Assessing the Different Economic Feasibility Scenarios of a Hydroponic Tomato Greenhouse Farm: A Case Study from Western Greece

Abstract

Among other agricultural systems that can contribute to sustainable food production, hydroponic systems are constantly gaining attention in terms of their economic viability and sustainability, while their ability to produce nutritious food has become more apparent in recent decades. The purpose of the study is to shed light on the potential of hydroponics to conduce sustainable food production systems, by focusing on the economic evaluation of a hydroponic greenhouse farm located in Western Greece. Particularly, the study aims at presenting an investment plan for a greenhouse farm of a total acreage of 0.2 hectares, where fresh tomato will be produced via hydroponic methods. The appraisal of the economic viability of the investment plan covers a 5-year period, while the Net Present Value (NPV) and the Internal Rate of Return (IRR) are used as criteria of feasibility and performance assessment. The study uses detailed technical and economic data—related to all costs and benefits deriving from the annual operation of the greenhouse farm—to assess three different economic feasibility scenarios based on the range of input, energy and product prices, taking into account the high volatility governing agricultural markets. The results show that economic viability is achieved during the 5-year assessment period in most scenarios, which is mainly due to the efficiency of the hydroponic systems. Investment performance indicators are adverse only for an “extreme” scenario with increased installation and production costs that are not counterbalanced by higher product prices or by financial support from the State. Despite the promising perspectives of hydroponics in Greece, its use is not yet widespread within the country. Further research should explore ways to increase adoption of such production methods, considering that immediate action is needed worldwide to improve the resilience of the food industry and promote environmentally friendly food production systems.

1. Introduction

The year of 2022 can be rightly described as a year of unprecedented hunger risk, with the world facing a large food crisis as never before in modern history. This crisis has been caused by a combination of different factors. First of all, war and instability threaten food security and disrupt the provision of food worldwide, and the events in Ukraine are only one of the confirmations. Climate shocks, the economic consequences of the COVID-19 pandemic and increased operating costs also contribute to this crisis. Last but not least, according to UN estimates, the global population exceeded 8 billion on 15th November 2022, a day considered as “a major milestone in human development” and a reminder of “our shared responsibility to take care of our planet” [1]. Under these trends, food demand is expected to increase from 35% to 56% globally between 2010 and 2050 [2].

In this context, making the food system more sustainable can be a game-changing solution, eliminating the negative consequences of the industrialization of food production, by maintaining high standards of environmental and social responsibility throughout the food supply chain. This is closely linked to the sustainable development goals set by the Food and Agriculture Organization of the United Nations (FAO) and can contribute to achieving some of them. Notably, SDG 2 (“Ending hunger and promoting sustainable agriculture”), SDG 6 (“Sustainable management of water”), SDG 11 (“Making sustainable cities”), SDG 12 (“Responsible consumption and production”), SDG 13 (“Combating climate change”) and SDG 15 (“Life on Land”) [3] are relevant to food production and consumption. At the production level, soil farming faces severe challenges in terms of soil degradation and losses as well as lack of irrigation water, while it is threatened by extreme weather events. Consumer preferences, on the other hand, for sustainable practices are very promising. According to “The Global Sustainability Study 2021”, 85 percent of people have become “greener”, adopting a more sustainable consumer behaviour in the past five years. Younger generations are the ones who have changed significantly their behaviour and are willing to pay more for sustainable products and services [4]. In Europe, 9 out 10 consumers feel environmental protection is crucial, but only 22% have ever purchased products with an eco-label [5], revealing a gap between consumer good intentions and actual behavior and a need to increase public awareness.

Hydroponic farming (HF) has been pinpointed as one of the practices that can contribute both to sustainable food production and to meeting the increased global demand for food. HF is a technique of growing plants in water instead of soil. Plants are in a fully controlled environment and their roots grow in a liquid nutrient solution or inside moist inert materials [6]. Hydroponic production has been linked to higher yields compared to open field agriculture [7]. In HF, crops can be produced on a year-round basis—as they are independent of the external environment—and more plants are able to grow per unit of area compared to open field cultivation [8]. In addition, the controlled intensity of light and its equal distribution in both upper and lower parts of plants, constant level of temperature, humidity, pH and the optimal concentration of carbon dioxide contribute to this effect [7]. The accurate and homogeneous control of plants is achieved through the use of inorganic solutions in aqueous solvents, while the growing environment is sterilized so that the likelihood of infection and infestation by pests is reduced: diseases and insects are absent from the hydroponic substrates. To all the above, efficient irrigation can be added too. When it comes to product quality, both the control of external conditions and less water consumption ensure the quality of fruits and vegetables, as well as avoiding changes in their appearance, providing them with an attractive shape, high nutritional quality and firmness [7,8].

