Emerging Hydroponics Industry

Abstract

A new international research report provides a competitive assessment of the hydroponic food production market and the forces shaping it, the technologies and skill sets involved, and some key players and their prospects. It also covers important issues and trends affecting agriculture and food security that make hydroponics a viable and growing market.

Full text

18 . Practical Hydroponics & Greenhouses . June . 2014
A new international research report provides a competitive assessment of the hydroponic food
production market and the forces shaping it, the technologies and skill sets involved, and some
key players and their prospects. It also covers important issues and trends affecting agriculture
and food security that make hydroponics a viable and growing market.
Report by Mauricio Mathias, MSc.
Emerging Hydroponics Industry Emerging Hydroponics Industry
It’s no news that hydroponic vegetable production
worldwide has enjoyed consistent growth over recent
decades, so much so that growers and companies in the
sector periodically ask themselves how much longer can
expansion continue before market saturation. While the
answer will always depend on local market specifics, the
general international outlook is still very positive according to
a recent study by Manifest Mind, LLC, a US-based team of
experts focused on sustainable technologies.
The 142-page report, The Emerging Hydroponics Industry:
Hydroponics Systems, Issues, Crop Values, and Global Market
Forecasts, breaks down reasons why hydroponics can be one
way out for some of today’s top issues such as climate
change, healthy-eating and labour. However, it also warns
that it is not the end-all solution. There are not only barriers
to be overcome, but also potential pitfalls such as more
investments and higher need of technical knowledge.
The background to the study is the inescapable scenario of
an increasing world population that has to be fed, estimated
to reach 9 billion by 2050. To add to that, the per capita daily
intake of fruit and vegetables is on the rise in most
developed, and some emerging markets. Another worldwide
trend, albeit with varied intensities, are those of increased
awareness of climate change and healthy-eating habits. The
combination of these ingredients explains recent hydroponic
industry growth, and sheds a positive light on its future.
Yield
The economics of greenhouse/hydroponic food production
should continue to be one of its main drivers for its
expansion. The combination of a growing urban population
buying more fresh food, with a shrinking rural population,

puts the stress on the need to increasing production per
m2—be it in the field or under protection. Greenhouses do
cost more to start up but the data compiled by the study
shows production several times or more that of a
corresponding field crop, and that’s not only in developing
areas without access to knowledge. In one example, the
yield difference of a hydroponic tomato greenhouse in the
US southwest harvesting 55 kg/m2, is over 10 times larger
than the average yield for open-field tomatoes in the US.
In computer-controlled greenhouses, commercial yields
of 70 to 80 kg/m2are not uncommon, while advanced
technology, such as closed greenhouses, bring yields even
higher. Not to mention that greenhouses also allow food
production where it would not be possible in open fields, in
places that are too cold for that, or in desert areas. The
technological approach to each challenge is not always
maximum technology, but the right combination for each
market, climate, growers’ knowledge and pockets.
In tropical climates, that of many developing countries,
even simple soil-grown crops in a greenhouse already
multiply yields by a factor from two to five, without
hydroponics. The study quotes a comparison of pepper
production in India where shade-house cultivation (35%
shade) increased yield to 95 kg/m2from the 15 kg/m2in
open field. Such a jump in production is the result of
reducing the detrimental effect of excessive sunshine, rain
and wind. The micro-climate under protection allows
better plant production, as long as the grower has enough
knowledge to adapt to the new growing conditions.
Similar cases can be found in other BRIC countries
(Brazil, Russia, India and China)—countries deemed to be
at a similar stage of newly advanced economic
development. Urban Brazilian consumers used to get their
vegetables produced in close-by areas right next to their
towns. Now facing city sprawling, growers have to either
move further away or invest in technologies that pay back
the increased cost of land and labour. And Russia, and
some former Soviet republics, have become a major client
for Dutch greenhouse technology for vegetable and flower
production to supply a home market with increasing
buying power.
As growers know, there is a spectrum of hydroponic
solutions ranging from simple, affordable systems to
multimillion-dollar, highly automated solutions with a
much bigger energy bill. The pursuit in this choice should
be to maximise profitable production, quality, and safety
goals, rather than pursuing ‘maximum yields’ at any cost.
Simple hydroponic systems that double or triple field
production may be sufficient and even transformative,
depending on the market.
Barriers
Just like any good solution, hydroponics, too, brings a set
of risks. The most obvious barrier is cost. It’s always more
expensive to start up and operate a hydroponics operation
than it is to plant seeds in fields. Depending on
technological level, a greenhouse can cost “anywhere from
Practical Hydroponics & Greenhouses . June . 2014. 19

