How To Invest in Vertical Farming (Plus the Top Vertical Farming Stocks)

As the global population approaches 9 billion by 2050, the food supply needs to increase by 70%. Vertical or hydroponic farming is one potential solution. As an investor, you can buy into the future of farming through stocks, an exchange-traded fund (ETF), or a direct investment. Keep reading to learn how you can invest in vertical farms.

SustainFi Updated October 22, 2021

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What is vertical farming?

Vertical farming involves growing produce indoors in stacked layers, like in the picture above. Vertical farms are often hydroponic or soilless, growing plants in nutrient-rich water. Plants grow under powerful LED lights, often with little human intervention. Vertical farming allows crops to be grown anywhere all year round, regardless of the weather.

Although the vertical farming industry is very young, its proponents believe it can take market share over the next decade. In 2020 alone, venture capitalists poured over $900 million into vertical farming startups, double the 2019 amount. There are already over 2,300 hydroponic farms in the U.S., though they make up a tiny percentage of the produce market.

Why invest in vertical farming?

As the global population approaches 9 billion by 2050, more people move to cities, and arable land decreases, we may need to find alternative farming methods.

Agriculture is also one of the top contributors to climate change. Food production takes up 50% of the planet’s habitable land, accounts for 70% of freshwater consumption, and produces 20-25% of greenhouse gas emissions. As the climate crisis looms, we need ways to reduce emissions from agriculture.

Here are several reasons why vertical farming could be one of the solutions.

  • Vertical farming uses less water. Vertical farming uses 90-95% less water than traditional farming. Water is recycled again and again through the same hydroponic system, so no water is wasted.
  • Vertical farming uses less land. Because crops are grown vertically, yield is higher than with traditional farming. If less land is used for farming, there is less deforestation and more land is available to plant trees.
  • Vertical farming uses less fertilizer and pesticides. Vertical farming doesn’t require as much fertilizer, which is very carbon-intensive to produce. Because farming takes place in a closed environment, herbicides and pesticides are not needed. Pesticides and herbicides may not only be harmful to humans, they also poison the water supply once they end up in rivers and lakes. In addition, indoor farming reduces the risk of contamination with bacteria like E.coli.
  • Vertical farming reduces transportation costs. Vertical farming allows produce to be grown near big cities, which reduces transportation cost and related emissions. Plus, the produce is fresh when it ends up on the table.
  • Vertical farming reduces food waste. According to the United Nations, food loss and waste are 25%-30% of total food production and 8%-10% of global greenhouse gas emissions. With vertical farming, produce doesn’t need to travel in trucks for weeks, so it’s less likely to rot.

Last but not least, crops grown indoors are always in season and do not depend on weather conditions.

Unsurprisingly, the vertical farming market is projected to grow by 25.2% each year through 2027, reaching $31.6 billion by 2030.

How to invest in vertical farming

There are three ways you can invest in vertical farming, short of starting your own farm: through stocks, an ETF, or a crowdfunding platform. Let’s get into each of these options.

Vertical farming stocks

Many of the best-known vertical farming companies are early-stage and not yet listed publicly. These include Bowery Farms, the largest vertical farming company in the U.S., and AeroFarms, which canceled its plans to list via a SPAC deal this year. But there are still a few options, though they tend to be volatile, small market capitalization stocks. Some of these companies are also exposed to the cannabis-growing industry.

StockTickerMarket Cap (m)Description2021 Year-to-Date Performance
Hydrofarm Holdings NASDAQ: HYFM$1,600Manufacturer of vertical farming equipment and supplies-39%
Village Farms International NASDAQ: VFFCAD 836Greenhouse operator-22%
AppHarvest NASDAQ: APPH$542Developer and operator of vertical farms-63%
Agrify CorpNASDAQ: AGFY$373Provider of vertical farming technology+42%
CubicFarm Systems TSE:CUBCAD 232Provider of vertical farming technology+53%
urban-gro IncNASDAQ: UGRO$114Provider of vertical farming technology+74%

Data as of 10/20/2021

1. Hydrofarm Holdings (NASDAQ: HYFM)

Hydrofarm makes equipment and supplies for the indoor farming market in the U.S. and Canada, including high-intensity grow lights and climate control solutions. The company has been around for over 40 years, selling to wholesale clients like retail stores. Hydrofarm has six distribution centers in the U.S. and two in Canada.

Because the company’s products can also be used to grow marijuana, the stock has also been a popular way to bet on cannabis legalization. So if you are just looking to invest in growing lettuce, Hydrofarm may not be the best pure-play choice. But, unlike many vertical farming startups, Hydrofarm makes money. For 2021, the company expects $565-$590 million in net sales and $80-90m in profits.

2. Village Farms International (NASDAQ:VFF)

Canadian company Village Farms develops and operates large greenhouses, including hydroponics. It grows tomatoes, cucumbers, and peppers, among other produce. VFF also owns Pure Sunfarms, a low-cost cannabis producer in Canada, and Balanced Health Botanicals, a CBD brand.