In terms of sustainability, HF promotes the rational use of water, as hydroponic units are equipped with infrastructure for water recycling. As a result, HF requires 5–20 times less water than soil agriculture [9]. Fossil fuel emissions are also reduced, as no agricultural machinery is used, while environmental pollution is mitigated because the use of neither organic nor chemical fertilizers is required. Additionally, enabling year-round production and the limited land use help to combat hunger and promote sustainable urban development, respectively [10]. Nevertheless, despite its undeniable benefits, not everything in hydroponics is ideal. High installation expenses—as HF is based on automation and technology—as well as reliance on a constant power supply are two factors that should be taken seriously, especially in times of the severe energy crisis that threatens European economies and societies. Last but not least, susceptibility to waterborne diseases reveals that there is a possibility for production losses, partial or full, even in this type of cultivation, since plants use similar nutrients [11].

Several successful examples of HF prevail around the world. One of these is the Duijvestijn tomatoes in the Netherlands, a name that comes from the founder of the family business of the same name. These tomatoes are grown in a geothermal greenhouse through a hydroponic system. The production reaches to 17 million kilos per year, using only 25 hectares of land [12]. In addition to Europe, in the US, many farms use hydroponic greenhouses. Green Life farms, Bright farms and Gotham Greens are just a few of the hydroponic greenhouse farms growing greens, herbs and tomatoes [13,14,15]. According to a literature review, many studies about HF investments have been conducted [16,17,18], while research on greenhouse hydroponics is lower, although it is a very promising production method [19]. In Greece, HF is not yet widespread but it is growing. Although there are no official data available, it is interesting to examine how HF can contribute to increasing food security in Greece as well, being an option towards a more sustainable production.

The purpose of this paper is the appraisal of an investment plan of a hydroponic greenhouse farm located in Western Greece and oriented toward tomato production. In particular, the study seeks to present the technical and economic data for the investment as well as various performance indicators. For this reason, the Net Present Value (NPV) and the Internal Rate of Return (IRR) are used as criteria of economic feasibility, while the study is supplemented with a qualitative critical assessment of the investment based on a SWOT analysis. In order to account for the volatility of external conditions, the appraisal is performed under three scenarios. The study seeks to contribute to the debate regarding the sustainability effects of alternative production methods and to pinpoint the prerequisites that could render such investments viable, profitable and beneficial to meet societal needs and demands. To our knowledge, this is the first time that HF is appraised in Greece, in contrast to the economic analyses that have been conducted for the construction of greenhouses producing, for example, medical cannabis [20].

2. Materials and Methods

2.1. The Study Area

The survey involved the Regional Unit of Preveza, which is part of the Region of Epirus in the Northwestern part of Greece and occupies a total area of 1.036 km² (Figure 1). The climate of this Regional Unit is coastal Mediterranean (Csa according to Köppen and Geiger,) with warm, muggy, dry summers and mild, wet, partly cloudy winters. The average temperature in Preveza is 16.2 °C and annual precipitation is 1177 mm [21]. The whole area is the least mountainous part of the Region of Epirus and the climatic conditions render it ideal for greenhouse vegetable farms. According to Hellenic Statistical Authority (ELSTAT), Preveza is mainly specialized in the production of greenhouse tomatoes—being the main center for greenhouse tomato production in Epirus—while tomato production in open field is limited. Specifically, in 2019, 3.311 tons of tomatoes were produced in greenhouses in Preveza and the corresponding cultivated area reached 701 hectares [22]. In Greece, there are two main seasons for growing greenhouse tomatoes [23], which are listed in

Table 1. Main seasons of growing greenhouse tomatoes.

Cultivation Practices	1st Growing Season (6–7-Month Duration)	2nd Growing Season (6–7-Month Duration)
Sowing	End of August–beginning of September	Mid-November–early December
Transplanting	Mid-October–early November	Late January–February
Harvesting	December–end of June	Early April–late June

.

