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Asia Business Development – Asia Business Consulting » Indoor Agriculture: Feeding the future

SpirE-Journal 2015 Q3

Indoor Agriculture: Feeding the future

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Indoor Agriculture: Feeding the future

With rapid urbanization and a rising global population – expected to hit 8.5 billion by 2030 – it is crucial to find innovative agricultural methods to sustain food supply. Touted as the future of food and agriculture, can indoor farming change the way we produce food?

What is indoor agriculture?

The art and science of sprouting crops in a controlled and sustainable environment with artificial lights and technology is known as indoor agriculture. With indoor agriculture, seasonal crops can be produced throughout the year using light-emitting diode (LED) lighting to trigger photosynthesis. Water fortified with minerals is used to substitute the functionality of soil.

Indoor farming can increase crop yields by 50 per cent.

Indoor farming can increase crop yields by 50 per cent, provided that growing conditions are optimal. Further advances in LED technology also assist to create an environment where vegetables can be grown – regardless of climate – to produce maximum yields with shorter growth cycles.

Benefits of indoor farming

Desertification is one of the top global issues affecting 2.6 billion people who depend on agriculture directly. 52 per cent of the land currently used for farming may become non-arable (moderately or severely) due to soil degradation. This is a huge potential threat to the food security of cities, where more and more of the global population will live. Many cities in emerging countries also face supply chain issues in transporting fresh produce from farms to city retailers. Much of the output is lost in transit or spoilt due to inadequate or non-existent cold chains.

How is indoor farming advantageous?

Feeds a rising global population

As the population count touched the 7.3 billion mark in July 2015 , 805 million people still suffer from hunger and malnutrition. Indoor farming helps address this problem as crops can be grown in layers, which means the scale of production is higher than traditional farming.

Reduces transport costs and carbon footprint

Indoor farming can help produce food close to where consumers live. This reduces food transportation costs and increases urban access to food. Gotham Greens (based in Brooklyn) – who run rooftop indoor farms – opened a 20,000 square foot farm in 2014 on the roof of a new Whole Food Market. They deliver produce directly to the shop located below.

Land and water preservation

As of 2014, 800 million hectares – equivalent to 38 per cent of the earth’s land surface – is already farmed. Another 100 million hectares will be required should current agricultural methods remain unchanged. For instance, in Jackson, Wyoming, a three-story 13,500 square foot hydroponic greenhouse known as the Vertical Harvest aims to provide 100,000 pounds of agricultural produce each year. This will be free of pesticides and will use 90 per cent less water as the farm recycles its water. Photosynthesis in the plants is brought about through artificial and natural lighting revolving around three stories of plant trays.

Indoor farming markets to watch out for

With an increasing demand for fresh and locally produced food in cities, countries are keen to adopt eco-friendly and sustainable agriculture methods. A few emerging markets across Asia to watch out for include:

A quarter of China’s vegetables now come from indoor farms.

In the face of rising food demand, a quarter of China’s vegetables now come from indoor farms – producing 170 million metric tons of vegetables annually. The indoor agriculture industry employs approximately 70 million people and accounts for 85 per cent of global indoor cultivation.

Both organic farming and emerging indoor agriculture markets are supported through government subsidies in China. For instance, in Heilongjiang Province, there is a USD8,750 offer per acre to encourage new production capacity through indoor farming. No wonder Heilongjiang is known as the breadbasket of China as it is home to some of the largest farming operations across the country.


Around 90 per cent of the food consumed in Singapore is imported, whereas the farming industry in 2014 occupied about 200 hectares – less than one per cent of a total land area of 71,000 hectares. This is precisely why the nation is a hot-bed for high-tech farming. The government further encourages farms to use innovative methods to overcome land shortages and decrease reliance on imports.

For instance, Sky Green farms developed one of Singapore’s first high-tech vertical farms back in 2009. Vegetables are grown vertically in high towers through a high-tech system where each step of farming is controlled. The output is ten times that of traditional farming. The farm produces eggs, fish and leafy vegetables for local consumption.


Indoor farming continues to spread across the globe, predominantly in developed countries. There are close to 380 enclosed farms (in 2014) operating in Japan that grow fruits and vegetables – some even run by electronics brands such as Panasonic, Toshiba, Fujitsu to name a few.