20 . Practical Hydroponics & Greenhouses . June . 2014
two to 20 times more than soil-cultivation, and even more
with some ultra-modern technologies that are gaining
ground in the urban food production wave”, states the
report. The infrastructure that is necessary to achieve high
yields, and the increasing reliance on control systems and
automation, require experience and education that unlike
traditional farming, has not been handed down from
generations. With higher costs and more need of expertise,
the risk to prospective investors goes up.
Such yield potential can and has blinded prospective
hydroponic growers and investors to the fundamental fact
that it is not magic: it is the result of ‘green fingers’ as well
as technical proficiency and years of experience learning
about a place’s local climate and labour mindset.
Energy has been another key issue for the industry.
Alternatives now in place include cogeneration (combined
heat and power [CHP]), especially in areas with
considerable greenhouse concentration, such as the
Netherlands and Turkey. CHP produces electricity from
waste heat from other industrial processes. Potential
savings from cogeneration can be up to 30% of energy
costs, through burning natural gas to create electricity and
heat, as well as using carbon dioxide (CO2), the by-product,
to supplement plant growth.
According to the report, another major energy-saver
now being commercially implemented are LED, or light-
emitting diodes, potentially cutting lighting energy costs in
half for hydroponic producers in northern-latitude
countries. The investment costs are still too high—and the
technology too new—for many growers to adopt. But with
the aging of greenhouses in Europe, the short lifetime of
other lighting types, and the rising cost of energy, LEDs in
time will be adopted by the industry. So while rising costs
of fossil-fueled energy are clearly a risk to the industry,
they are also creating innovation and creativity.
Labour Intensity
In a section analysing the “graying of agriculture”, the
report describes the aging of the agricultural population in
the world, which has declined from 46% in 1990 to 38 % in
2010. Forecasts predict another 4% decline by 2020. As far
as agri-labour is concerned, there is the issue of
availability as well as cost. The report notes a good part of
greenhouse production in developed countries is manned
by migrant or foreign workers. Around the world there are
variations of the same trend: Mexican and Latin-American
greenhouse workers in the USA, Moroccans in the
Netherlands, and several African nationalities in Spain.
Fewer work hours go into producing a ton of
greenhouse/hydroponic produce than field production, but
it is still a major cost factor. There are examples of industry
shifts to regions with lower-wages to supply the same
consumer markets. In recent decades, the greenhouse
area in the Almeria region grew much more than in
northern Europe, supplying the same European target
countries. Since the mid-90s, the shift in North America
has been from growing regions along the US-Canada

Practical Hydroponics & Greenhouses . June . 2014. 21
border to sunnier regions of southern California, Texas and
Arizona. These places offer advantages of lower humidity,
more sunlight, not so much greenhouse heating, and
abundant labour.
The trend, however, has not stopped at the southern
borderline. Mexico offers more of these same competitive
advantages, now as part of NAFTA (North American Free
Trade Agreement). The greenhouse area in the country has
grown exponentially. And Europe now faces the dilemma of
importing vegetables from Morocco, Egypt or Turkey, all
outside the EU (European Union), with labour and climate
advantages resulting in lower prices.
It’s important to note that this report does not advocate
hydroponics at all costs, in all situations. Agricultural
intensification and efficiency takes many paths. Although the
report focuses on hydroponics alone, it acknowledges that in
countries where overall development is low, simple soil-
based greenhouses and more technical training in irrigation
and nutrition practices are more appropriate.
The complete report with sector players, technical issues,
crop-specific forecasts, and recommendations can be
purchased from Manifest Mind.
More information at www.manifestmind.com/hydroponics
About the author
Mauricio Mathias is a greenhouse vegetable consultant
and international freelance writer based in Brazil. Email:
mauriciomathias@hotmail.com b
About Manifest Mind
Colorado-based Manifest Mind (http://manifestmind.com)
is an independent market research organisation that focuses
solely on sustainability and clean technologies. The team of
analysts is dedicated to helping entities such as multi-
national corporations, regulators, public service providers,
government institutions, product companies, non-
governmental organisations, and service providers improve
their outcomes and goals based on sustainable business
practices. The team works with thought leaders who can
bring perspective and practical experience to the
conversation in an accessible manner.
Analysts, who come from backgrounds in finance, public
policy, technology, and philosophy, perform both primary and
secondary research, utilising both in-person and phone
interviews with stakeholders along the value chain, including
technology vendors, leading producers, retailers, community
leaders, investors, government agency representatives, and
other relevant organisations.
To support their primary research, Manifest Mind also
conduct secondary research that includes, among other
information, current news, scholarly reference materials, and
industry courses and presentations.
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