Return to search

Abu Dhabi to steal agtech march via vertical farming?

The UAE capital will deploy $270m by 2021 as part of a strategic agtech program that has the end-goal of turning the city into a regional and global exporting hub of food tech innovation.

One of the heavyweights of the vertical farming space, US-based AeroFarms, was among four agtech companies to which Abu Dhabi Investment Office committed approximately AED367 million ($100 million; €91 million) at the start of April.

The capital was deployed by the state-backed investor’s AED1 billion AgTech Incentive Program, which was established last year as part of a government accelerator program – Ghadan 21 – which will inject AED50 billion into the UAE capital’s economy.

While other beneficiaries of the investment include inputs producer RNZ and drip irrigation company Responsive Drip Irrigation, the potential impact it could have on Abu Dhabi’s place in regional (if not global) vertical farming innovation is noteworthy.

For a start, the fourth beneficiary of the staggered investment is Dubai-based vertical farmer Madar Farms. The company has so far only used its indoor hydroponic solution to grow microgreens but has now been backed to develop a “commercial-scale indoor tomato farm” using its technology, a joint statement said.

More noteworthy still is that the investment signals AeroFarms’ entrance into the Middle-Eastern market. The company will build an 8,200-square-meter vertical farming R&D center in Abu Dhabi, which is billed as the largest of its kind in the world.

AeroFarms co-founder and chief executive David Rosenberg told Agri Investor that the UAE’s “great attitude of wanting to lead, whether it’s the tallest building, great architecture or innovation,” was integral to the company’s desire to the work in the country. The regional challenges of water and arable land scarcity, as well as the benefit of a relatively lower price of energy for LED lighting and indoor ecosystem management, gives vertical farming a higher value proposition in the Gulf, Rosenberg added.

It is also telling that Abu Dhabi’s investments into all four companies are structured as cash and non-cash incentives, which includes rebates of up to 75 percent on research and development expenditure upon commercialization. In fact, the move is all about commercializing new innovations.

“What’s the right way to pollinate 40-50 feet up in the air? Is it the honeybee, mechanical or manual?” asked Rosenberg. “How do we get the best class of seeds for the way we grow? Most breeders focus on drought resistance and pest resistance. Here, we’re able to think about taste, texture, nutritional value and yield.

“This facility will not only help us in that early stage but also those pilot stages [so that before] we go big and make a $100 million investment, we can make a smaller investment to understand the details so we get it right as a step up to that bigger phase. This will help us for that commercializing phase,” he explained.

Once developed and commercialized, Abu Dhabi Investment Office knows exactly what it would like the next step to be, both with respect to vertical farming and other agtech innovations.

“We believe that one of the next big announcements is going to be how Abu Dhabi is exporting the intellectual capital and property we’re generating through these partnerships, to the rest of the region and the world,” ADIO director general Tariq Bin Hendi told Agri Investor.

“We’ve got a fantastic location to test these arid climate technologies and with our support, that will be one of the big highlights in terms of what it is other countries are able to capitalize on from our investment,” he said.

A separate $100 million investment also made at the start of April, this time by Kuwait’s state-owned Wafra International Investment Company into Abu Dhabi-based vertical farmer Pure Harvest Smart Farms, suggests this regional export of expertise from the UAE is already happening.

Full access to Wafra’s foreign direct investment into Pure Harvest is dependent on various business development benchmarks being hit, which are primarily based around expansion into the Saudi Arabian market.

With tangible deals now executed and a heavyweight in the shape of AeroFarms successfully drawn to the Gulf state, is it only a matter of time until global investors are supporting Abu Dhabi-propelled agtech companies en masse?