Agriculture & AgriTech in the Middle East: Growth Beyond COVID


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In 2020 the world largely moved indoors. Commercial endeavours in farming, food production, agricultural technology and sustainability however have needed to plough on, and have done so in light of an international slowness in travel, import and export.

The agricultural sector in the Middle East, supported inherently by the AgriTech sector, has been reactive. Although not a region that historically springs to mind when discussing these topics, there is an exponential market for involvement on various scales that has shown resilience and a determination and in turn is creating opportunities.

The market in the Middle East


Domestic production (and that encompasses the region, and applies respectively to Gulf States) has been at the forefront of agriculture discussion since the early part of this year as the pandemic has created rigour for trade. Geopolitics versus the need to feed has, and in some instance still is, a very active concern.

Although historically up to 90% of food in the Gulf has been to some extent imported, the market has been bolstered by myriad investment and both public and private investment. According to UK viability assessor Agri-Epi Centre, the sector will be worth of approximately $170 billion by 2025.

What is AgriTech?

To an extent self-explanatory, this portmanteau of agricultural technology covers a diverse range of tools used to engineer, expedite and capitalise on the yield or output of agriculture to meet demand.

In a commercial context AgriTech cover a range of enterprises from funded research into things like farming techniques to hydroponic growth or seed preservation, to more practical applications such as advance weather forecasting or using drones for fertilisation or propagation.

The Middle East broadly, with a very present bend towards economic diversification, and spurred on by the desire to increase domestic agricultural productivity, is placed as a well-funded, high-tech proponent of AgriTech solutions.

The notion of "food security" is important when discussing AgriTech in the region. The availability of food (and by that we mean nutritional output at an ingredient level) in itself is not enough for the market to become buoyant, but factors such as affordability and tradability of produce need to be leveraged against demand. In short; investment in AgriTech should allow for imports to be lessened, and in part for exports to be increased and for the Gulf to become more food secure through sustainable, commercial enterprise.

Bahrain

The Kingdom of Bahrain may be geographically small as a landmass, but it benefits from being an island nation in two key ways: fishing and weather.

The Ministry of Agriculture in Bahrain earlier in the year set out plans to invest heavily in aquaculture (essentially fish farming), in order to maximise on the archipelago's wealth of fishing availability. In particular the Southern Governorate (which is currently less metropolitan than the north of the Kingdom) is being guided towards collaborative efforts with private fish farmers to regulate, regularise and increase local produce.

It is reasonable to think that as the south of the Kingdom proceeds with this endeavour, investment opportunities for AgriTech internationals, along with home-grown ventures, may find an upwards market. It has been quoted that the current proposals by the Ministry will boost domestic production to around 60% of consumption.

More directly related to the technological side of things, hydroponic farming is being spearheaded in Bahrain as a viable way to increase food security and to quickly increase available profit from home-grown crops. At the time of publication, tenders have been issued for the establishment of two soil-less farming projects, with the first two years of these projects already funded by Ministry. With the expected success of these two projects, a future of sustainable growth (benefitting directly from the niches of the Bahraini climate compared with, for example, the interior parts of Oman) seems set to be marketable in the foreseeable future.

UAE

Compared to Bahrain the UAE has both a larger variety of climates, and a much larger population to supply. Along with a new body being established to research and develop AgriTech ideas, the Emirates are also looking at technology to address water scarcity.

The "AgriTech Sector Development Team" was recently formed of public and private sector stakeholders with a view to harnessing technology in the agricultural sector. As mentioned above, food security and commercial viability are the main drivers in this. So far the Team has met as a forum for representatives from aquaculture, poultry production and fruiterers/plantation growers to discuss the direction in which it should progress. Projects tabled include rice growing in Sharjah, with the key focus on staple foodstuffs being prioritised.

Of interest in these initial Team developments is the immediate inclusion of now readily understood concepts (such as the Internet of Things, genomics, and artificial intelligence) which are so widely endorsed an array of sectors being comfortably applied to agricultural discourse. The idea of farming being a high-intensity, low-impact trade has certainly been relegated. The market for start-ups along with public-private enterprise is certainly becoming clear.

Desalination in the UAE is the largest method of drinking water production. The issues with this process move into periphercal AgriTech discussions, but alternative sources of sustainable water purification are very much within the ambit of using tech to combat scarcity. This crucial area has opened up an arena of opportunity for businesses from across the globe.

By way of an example of technology incumbent in this sector, a US company has established an entity in the UAE that uses an air-to-water process to extract humidity from the air and to turn it into drinking water using hydropanels, again using the region's natural humidity to its advantage. An initial setup in Lahbab is expected to be completed this year, so the effectiveness of the process will soon be open for review.

A profitable future…

The examples of applied AgriTech mentioned in this piece are both highlights and forerunners for a sector that is, by design or necessity, going to maintain and grow in importance.

From a real estate perspective the manufacturing and infrastructure concerns of agricultural products will need to be met, whilst from a more corporate angle the investment and structuring arms of AgriTech enterprises will need to become more sophisticated and reactive. The lucrative nature of green technologies, sustainable alternatives and government-level incentives is clear.

Trowers & Hamlins is uniquely placed in the region to advise on a variety of aspects that affect the agricultural market, whether it be providing local know-how on development projects, assisting in a transactional capacity or in advising on new ventures. In a market that is emerging and adapting so quickly, it is important to ensure that expert advice is taken, so please do not hesitate to get in touch to discuss things further.

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