Indonesia Indoor Farming Market - Forecasts from 2023 to 2028

Indonesia indoor farming market is estimated to grow at a CAGR of 6.40% to reach US$71.399 million in 2028 from US$46.247 million in 2021.

The market for indoor farming in Indonesia has seen a considerable surge in investment in recent years, mostly because of shrinking arable land, rising consumer demand for regional, sustainable products, and migration to megacities. One way to address the challenges presented by Indonesian indoor farming is by using hydroponic and greenhouse technology.

According to the World Bank, one-third of Indonesia's labor force is employed in the country's key agricultural industry, which accounts for around 14 percent of the GDP and is dominated by smallholder farmers (93%). With changing dietary tastes, the industry is essential to Indonesia's ability to feed its populace, which is rising and becoming more urbanized. To satisfy those demands, it is crucial to uphold and improve agriculture's production, sustainability, and competitiveness.

Additionally, as per the World Bank report, the population in Indonesia is significantly increasing each year, which leads to a decrease in arable lands and utilization of resources at a higher pace, which has influenced consumers to shift to indoor farming as an alternative to meet the requirement.

Market growth drivers:

According to EDI (Electronic Data Interchange Indonesia), the development of contemporary greenhouse agriculture and hydroponic technology would improve the role of hydroponic farmers in Indonesia. Farmers must overcome several challenges to ensure that vegetable output is high and constant, including disease outbreaks and damage from rainwater. The greenhouse in which EDI is involved is built in Indonesia, and its irrigation system, humidity management, and temperature regulation are all fully automatic.

Artificial intelligence (AI) is projected to make a presence in the more technologically advanced area of agriculture known as indoor farming in Indonesia. Indonesian AgTech players have made significant contributions to the necessary transformation of the agriculture industry, from production, supply chain, market access, and transactions to finance options, as well as to many elements of traditional agriculture.

Additionally, numerous Indonesian towns have seen the emergence of grassroots initiatives aiming at attaining food security through urban and indoor farming. This is a fantastic approach to increasing the diversity of foods available and reducing the effects of rising food and commodity costs. Compared to commercial farming, it has less emissions and better soil, among other ecological advantages.

Product innovations to drive market growth.

The country's expanding population and less irrigational land have led market players to focus on product innovations throughout Indonesia. For instance, in March 2023, a high-tech indoor farm designed in the manner of eco-architecture is being built in the Innovative City of Nuanu in Bali, Indonesia, because of a partnership between the Nuanu community and the provider of indoor farming technology, iFarm. The initiative aims to develop a regenerative agricultural model for a sustainable town's future while guaranteeing Nuanu's year-round access to the finest quality products, including nine recreation spaces for inhabitants and visitors, places for co-creation, education, wellness, and the production of regenerative food. The Magic Garden portion of Nuanu will include a sustainable AgTech exhibition, community gardens, and a high-tech, multi-functional indoor farm constructed using iFarm technology.

The hydroponics segment is set to witness robust growth.

Hydroponic farming yields are higher than those from conventional agricultural methods, and the hydroponics market is expanding in Indonesia. Moreover, hydroponics is experiencing tremendous growth due to the expansion of greenhouse vegetable operations. The exact control of variables, including temperature, humidity, light, and nutrient supply, makes greenhouses a perfect setting for hydroponic production. Hydroponic systems have benefitted from increased yields and efficient use of water and nutrients. The demand for hydroponics may rise as greenhouse vegetable businesses grow, opening more chances for expansion and innovation. Additionally, hydroponics is consistent with sustainable agriculture methods, minimizing environmental impact and satisfying consumer desire for food that is produced locally and sustainably.

Further, the production of many crops in Indonesia is also rising because of various government initiatives. The Indonesian government is making investments to boost agriculture. For instance, in September 2022, through the Agriculture Value Chain Development (ICARE) project, the Indonesian government will create models for assisting sustainable and inclusive agriculture value chains in nine chosen sites. The Board of Executive Directors of the World Bank gave their approval to the $100 million initiative. The project's objectives are to strengthen the value chain in particular agri-zone clusters and the institutional capability of the Ministry of Agriculture to support stakeholders. This broad and developed agricultural system has facilitated the production of fruits and vegetables. For instance, the FAO reports that the average output of vegetables in Indonesia was 105,996 kg per ha in 2020 and increased slightly to 108,591 kg per ha in 2021.

Market Developments:

• In December 2022, the innovative SGH program, launched by Indonesia's Agriculture Ministry, aimed to develop modern agriculture. The program's digital agriculture has begun to help farmers in Mojokerto, East Java. SGH takes part in campaigns to advance agricultural digitalization to raise agricultural productivity. SGH Agriculture makes the most of digital technologies to boost agricultural practice. SGH comprises buildings with the Greenhouse trademark and a digital system. SGH promotes environmentally friendly indoor farming practices. Thus farmers utilize it to grow organic vegetables. The revenue of farmers has grown since SGH was founded.
• In February 2023, Agritech business iFarm, located in Helsinki, stated that it was extending its operations in Asia Pacific and preparing to construct indoor farms in nations including Singapore, Indonesia, and others. The farms will primarily cultivate berries and be outfitted with cutting-edge technology and smart gadgets to grow fruits with the least resources.
• In August 2022, the fully integrated seed-to-meal dine-in platform with indoor growth chambers and farming as a service for anybody who wishes to grow food in their community was built by GREENS, a hyperlocal meta-framing firm with headquarters in Jakarta, Indonesia.

Market Segmentation:

By Growing System

• Hydroponics
• Aeroponics
• Aquaponics
• Soil-based
• Hybrid

By Component

• Hardware
• Software
• Services

By Facility Type

• Glass or Poly Greenhouse
• Indoor Indoor Farm
• Container Farm
• Indoor DWC System

By Crop Type

• Fruits and Vegetables
• Herbs and Microgreens
• Flowers and Ornamentals
• Others