Established in 2004, Mirai is an indoor farming company which turned a semiconductor factory into the world’s biggest indoor farm. This was part of the reconstruction effort for the Tohoku region – devastated by the Great Japan Earthquake. The farm has a yield capacity of 10,000 head of lettuce per day – all at 25,000 square feet. LED’s developed by General Electric (GE) and Mirai, these help reduce energy consumption by 40 per cent.

Upcoming trends

As the indoor farming movement continues to spread across the globe, a few trends will continue to drive more growth.


Automation has helped the indoor agricultural industry to flourish at its fullest. Plantation and growth of crops require vast amounts of manual work. Hiring labor for such large scale work would cost 30 per cent of the total production, whereas, automation is a one-time investment. For instance, Harvest Automation’s nursery robot can rearrange plants in a nursery; the maker of this robot is a material handling company based outside Boston.

Alternative to organic farming

Organic farming largely depends on climatic conditions. With traditional methods, some crops can only be grown in particular seasons.

The use of natural predators like ladybugs further reduces the use of pesticides, resulting in healthy and clean crops. Although, organic farming is the natural way of cultivation, there are many challenges associated with it such as availability of land and risks from weather and insects. Traditional farmers also face difficulties in controlling the supply of water, minerals, humidity and temperature.

Indoor farming has created an alternative method for producing organic vegetables.

New lighting technology

Indoor agriculture has come a long way from the time when more energy-intensive fluorescent lights were used. Today, most of the industry has adopted LED lighting over fluorescents. LEDs consume less energy and have increased yields by 20 per cent.

The LED market is set to surge from USD395 million in 2013 to USD3.6 billion by 2020.

LEDs consume less energy and have increased yields by 20 per cent.

Big data

Big data is an affordable means to monitor indoor agricultural growth online. It can be used to customize automation and tweak alert systems. Most indoor farmers now use big data to maximize yields and prevent losses. For instance, Osmo Systems (since 2012) – based in the Bay Area (Berkeley) – offers affordable aquaculture and hydroponic alerts and monitoring services.

Custom greens

Making custom greens is one of the greatest advantages available through indoor farming. For the first time, small batches of “customized vegetables” can be produced for urban customers. For instance, a New Zealand-based indoor farm named Biolumic uses UltraViolet light to saturate certain flavors in plants. The technique releases a desired taste in a crop such as extra lemony basil or peppery microgreen.

Challenges ahead

Indoor agriculture has taken the global food market by storm. With its technological advances, this trend is set to transform the future of agribusiness. It holds out the prospect of ensuring that cities are no longer dependent on the countryside, or on the lagging state of the logistics industry in emerging countries which transports food from rural to urban areas.

However, the industry is far from mature. New investors should also consider the challenges that come with indoor farming.

Cost intensive

The big challenge is to make indoor farming commercially profitable. Even now, there are drawbacks. It is expensive to start a farm since energy costs can run high and space constraints limit what can be grown. Moreover, due to the lack of soil, the produce might not get an organic label – even though it costs as much as organic vegetables to produce.

Reliance on electricity

Indoor farming depends heavily on electricity to create controlled environments for plants with the help of machinery and artificial lighting. Though it is projected that indoor farms will reduce transportation cost and preserve the soil from degradation, it will also release about eight pounds of Carbon-dioxide into the atmosphere for growing just 1 kilogram of lettuce.

Future outlook

The attractions of indoor farming are obvious. The rising global population’s needs can be met by indoor farming as it leads to higher crop yields which are pesticide-free. It also strengthens food security in large cities from the prospect of freak weather events and political turmoil in the countryside.

As produce comes closer to where the consumers live – often grown on roof tops – transport costs are reduced. Indoor farming also does a better job of protecting scarce resources of water and soil as compared to traditional agriculture.

Although indoor farming is growing rapidly, it is growing much faster in heavily urbanized and more economically developed regions, such as China, Japan, Dubai and Singapore. The prospects for adoption in less developed regions are dim, given the far lower costs and large labor pools in rural farming areas. Hence indoor farming is not a panacea for feeding a rising global population (set to hit 9 billion by 2050 ), since much of the growth in population will be seen in poorer countries.

The world still needs technology and business solutions that can raise productivity and yields on rural farms. Biotechnology, rural irrigation and farm modernization still have a crucial role to play.

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