This is a historic year for Agriculture Technology (AgTech) in the UAE. This March the Abu Dhabi government approved an AED 1 billion package to support the AgTech sector. The package is part of Ghadan 21 (Tomorrow 21), which is a three-year AED 50 billion program designed to accelerate the capital’s economic growth and reduce dependency on oil revenues. It is led by the Abu Dhabi Investment Office (ADIO), which was created in 2018 with the mandate to increase foreign direct investment. In this article, we are going to take a deep dive into the initiative.

What is it?

The stimulus consists of cash and non-cash benefits, which include rebates of up to 75% of R&D costs subject to eligibility and commercialization criteria.

Who is eligible?

Local and international companies are eligible. The program is focused on three specific sectors in the AgTech industry that have been identified for their strategic significance: precision farming and agriculture robotics, indoor farming, and bioenergy (algae).

But why?

The government has taken this major decision primarily for three reasons.

Firstly, the government seeks to establish Abu Dhabi as a global center for innovation in agriculture, especially in desert environments. This is achievable because the AgTech industry is in its early stages globally. As such, there is an opportunity to become global leaders if we become knowledge exporters. R&D is underfunded globally, which is why the initiative targets R&D and seeks to attract the best talent from around the world.

Secondly, agriculture is a high-risk industry due to the sheer number of variables that cannot be controlled, which is why governments around the world provide various levels of assurances and support. AgTech promises to decrease these risks in the medium term. However, developing and localizing these solutions to the UAE’s environment adds a degree of complexity. This is why the government’s initiatives are crucial for the success of this industry as a whole.

Finally, the government recognizes the urgency of addressing food security and diversifying the economy. Currently the UAE imports over 90% of its food, and the country’s population is forecast to increase from today’s 9.4 million to 11.5 million by 2025. Demand for food, especially high-quality produce, is set to rise sharply. A booming AgTech industry should meaningfully reduce dependence on imports.

What is expected?

Like any investor, the government seeks the highest return for its investment. The government measures success by analyzing which initiative will have the largest GDP multiplier (i.e. where 1 AED will generate the biggest knock on effect). In addition to reducing dependency on food imports and oil revenues, the package is expected to generate a contribution of AED 1.65 billion to the GDP and create more than 2,900 jobs in Abu Dhabi by 2021.

Are there any other benefits?

In addition to funding R&D, the initiative allows it to be easy to setup in AD with world-class infrastructure etc. and attract global level talent here to make UAE a global center of excellence for this industry.

Additionally, …

Government funding alone does not ensure success. Regulations need to keep pace with technological and commercial innovation. The ADIO acts as a bridge for industry to discuss the regulatory environment. These discussions have played in a key role in recent regulatory changes for the agricultural industry.

The Abu Dhabi government consolidated regulation of the agriculture sector through the establishment of the Abu Dhabi Agriculture and Food Safety Authority (ADAFSA). This new organization has taken on the roles of the Abu Dhabi Food Control Authority, the Abu Dhabi Farmers’ Services Centre, and the Food Security Centre – Abu Dhabi. It is responsible for overseeing agriculture, food safety, food security, and biosecurity. The founding of ADAFSA is another step in accelerating the emirate’s efforts to drive scientific research and agricultural development while helping to build partnerships between the public and private sectors, according to Sheikh Mansour bin Zayed Al Nahyan, the deputy prime minister and minister of presidential affairs. He told local media:

“Food security continues to be a national and strategic priority that entails concerted actions between the government and private sectors in order to ensure a well-integrated food security strategy that is conducive to unlocking the value in the agriculture and food supply chains, and ensuring all segments of society have access to all food supplies”.

Like any new industry, businesses in the AgTech industry will inevitably discover that some aspects of the existing regulatory framework do not meet their commercial needs. This is natural as regulators cannot predict future industry requirements with 100% accuracy. However, it is encouraging to see that the government is proactive about increasing their understanding and are taking decisive actions. We are more optimistic than before about the AgTech industry’s prospects in the UAE.

For more information, please visit www.investinabudhabi.ae or follow them on Instagram, Twitter, LinkedIn and Facebook.

Digant Raj Kapoor
People Manager

Sources

1. Gulf News – 11 March 2019

2. The National – 11 March 2019

3. Arabian Business – 11 March 2019

4. ADIO Website – seen on 26 August 2019

5. Zawya – 15 May 2019

6. AgFunder News – 25 March 2019

7. World Future Energy Summit – 27 March 2019