United States vertical farming market. Hydroponics accounted for 61% of national tomato production, 67% of cucumber production, and 66% of lettuce production ^{[1]Source: U.S. Department of Agriculture Economic Research Service, “Controlled Environment Agriculture Statistics,” ers.usda.gov}. Plenty Unlimited utilized Walmart’s equity investment to distribute greens to over 430 Albertsons stores in California by January 2025. Additionally, shrink rates that are 15–20% lower than those of field-grown produce have converted trial listings into long-term supply contracts. Little Leaf Farms expanded to over 8,000 retail locations after securing a USD 250 million credit facility in October 2024, highlighting that the future growth of the United States vertical farming market will depend on retailers’ efforts to improve per-foot gross margins.

Water-Efficient Agriculture Amid Drought Policies

Stage 2 drought declarations in California and the 2024 allocation cuts under the Colorado River Compact have necessitated the incorporation of water-saving measures into investment models. Hydroponics reduces water usage by 99% compared to traditional farming methods, while aeroponics further decreases consumption by 95% through the application of micronutrient misting at frequent intervals. The United States Department of Agriculture Natural Resources Conservation Service has awarded Ponix Systems USD 4.9 million to expand hydroponic lettuce production. However, life-cycle analyses indicate that energy demand for hydroponic lettuce is 162 megajoules per kilogram, compared to 10.7 megajoules for field-grown lettuce. In response, operators within the United States vertical farming market are adopting closed-loop irrigation systems and procuring renewable energy to ensure water savings do not exacerbate electricity cost disparities.

Dynamic Renewable-Microgrid Contracts Cut Power Costs

Electricity constitutes 30% to 50% of operating costs, making power hedging a critical factor in determining profitability within the United States vertical farming market. Bowery Farming’s 150-kilowatt solar array and 200-kilowatt-hour battery reduce carbon dioxide emissions by 204.1 metric tons annually and generate USD 500,000 in net-present-value savings through time-of-use pricing arbitrage. In Texas, the Electric Reliability Council of Texas (ERCOT) market offers negative pricing during periods of oversupply, enabling farms to align photosynthetic activity with the lowest energy costs. The United States Department of Energy is providing loan guarantees for controlled-environment agriculture projects that incorporate dispatchable demand response, shifting lender evaluation criteria from revenue growth to megawatt-hour elasticity ^{[2]Source: U.S. Department of Energy, “Agricultural Energy Efficiency,” energy.gov}. If implemented on a national scale, microgrids could bring the United States vertical farming market closer to cost parity with traditional field-grown produce.

Defense-Base Supply Contracts Secure Long-Term Off-Take

The United States Department of Defense has designated hydroponic lettuce as an eligible product, ensuring consistent demand and protecting producers from retail price competition ^{[3]Source: U.S. Government Accountability Office, “Federal Food Purchases,” gao.gov}. Babylon Micro-Farms received a USD 49,898 Small Business Innovation Research contract from the United States to pilot modular units on military bases. These public sector agreements include inflation-adjustment clauses, which help stabilize debt-service coverage. Additionally, the 2024 Salinas Valley Escherichia coli outbreak highlighted vulnerabilities in traditional field supply chains, prompting military commissaries to collaborate with local vertical farming partners. This shift continues to support demand in the United States vertical farming market, even during periods of reduced consumer spending.

Economically Viable Crop Range Remains Narrow

Leafy greens contribute positively to margins due to their 30- to 45-day growth cycles and retail prices ranging from USD 4.41 to USD 8.82 per Kg, which help offset energy costs that are 20–30 times higher than traditional field production. These shorter cycles allow for quicker turnover and reduced exposure to prolonged operational risks. In contrast, crops like strawberries and tomatoes require longer growth cycles of 60 to 90 days, which ties up working capital and increases biological risks, such as susceptibility to pests and diseases over extended periods. The 2023 bankruptcy of AppHarvest, partly attributed to USD 60 million in electricity debt for a 60-acre tomato facility, highlights the consequences of poorly aligned crop selection and the financial strain of energy-intensive operations. Many growers in the United States vertical farming market remain vulnerable to risks such as retailer delistings and single-pathogen outbreaks due to a lack of diversified crop portfolios, which could otherwise mitigate these challenges and enhance operational resilience.