2.2. Methodological Background

The analysis in this paper combined a qualitative and a quantitative approach in order to shed light on the prerequisites and effects of investing in hydroponics in Greece. The qualitative part of the analysis was based on a strengths, weaknesses, opportunities and threats (SWOT) analysis, which was conducted in order to highlight the internal and external conditions for the investment in HF in Greece. According to Lei (2009) [24], a SWOT analysis is used as a key tool for strategic planning for many years. It is divided into two main parts, focusing on the internal and external environment of an investment or a phenomenon, respectively. The former includes «Strengths»—i.e., the factors that can be controlled in the internal environment of a firm, which help a project to be accomplished—while «Weaknesses» are limitations, faults or defects that affect its success. The latter involves «Opportunities» and «Threats», which summarize the aspects of the external environment (uncontrollable factors) that are mentioned in any favorable (trend, change of some kind and overlooked need) and any unfavorable situation (barrier and constraint) to set a project up for success or not, respectively.

The quantitative analysis is based on a cost–benefit analysis (CBA) framework, which is a well-established systematic and analytical process of estimating and weighing benefits and costs in an investment plan at the socioeconomic level [25]. To rephrase it, CBA is a decision-making tool that can applied to both private and public investments. In this particular application, CBA is firstly used to determine if the investment is beneficial, figuring out if its financial benefits exceed the costs and to what extent. Secondly, the CBA also provides a tool for comparing the performance of the investment with other competing projects, comparing various performance indicators of each investment and determining which is more lucrative. In conventional CBA, benefits and costs are expressed in monetary terms and are adjusted for the time value of money. For this reason, all flows of benefits and project costs over time are expressed on a common basis in terms of their discounted net cash flows (benefits minus costs). The algebraic sum of net cash flows overtime yields the NPV of the investment [26], which constitutes a measure of the rentability of the investment and can be compared against the NPV of other possible uses of funds. In addition, the IRR—the discount rate that equates the present value of the flow of benefits of an investment with the present value of its flow of costs (i.e., yielding a zero NPV)—permits comparisons with the costs of the acquisition of capital and suggests selecting the investment whose IRR is greater, at least, than the cost of the capital [27]. CBA has previously been used for the assessment of different sectors of the food industry and, particularly, in the farm service sector. There are more than a few cases where this method has been applied to tomato production both in protected and open farms [28] and in soilless culture systems under greenhouse conditions [29].

2.3. Elaboration of Scenarios

The main research question of the study is to examine whether the investment on a hydroponic tomato greenhouse can be feasible and cost-effective. To reach this conclusion, four scenarios were considered, of which the “Baseline” scenario illustrated the status quo situation where the installation costs, variable capital, labor costs and expected revenues were calculated based on prices and availability at the time of the study. The remaining three scenarios were hypothetical and were elaborated to permit a sensitivity analysis of the baseline results. These scenarios depicted various possible outcomes of the current developments in the Greek farming sector, which witnesses significant increases in production costs (costs of inputs, such as agrochemicals, seeds and energy). According to the ELSTAT, the General Input Price Index in agriculture and livestock of November 2022, compared to the corresponding index for November 2021 showed an increase of 22.4% (base year 2015 = 100). This is due to an increase by 24.2% in the price index of consumables, mainly of energy and lubricants [30]. On the other hand, product prices are also increasing, but this is not always reflected proportionally in producer prices. Recent data from ELSTAT demonstrate that the General Output Price Index in agriculture and livestock and specifically for vegetables has increased by 13% between 2021 and 2022, while for the years 2021 and 2020, this increase was 4.5% [30].

In this framework, the three hypothetical scenarios were as follows:

• Scenario 1 involved a 100% increase in variable costs and a corresponding 10% increase in the producer price of HF tomatoes.
• Scenario 2 accounted for a more modest increase in variable costs (80%) and a 40% subsidy of the installation costs by the state. This is the basic percentage of support provided to farmers in the framework of the Measure 4 “Investments in tangible assets” and, in particular, of sub-measure 4.1 “Investments in agricultural farms” of the Rural Development Programme of Greece 2014–2020. Note that this percentage can be increased for young farmers (+10%) or for farms in Less Favoured Areas (+10%), but the analysis only considers the basic support intensity, which is applicable for the study area [31].
• Scenario 3 combined an 80% increase in variable costs, with an increase in installation costs by 20% and of the producer price by 5%.