As with Hydrofarm, investors have been buying VFF to bet on cannabis, so it may not be the best pure-play stock if you want to invest in hydroponic lettuce. But, at least VFF is not losing money. The company reported $123 million in revenue and $2 million in profit in the first half of 2021.

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3. AppHarvest (NASDAQ: APPH)

AppHarvest is one of the best-known vertical farming startups in the U.S. It develops and operates large vertical farms, designed to grow non-GMO, pesticide-free produce. The company’s 60-acre Morehead, KY facility is among the largest indoor farms in the country. According to AppHarvest, its vertical farming technology uses 90% less water than traditional farming, without chemicals or pesticides. The company even boasts Martha Stewart among its board members.

AppHarvest Kentucky Facility. Credit: AppHarvest

However, after AppHarvest went public via a SPAC merger in early 2021, the stock’s performance was disappointing. The company had to deal with low tomato pricing, high shipping costs, operational challenges, and poor produce quality. As a result, AppHarvest reduced its 2021 revenue outlook from $20-$25 million to $7-9 million, and it expects to lose $70-$75 million this year.

The management team continues to believe that the future is rosy, guiding to $300-$350 million in sales in 2025. Perhaps they can overcome their challenges in the future, but this investment seems very risky.

4. Agrify Corp (NASDAQ: AGFY)

Agrify makes solutions for vertical farming, targeting the cannabis and hemp space. Products include vertical farming units, LED grow lights, and air purifiers. The stock has done well this year, but the business remains unprofitable, despite generating a record revenue of $19 million in the first half of 2021. And, although Agrify solutions can be used for high-value crops other than cannabis, this company is clearly very tied to the cannabis and hemp space.

5. CubicFarm Systems Corp (TSE:CUB)

CubicFarm makes hydroponic growing systems and provides consulting services. According to CubicFarm, their technology uses 95% less water than traditional growing methods. The CubicFarm System can grow leafy greens, herbs, and microgreens in a controlled environment.

This Canadian company is listed on the Toronto Stock Exchange. CubicFarm stock is up over 50% year-to-date, but it remains a small company. CUB reported only $4.3 million in revenue in the first half of 2021, remains unprofitable, and has only 116 employees and contractors.

6. Urban-gro Inc (UGRO:NASDAQ)

Urban-gro, Inc designs and engineers growing systems for the commercial cannabis and indoor farming markets. They provide grow rooms, environmental controls, lighting and fans, sanitation, water systems, and more. Over the past 12 months, the company reported $42 million in revenue. The business has even been profitable (on an adjusted earnings level) over the past four quarters. The stock has done very well this year, though this is a tiny company exposed to sentiment around cannabis stocks.

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Vertical farming ETFs

Global X AgTech & Food Innovation ETF (KROP)

There is no ETF dedicated to vertical farming only. However, the Global X AgTech & Food Innovation ETF (KROP) invests in innovative food and agriculture tech companies. This includes businesses involved in precision agriculture, vertical farming and hydroponics, agricultural robots and automation, protein and dairy alternatives, and food waste reduction.

KROP owns about 30 stocks, including protein and dairy alternative manufacturers Beyond Meat and Oatly. Vertical farming companies Hydrofarm (HYFM) and AppHarvest (APPH) are also in the mix.

Launched in July 2021, this fund costs 0.50% ($50 on a $10,000 investment annually). It’s a small fund with less than $5 million in assets.

Vertical farm crowdfunding 

Agriculture crowdfunding platforms like Harvest Returns let you invest in hydroponics directly. Although crowdfunding investments are risky, the return potential is also greater. You can start investing with $5,000 and some deals are open to non-accredited investors. Harvest Returns recently listed a hydroponic farm in Alabama and a company that makes precision sensor technology.

Vertical farming critics

Critics say that despite the hype, it may be too early to invest in vertical farming. Why is that?

Vertical farming is expensive

Critics argue that vertical farming technology is too expensive to be viable or profitable, and adoption is way in the future. Indeed, many vertical farming startups have struggled with high initial investment and energy costs. In the meantime, unprofitable early-stage startups continue to rely on venture capital for funding.

Even traditional farming has very low margins, and prices for hydroponic produce need to be high enough to justify the upfront cost. Unfortunately, some consumers believe that vertically grown crops can’t taste as good as conventionally grown greens, which get nutrients from the soil.

Vertical farming is energy-intensive

Hydroponic greens grow under LED lights in controlled environments. They need energy-intensive lights and ventilation. Some farms get power from renewables like solar, which is fine. But, if renewables are expensive or unavailable, you need to ask how sustainable vertical farming really is.


In the end, you can think of vertical farming as a complement to conventional agriculture. Vertical farming has a clear advantage in hot and dry areas, like parts of the Middle East, where traditional farming isn’t workable, and solar power is plentiful.

And even if vertical farms can’t replace the entire produce supply chain, they can grow expensive, perishable, and compact crops like leafy greens.

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