Talent Poaching by Semiconductor Fabs Plants Inflates Automation Labor Costs

Intel and Taiwan Semiconductor Manufacturing Company are recruiting over 2,000 electrical and mechanical engineers in Arizona and Ohio, offering annual salaries ranging from USD 80,000 to USD 120,000, along with equity. In comparison, salaries in the agriculture sector range from USD 50,000 to USD 70,000. Vertical farms require comparable automation expertise to integrate programmable logic controllers and sensor networks. These automation systems are critical for optimizing operations, reducing manual intervention, and ensuring consistent production quality. Local Bounti achieved a 19% improvement in labor productivity after implementing computer-vision robots, but filed a patent to protect its intellectual property amid increasing competition for wages. The shortage of skilled talent is driving up ramp-up costs across the United States vertical farming market, further emphasizing the need for advanced automation and efficient workforce management strategies.

Segment Analysis

By Growth Mechanism: Hydroponics Holds Sway as Aeroponics Accelerates

Hydroponic systems accounted for 56.8% of the United States vertical farming market share in 2025, bolstering lender confidence due to turnkey suppliers and extensive horticultural data that mitigate ramp-up risks. These systems support crops such as tomatoes, cucumbers, and lettuce through nutrient baths, which reduce commissioning costs and simplify food safety audits. Commercial software solutions from providers like Hortimax and Priva streamline nutrient dosing, making hydroponics the preferred choice for new entrants in the United States vertical farming market. Economies of scale in LED procurement and nutrient formulations contribute to profitability, and the segment's maturity ensures hydroponics will remain the primary revenue driver in the United States vertical farming market through 2031.

Although aeroponics represents a smaller revenue share, it is projected to grow at a 16.0% CAGR through 2031, nearly 50% faster than the overall United States vertical farming market. Misting systems in aeroponics deliver nutrients with an absorption efficiency of 98%, reduce growth cycles by approximately 30%, and lower microbial risks in the root zone. AeroFarms reports 95% water savings compared to hydroponics, and validation from the National Aeronautics and Space Administration enhances its technical credibility. As sustainability certifications gain importance, aeroponics is well-positioned to capture a growing share of the United States vertical farming market, particularly for high-margin crops such as spinach, kale, and microgreens.

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

By Structure: Building-Based Platforms Dominate While Containers Climb

Building-based vertical farms accounted for 68.6% of the United States vertical farming market size in 2025. This dominance is attributed to centralized chillers, shared utilities, and multi-tier racks, which optimize crop output per square foot. Gotham Greens’ network of thirteen facilities demonstrates how rooftop integrations reduce last-mile freight costs and secure premium shelf space. Additionally, industrial vacancy rates of 4% to 5% present opportunities for conversions at costs below replacement value, making building-based assets a preferred choice for large institutional investors seeking exposure to the United States vertical farming market.

Shipping-container vertical farms are projected to grow at a 12.2% CAGR, providing entrepreneurs with a cost-effective entry point into the United States vertical farming market. For instance, Freight Farms’ Greenery S module can produce up to 4 metric tons of leafy greens annually, with a bill of materials ranging from USD 150,000 to USD 200,000. This allows small operators to test market demand before scaling operations. Municipalities and school districts are increasingly adopting container units for food security initiatives, while defense installations are exploring containerized farms to localize their supply chains. As financial institutions become cautious about funding large-scale greenfield projects, container solutions are poised to capture a growing niche within the overall expansion of the market.

By Crop Type: Leafy Greens Lead as Fruits and Berries Surge

Leafy greens accounted for 52.3% of the projected 2025 revenue, representing the core of the United States vertical farming market's proven unit economics. The combination of 45-day crop cycles and strong consumer demand enables growers to achieve positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), even in regions with volatile power prices. Little Leaf Farms’ 40-acre greenhouse in Pennsylvania is projected to drive annual retail sales to approximately USD 200 million, demonstrating the scalability of lettuce and arugula production. Supermarket buyers prioritize low shrink rates and consistent year-round quality, ensuring leafy greens remain the largest segment of the United States vertical farming market.