2.4. Survey Profile and Data

The data of all costs and benefits from the annual operation of the greenhouse farm were collected from the Directorate of Agricultural Development of the Regional Unit of Preveza in 2021 (Year 0) through in-person interviews, which involved visits to typical hydroponic tomato greenhouse farms of the study area. The specific construction examined in this paper adopts principles of circular economy. The costs were classified into three categories. Firstly, the installation costs include the cost of the greenhouse structure; electrical and irrigation equipment (for instance, electricity generator and irrigation system); and the labor for installation. Second, farm management labor costs are divided into the cost of family work and the cost of specialized and non-specialized personnel labor. Third, variable capital costs include the purchase of plants; fertilization and plant protection; electricity and water; certifications; and any other expenses.

Table 2. Installation costs for a hydroponic tomato greenhouse farm.

Installations Costs (EUR)
Main greenhouse structure	38,000
Plastic materials for roof covering	1500
Plastic materials for side wall covering	500
Small truck	12,000
Electric windows	2000
Refrigerator chamber	3000
Heating system with air boilers	8000
10 Axial fans	1000
Electricity generator	7000
Drip irrigation system	10,000
Drainage collection system	1200
Plastic material for ground covering	4500
Hydroponic channel	7000
Meteorological station	500
Climate control microcomputer	2500
Sensors	1000
Installation labor	8500
Other expenses	1800
Total	110,000

,

Table 3. Labor costs for a hydroponic tomato greenhouse farm.

Labor Costs (EUR/Year)
Owner’s labor	3.4 EUR/h × 1200 h/year = 4080
Specialized personnel’s labor	5.0 EUR/h × 2400 h/year = 12,000
Non-specialized personnel’s labor	3.4 EUR/h × 1200 h/year = 4080
Total	20,160

and

Table 4. Variable capital costs for a hydroponic tomato greenhouse farm.

Variable Costs (EUR/Year)
Plants	3500
Fertilization	3140
Plant protection	2000
Bumble bees for pollination	1000
Energy (heating)	1400
Irrigation	300
Accountancy	400
Consultancy	100
Fuel	500
Total	12,340

summarize these data in detail.

The producer price was 0.9 EUR/kg and the average production was estimated at 35,000 kg/ha. In all scenarios, prices and yields remained the same in the entire duration of the project lifespan. Based on these assumptions, the annual revenue of the farm from product sale was EUR 63,000. The annual costs (labor and circulating capital costs) were EUR 35,491, including maintenance costs (conventionally calculated at 3% of construction costs per year). The annual expenses of fixed capital (installation costs) were not included in the annual net cash flows, as they were related to the initial foundation and not to the operation of the farm (i.e., the construction and installation of the greenhouse facility takes place in Year 0 of the investment). Thus, the hydroponic tomato greenhouse farm generated EUR 27,509 of annual net cash flows (i.e., subtracting the expenses from the revenues).

For the quantitative analysis, data were input into a Microsoft Excel spreadsheet and the CBA was performed using dedicated equations. For each one of the scenarios, the NPV and the IRR were calculated. Net cash flows were discounted with a 6% discount rate, which is considered satisfactory for a private investment. Additionally, the NPV was calculated for a period of 6 years (

Table 5. Outline of net cash flows in the CBA.

Financial Indicators	Baseline Scenario	Scenario 1	Scenario 2	Scenario 3
A. Annual revenues (EUR)	63,000	70,000	63,000	66,500
B. Annual expenses (EUR)	35,491	46,831	44,563	44,563
C. Annual net cash flows (EUR) (A–B)	27,509	23,169	18,437	21,937
D. Installation costs (EUR)	110,000	110,000	110,000	132,000
E. Subsidy on installation costs (EUR)	0	0	44,000	0
F. Discount rate (%)	6	6	6	6

).

3. Results

3.1. SWOT Analysis

Table 6. SWOT analysis for investment in hydroponics in Greece.

Strenghts	Weaknesses
Higher yields—all year round Low pest management and labor costs No needed for agricultural land Construction and operation follows circular economy principles	High initial expenses—Requires specialized contractors Lack of advisory support and specialized technical knowledge Susceptibility to system malfunctions Susceptibility to waterborne diseases
Opportunities	Threats
Increased demand for vegetables and fruits Consumers interested in sustainable production Possibility to certify CEA as organic products Agricultural Knowledge and Innovation System (AKIS)	Consumer’s perception of soilless products as unnatural Dependency on the availability of electric energy and water Lack of targeted funding for such investments

