Hydroponics started off as an experiment with water culture. Today, it is promising to be one of the most innovative, profit centers in the future. It could create new jobs, support services like a pest control company and capacity to feed the world. Although the industry has its fair share of naysayers, the hydroponics farm costs, margins and profits may convince entrepreneurs otherwise. Before drafting a vertical farming business plan, check out these hydroponics farming business trends to learn from.
Indoor Farming Space Utilization
Many hydroponic farms are shifting from traditional flat beds to vertical structures. They are optimizing the use of space by adding aisles to their growing areas. This might see obvious as first thought. However, adding racks and height allow for much more profit per square foot. Moreover, the indoor growers are identifying that costs are optimal up to a certain height as well. To be a profitable hydroponics business, your space utilization will impact your profits positively.
Low Market Penetration
Thus far, the hydroponics market has a very low percentage of the grater food production industry. Compared to the $143 Billion in revenues, hydroponics account for only $607 million dollars. If we are to expect indoor farming to overtake traditional agriculture, then this low market percentage is a major opportunity. Just consider how much of our tossed salad will eventually being produced indoors. The company that changes this percentage drastically will stand to make billions in profits.
Decreased Hydroponics Costs
Of course, indoor commercial space can be expensive. However, growers are lowering their commercial costs with LED lighting and low energy consumption infrastructure. By using the most efficient lighting to grow their crops, these companies increase the crop yields. Needless to say, the increased yield in production leads to lower costs and higher profit margins. If possible, your hydroponics business should continue to lower the production costs.
New Legal Requirements To Watch
For now, a hydroponics farming business requires the basic permits, licenses and quality standards of other agricultural business. In the near future, we could see the increased legal requirements and legislation to regulate hydroponics farming. At a commercial scale, producing companies may have to comply with higher standers or specialized licenses. In fact, there could be increased inspections by the government. For anyone serious about this business, you will want to pay attention to the developing legal landscape of hydroponic operations.
Shift To Vertical Integration
While many hydroponics businesses are part-time farms, larger companies are aiming for full vertical integration. In addition to running hydroponics farming operations, they are investing in standard food process and packing plants. This allows them to complete the production process and export their own crops to catering businesses, food retailers or restaurant chains. The supply chain expansion allows companies to cut out the middle man. Certainly, selling agriculture produce direct is a great way to increase revenues and margins for the business.
Similar to any new market, hydroponics business have tremendous change and opportunity ahead. These trends include lower costs, greater margins, innovative technology and higher standards of quality. To start a hydroponics farming business, you should be ready to take on all of the latest trends in the market. If you are successful, your business could be the leader in the indoor farming space.
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