This is just what I needed to see after the front page of HN was dominated by bullshit about Surface and iPad mini. Finally, technology used to make something other than toys for bored rich people.
You are correct that Organic produce is the obvious immediate competitor. I wonder if hydroponically grown good can be labeled as organic. it could certainly come with no label at all.
As to whether there's a marketing benefit to actually being labeled as hydroponically grown, I've no idea.
As for subsidies, I assume that Organic food takes advantage of all of the same subsidies as non-organically grown food.
Why single out the organic market?
It seems likely that lost water due to evaporation with this type of setup should be a great deal less than water lost with traditional farming (spraying water with things like center-pivot irrigation machines should cause much more evaporation. I mean, come on... http://upload.wikimedia.org/wikipedia/commons/6/6e/Irrigatio...), and water lost through fruit mass is irrelevant.
1. Underselling water
Municipal water prices set by local government greatly undervalue the actual rarity of water. With so many aquifers running out, and rivers stretched to the max, especially in the west, I'm surprised there could be this much myopia on an issue that is clearly far more serious and immediate issue than energy. Right now the only pressure to reduce water use seems to be on consumers (watering policies, low-water use appliances), but they only use 11% of it.
2. Subsidized agriculture.
This is a more well known issue so I don't think I need to repeat it here.