presents a SWOT analysis of investing in hydroponics in Greece. When it comes to strengths, the most notable ones relate to the expected economic turnover. This is due to higher yields—as production can be continued all year round—as well as lower labor and pest management costs. Previous research has shown that hydroponic crops grow 30–50% faster than conventional ones [32]. As an example, the open agriculture yield for a tomato crop is on average 5–12 tons per acre, while for hydroponic cultivation yield, it can reach 180–200 tons per acre [33,34]. Additionally, this type of cultivation is not labor-intensive, as production is more automated and industrialized thanks to the use of specialized equipment [35]. However, labor still remains the main cost driver of the farm, accounting for 65% of the total [17], while even pest management costs are lower as plants are grown in a protected environment [32]. In addition, hydroponic production does not require farmland (only land for the installation of the greenhouse), which means that it can valorize areas of low productivity, where other agricultural production cannot be supported [9,11]. In addition, both HF and the greenhouse hydroponics that have been examined in other papers fit perfectly into the principles of the circular economy [36,37] and, thus, a relevant investment represents an opportunity with a reduced environmental footprint [38]. Through this process, water, nutrients and energy are conserved and reused, creating a sustainable and efficient system.

The major weakness of setting up and running a hydroponic system is the large financial investment in equipment and supplies, with the size and scope of the farm playing a proportionate role [39]. Although a hydroponic system does not require the machinery that is used in open field cultivation (e.g., tractors), specialized machinery and equipment (often imported) are needed, thus increasing significantly installation costs, while the relatively novel aspect of this investment entails uncertainties relating to the availability of this equipment. For the same reason, there is generally a lack of specialized advisory support and technical knowledge—particularly in Greece—because many of the hydroponics processes are still relatively new and evolving. It is a complex field that requires in-depth knowledge ranging from agronomy to Information and Communication Technologies, combined with the use and maintenance of specialized machinery, and there are relatively few experts with such experience in the field. However, the Agricultural Knowledge and Innovation System (AKIS), which was set out as one of the 10 objectives of the new Common Agricultural Policy (CAP), promotes digitalization in agriculture and thus provides farmers the opportunity to exchange experience and knowledge with those using hydroponic systems. More specifically, AKIS is an integrated system of policies, institutions and resources that facilitates the development, exchange and use of information and knowledge to support agricultural innovation [40]. In this framework, specific actions can be funded and the coordination of relevant actors can be more targeted and effective, while also farmers may gain insights into how hydroponics work and become more familiar with it [41]. Last but not least, HF systems entail risks linked to increased susceptibility to system malfunctions and waterborne diseases. Indeed, these systems rely on a complex network of pumps, timers and nutrient reservoirs that can fail if not properly maintained [32], while the nutrient-rich water they use provides an ideal environment for the growth and spread of waterborne diseases. This water may contain disease-causing organisms, such as bacteria and viruses, which can contaminate the plants and cause illness [42].

Considering the opportunities, it is clear that the demand for fruits and vegetables has increased significantly since the COVID-19 pandemic in Europe [43], as consumers are looking for more nutritious alternatives in order to stay healthy and boost their immune system. Moreover, consumers are interested in sustainable production, as according to “The Global Sustainability Study 2021”, one third of consumers—especially younger ones—are willing to pay a premium for sustainable products [4]. Therefore, the sustainability components of HF can be valorized as desirable attributes for consumers, thus increasing the economic performance of HF products. Another opportunity is also the possibility to certify the products of Controlled Environment Agriculture (CEA)—such as HF products—as organic [44]. However, this certification has been a divisive topic, for years, between those who are for and those who are against. The main difference is that those who support it believe that the controlled environment of CEA production is a more sustainable and efficient way to grow food than traditional farming methods, while those against it feel that CEA is not “natural” enough and does not meet the standards of organic farming [45]. Finally, as mentioned above, AKIS can help to promote HF by providing information and education on the basics of hydroponic systems, helping farmers to share experiences and learn from each other while also connecting them to other stakeholders, such as suppliers and technicians who can provide them additional support [40].

Threats for investment in hydroponics include the fact that consumers who are not familiar with HF are critical towards it because they believe that HF products are the result of artificial growth [46] and are thus unnatural. Another threat is that, without access to electricity and water, HF is not possible, and this rules out the possibility of practicing it in remote areas, while it also increases infrastructure costs. More specifically, water is used to mix and transport the nutrient solution to the plant roots, and electricity is used to power the irrigation system and pumps that circulate the nutrient solution [32]. In all the above, the lack of funding for such investments should be also noted. This is a major obstacle for many farmers given the high initial investment costs. In Greece, HF is becoming more and more popular, but subsidies or incentives are not yet provided to farmers who wish to invest in it. However, some Greek entrepreneurs have turned to investments in the hydroponics sector, which means that the “hydroponic era” is now starting in Greece [47].