Fruits and berries are projected to grow at a compound annual growth rate (CAGR) of 10.3% through 2031, supported by retail prices that are three to five times higher than those of lettuce. Oishii’s New Jersey facility employs bumblebee pollination and computer-vision monitoring to achieve premium Brix levels, showcasing the scalability of strawberries in climate-controlled environments. While 60- to 90-day crop cycles tie up working capital, edge-computing technology optimizes harvest timing to protect margins. As pollination techniques advance, fruits are projected to contribute additional value and diversify revenue streams within the United States vertical farming market, particularly for operators adept at managing energy costs.

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

By Component: Software Becomes the Margin Differentiator

Hardware captured 63.7% of the United States vertical farming market share in 2025, mirroring the heavy upfront spending on light-emitting diode arrays, climate-control systems, irrigation lines, and battery storage, which together can reach USD 400,000 per megawatt of installed grow-light capacity. Bowery Farming’s 150-kilowatt solar array and 200-kilowatt-hour battery underscore the continued dominance of physical equipment in collateral valuations when lenders size construction loans, while turnkey packages from Priva and Hortimax continue to commoditize margins for lighting, heating, ventilation, air conditioning, and irrigation to single digits. 

Software is projected to grow at a compound annual growth rate (CAGR) of 12.4% through 2031, driven by proprietary algorithms that optimize lighting schemes, nutrient mixes, and harvest timing, thereby improving yields and labor efficiency beyond the capabilities of standard equipment. Local Bounti improved labor productivity by 19% and reduced unit labor costs by 17% in 2025 after deploying computer-vision quality control. It then filed patents to secure its training data and inference models. Amazon Web Services Greengrass now runs machine-learning models on-site, eliminating latency and bandwidth fees while guiding light cycles and robotic pickers in real time. The United States Department of Agriculture National Institute of Food and Agriculture validated this direction with a USD 175,000 grant for autonomous monitoring software, signaling that code rather than steel will decide which growers refinance construction debt at investment-grade spreads.

Geography Analysis

BrightFarms Inc. (Cox Enterprises, Inc. )’s establishment of 1.5 million-square-foot hubs in Texas and Georgia highlights a strategic focus on central-continental logistics. These locations place two-thirds of the United States' population within a one-day drive and leverage favorable industrial electricity tariffs, enhancing competitiveness in the United States vertical farming market. In the Northeast, population density supports rooftop greenhouse initiatives by Gotham Greens Holdings, LLC, where higher retail price points and extended winter periods strengthen the economic rationale for local hydroponic farming.

California and the broader Southwest present a mix of opportunities and challenges. Chronic drought conditions increase the appeal of water-efficient cultivation methods, while extensive field production can sometimes pressure vertical farm pricing. Plenty Unlimited Inc.’s Compton facility, for instance, ships approximately 2,040 metric tons of produce annually to 430 Albertsons stores. However, the company closed its South San Francisco research site in 2023 to reduce costs. Meanwhile, municipal regulators are debating whether to classify vertical-farm water usage as industrial rather than agricultural, a decision that could significantly impact the feasibility of expansion in regions reliant on the Colorado River basin.

Midwestern and Southern states are emerging as key growth areas for the United States vertical farming market, driven by lower land costs and access to grid reliability programs. Companies like 80 Acres Farms, Inc. and Soli Organic have expanded their networks across states such as Ohio and Arkansas, benefiting from industrial leases that are approximately 30% cheaper than those in coastal areas. Additionally, the 2024 Agriculture Improvement Act allocated USD 20 million for urban indoor agriculture research, with grants distributed through land-grant universities concentrated in these regions. Policy support and energy cost advantages position interior states to accommodate the next wave of capacity expansion, as established operators increasingly focus on adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rather than solely pursuing revenue growth.