What Are The Emerging Markets in Indoor Farming?

Indoor farms have witnessed impressive growth in recent years, especially in western/occidental countries that have been in the spotlight.

Other regions such as Eastern Europe, Latin America, Africa, and Central Asia are often neglected despite a fair amount of activity in the sector. Indeed, emerging markets such as Romania will see its first vertical farm in operation in the coming weeks, African countries (Both North & South) had new companies/projects created in order to develop indoor farming solutions, Latin America has seen important funding rounds, and Central Asia has government plans to further grow the indoor farming sector in their respective countries.

Today, we take a look at the recent investments made in these regions, the potential for growth as well as the future of the sector, and certain challenges that companies may face when expanding in these regions.

Eastern Europe A Growth Halted By The Russian War?

Eastern Europe became an important crop producer for the European market over the years with countries such as Romania, and Poland representing 10.8% of the total annual agriculture output in 2019. Moreover, the region represents about 20% of the total vegetable output and more than 30% of the employees in the European agriculture industry.

Nonetheless, the region has been prone to (1) decreasing arable land and (2) increasing effects of climate change. In fact, recent droughts and heatwaves may have cost the region about 1% of its GDP and is expected to further the overall economic damages forcing the countries to seek new solutions to adapt to a changing climate. A recent report, carried out by the British consultancy Cambridge Econometrics highlights the regions most prone to climate hazards in Europe. According to the report, an average increase in temperature of 1.5ºC may lead the region to suffer a USD 5 to USD 6Bn in annual damages and a fall in productivity. In the CEE region, Romania and Hungary will suffer the most from the effects of heat, resulting in a loss of 1.5 percent and one percent of GDP, respectively.

Today, most of these countries are investing in indoor farming/vertical farming in order to mitigate the effects of climate change as well as adapt to changing environmental conditions. Though the projects are relatively new and yet to represent an important proportion of the region’s output, they do represent the growing interest the region has in these new technologies. Today, most of the projects that emerged in the region focus on growing baby leaves, microgreens, and specialty crops as well as providing equipment to the industry.

Romania for instance developed two hybrid greenhouses and a vertical farm dedicated to microgreens. Fresh Microgreens invested USD 2.2M in two new “Microgreenhouses” in order to supply German retailer Kaufland as well as Esiberg with fresh locally produced greens.

In October Kaufland and Ultragreens (formerly known as Microgreens Romania) inaugurated the first vertical farm in Romania.