3.2. Results of the Cost–Benefit Analysis

The results of the CBA of all scenarios are reported in Figure 2. The outcome confirms the economic viability of the greenhouse farm during the 6 years of operation. The IRR is positive (13%)—which exceeds the current bank interest rates—while NPV is also positive and equals to EUR 25,270.67 in 6th year. Actually, the payback period is 5 years; therefore, the initial capital of EUR 110.000 as well as the annual operating costs are fully compensated by the net cash flows by the 5th year of operation.

• Scenario 1—Increase in variable costs and producer price. The results of the CBA show the effect of doubling the price of variable costs and increasing the producer price by 10%. As in the baseline scenario, the IRR was positive (7%), but this time, it was about half of the value of IRR of the baseline scenario. This reflected the lower return and cost-effectiveness of the investment, which was mainly due to the fact that cost increases were not reflected appropriately in market prices. When future benefits and costs were discounted to current values, NPV was EUR 3929.49 in the 6th year of operation; thus, the payback period was 6 years.
• Scenario 2—Increase in variable costs and providing cost-based subsidies. In the second scenario, in which the variable costs were increased by 80% and a 40% cost-based subsidy was provided, the results of the CBA were the most encouraging. Although annual net cash flows were the lowest (18,437 EUR/year), adverse market conditions were counterbalanced by financing the initial installation cost. In this way, the IRR was 17%, marking the highest profitability of the investment across all scenarios. In the 6th year, NPV was EUR 24,660.71.
• Scenario 3—Increase in both variable and installation costs as well as producer price. The last scenario examined an “extreme” situation where the variable costs were increased by 80%, the installation costs by 20% and the producer price by 5%. In this case, IRR was zero. In the 6th year, when future benefits and costs were discounted to the current values, NPV was negative and specifically equal to EUR −24,128.66, indicating a net loss. Therefore, scenario 3 represents an adverse future situation in which HF would not receive public support nor societal/consumer recognition.

4. Discussion

The CBA shows that the examined investment on a hydroponic tomato greenhouse is beneficial in the three scenarios (including the baseline), except for Scenario 3, which actually examined an “extreme” situation. The fact that the revenues of a hydroponic greenhouse compensate the initial capital as well as the annual operating costs has also been proven in another economic appraisal study, which was, however, conducted for the Nubaria region, Egypt, and therefore represents different socioeconomic conditions and environmental challenges [19]. The paper of Abdelmawgoud et al. also applies a quantitative analysis; after measuring the investment and operational costs of tomato production in a hydroponic greenhouse, the main economic indicators were calculated and some scenarios were examined. However, the main difference lies in the fact that, in [19], a sensitivity analysis was conducted only for the case of an increase/decrease in revenues and costs, and their effects on the net profit were examined. The analysis did not consider any change in producer price nor any measure of policy support, whereas the scenarios that were presented in this paper represent combinations of future situations of HF consisting of two main components: public policy support and market strategies aiming towards societal recognition. The increased installation and operation costs are factors that were also pinpointed in that paper, as well as the fact that making such an investment is profitable.

As mentioned above, hydroponics is a cultivation method that guarantees the achievement of high yields and excellent quality of the grown vegetables and fruits. However, it is not yet widespread in Greece. The main reason is the high initial investment capital required to purchase and install hydroponic systems, in combination with a lack of advisory support and specific technical knowledge. One solution, as examined above, would be the provision of a subsidy, which would function as an incentive and help farmers to initiate such an investment. Examples for such support are ample in the European Union for various types of investments, including agriculture. According to [48], in India, the central and state governments have subsidized capital costs for farmers who want to invest in hydroponics. A state-specific support system was introduced, allowing subsidy rates to vary across states according to the socioeconomic policy objectives in each state and the intensity of the challenge that HF would tackle. However, the authors pinpoint that the amount that is provided to farmers in most states is low, while the subsidy is in the form of a credit loan and farmers are required to pay back the money within a certain timeframe, discouraging them from eventually adopting this method of cultivation [48].

In the European Union, CAP could play an important role in the promotion of hydroponics. The new CAP 2023–2027 focuses both on the sustainable management of natural resources (CAP objective 5) and the contribution of agriculture to EU environmental and climate goals (CAP objective 4), with the sustainable intensification of food production, emphasizing on innovative practices, being another of its goals [49]. However, the CAP measure relating to investments in infrastructure does not yet include hydroponics in the list of eligible activities. On the other hand, CAP supports alternative farming methods, such as organic agriculture, agro-forestry and carbon and precision farming through eco-schemes. Member States are encouraged to set eco-schemes in their strategic plans, as CAP Regulations for 2023–2027 allocate at least 25% of direct payments on them [50]. The agricultural practices that can be supported by eco-schemes include practices that, among others, improve nutrient management, protect water resources and are beneficial for the soil. However, hydroponics is not included in eco-schemes—even though it achieves all of the above—nor specific subsidies are provided. Nevertheless, given the benefits that are mentioned above about soilless farming, CAP could provide more direct incentives to promote the adoption and further development of hydroponic systems in the European Union. This could include subsidizing both the cost of setting up hydroponic systems and of hydroponic inputs and providing training and technical assistance to growers to equip them with the necessary resources, knowledge and skills. So, it is clear that the adoption of HF is matter of policy-making and correctly ranking potential investments within the new CAP strategic plan. In this framework [51] proposed three alternative schemes for supporting hydroponics in the form of aquaponics (hydroponics and aquaculture combined) in the UK.

As part of the Horizon Europe program 2021–2027, the EU will provide 9 billion for research and innovation, including in the area of Natural Resources, Environment and Agriculture, which can prompt the development of hydroponic technologies [52] and increase knowledge and understanding about the barriers to adopt [51]. In addition, an important research need could be the development of varieties that pertain to this cultivation method in Greece and also to resolve issues with regards to waterborne diseases. A specific type of such technologies could be new ways for valorizing recycled water in hydroponics, such as the combination of aquaponics with plant growing in greenhouses [53], or the use of alternative substrates in the framework of a circular economy [54], both of which are being investigated in Greece. This would also allow for the better monitoring of water quality, thus decreasing the danger for waterborne diseases. In addition, the substitution of water substrates from other materials (e.g., from hydrogel [55]) has already been examined in other countries and could be investigated under Greek conditions in order to potentially increase their autonomy. Additionally, future research should be focused on ways to increase the adoption of HF. The promotion of HF to the general public could be one of the strategies for increasing recognizability but also improving the entire organization across the value chain of HF tomatoes and other vegetables, given that promoting sustainable food production systems is an urgent need for the planet. Therefore, an integrated advertising plan to increase awareness about the benefits of hydroponics and safety of the food thus produced could increase consumer confidence. Although in a different setting (Indonesia), this method was proven to be effective to approach potential consumers [56].

The methodology presented in this study can be easily applied to other crops, encouraging the development of similar activities in the agricultural sector. However, the basic limitation of this study is that there are not adequate real-life and time series data about HF that can provide additional insights. Further research should investigate the effect of hydroponics on employment. Although HF does not require labor-intensive tasks, such as tilling, weeding and herbicide and insecticide applications, it requires specialized personnel for other tasks and, especially, for monitoring the production process. Therefore, HF could create employment opportunities for specialized personnel and in areas where access to land is limited or where climate conditions are not favorable.

5. Conclusions

This study examined the impact of a set of scenarios on the construction of a hydroponic tomato greenhouse farm. The major finding is that the investment can be profitable even under the current conditions but also under future developments. In particular, the CBA shows that, although the construction and operational costs are quite high, this investment is beneficial under the current market circumstances and prices, as the positive annual net cash flows exceed the initial installation costs. A cost-based subsidy on these costs can greatly assist farmers in their initial startup. It is important to make the link between economic feasibility and socioeconomic development of the area, thus leading to a more secure food supply and providing fresh and local food options to the people living there. Additionally, the presence of a hydroponic greenhouse can encourage entrepreneurship and innovative thinking. Hence, policy measures and toolkits should be examined and adopted not only at a national but also at a European level, in order to promote and support HF.

All in all, HF in greenhouses can be an effective alternative way of growing vegetables and fruits. With the ability to produce high yields with high quality all year round, to conserve resources and to reduce fossil fuel emissions, hydroponic greenhouses can be an important future option for sustainable agriculture. Such innovative methods are essential for agri-food industry as they also help farmers to become more competitive and differentiate themselves from their competitors.