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abu dhabi agtech
Abu Dhabi city center. Image credit: Shutterstock

Abu Dhabi’s $272m agtech commitment: Where is all that money going to go?

March 25, 2019

Shimmering skyscrapers arising from desert sands; entire artificial archipelagos shaped like palm trees or maps of the world; an indoor ski resort where outdoor temperatures soar above 100 degrees Fahrenheit. Such images often spark debates over whether the United Arab Emirates (UAE) is all about breathtaking visions for the future, or Ozymandian hubris.

Whatever one’s take, the UAE is starting to view agritech with a similar sense of gigantism and grandeur. In Abu Dhabi, a funding and tax incentive tranche of $272 million has been earmarked this March for developing an agtech ecosystem, according to government officials. A statement seen by AFN describes how a clear set of cash and non-cash incentives have been identified and will be made available to agtech companies locally to aid growth and international companies to accelerate their establishment in Abu Dhabi.

These incentives could reach up to 75% rebate on R&D expenses, subject to eligibility and commercialisation conditions, the statement suggests. “The incentive packages will enable the creation of advanced agtech knowledge in Abu Dhabi and help to solve traditional farming challenges,” Saif Mohammed Al Hajeri, chairman of the Department of Economic Development, said in the statement: This will not only benefit the UAE, but also other nations across the world with arid conditions. Our aim is to position Abu Dhabi as a beacon for innovation in agriculture technologies applied to desert environments.”

This month’s announcement fits a trend of Abu Dhabi, the largest and wealthiest emirate of the UAE, embarking on ambitious preparations for a world beyond fossil fuels. Earlier this year, the Abu Dhabi-based Sustainable Bioenergy Research Consortium announced the world’s first commercial flight using locally produced sustainable bio-fuel on an Etihad Airways Boeing 787. And slowly but surely, work continues on the city of Masdar — which some dub the world’s first carbon-neutral city, while others deride it as ‘a Green Ghost Town’, owing to its construction overspend and setbacks.

A turn to agtech is a substantial policy pivot for Abu Dhabi. Previously, food security solutions lay elsewhere. As tourists arrived in greater numbers, and as its population grew, the emirate bought up huge tracts of land in countries better suited to arable growth, like Serbia — hardly a paragon of Balkan stability.

Yet Abu Dhabi is rethinking its reliance on food imports partly due to persistent regional geopolitical tensions — these days with neighboring Qatar. Adding urgency to food security are also the effects of climate change on already scarce water supplies.

Changed strategies and fresh announcements are one thing. But where exactly is this money going to end up — and what would await any agtech company heeding the call of the desert and moving to work in Abu Dhabi? AFN contacted Elham Al Qasim, acting CEO of the Abu Dhabi Investment Office (ADIO), to discuss the ins and outs.

AFN: What agtech companies have already moved to Abu Dhabi or are established there?

Elham Al Qasim: Abu Dhabi’s existing AgTech community is strong and growing. There are already multiple companies applying agriculture technology farming methods and adapting them to the local environment.  Located in Al Ain, the oasis of Abu Dhabi, a selection of these companies include Madar Farms, Pure Harvest, and Badia Farms. Importantly, the focus of the agtech sector extends beyond food. Elsewhere, Masdar – an international renewable energy company owned by the Abu Dhabi Government, opened the world’s first-ever biofuel facility run by irrigating desert land with seawater. The facility is funded by the Sustainable Business Research Consortium (major partners include Etihad, Boeing, ADNOC, SAFRAN, GE).

We look forward to welcoming further AgTech businesses to Abu Dhabi that will, in turn, drive R&D innovation and position Abu Dhabi as a beacon for innovation in agriculture technologies.

Can you provide further details on how the funds will be allocated? Any further details about the sub-sector focus for the announcement?

As a priority, Abu Dhabi is looking to attract companies that are looking to innovate and apply new technologies and R&D to three key agtech sub-sectors.  Each of the sub-sectors identified leverage Abu Dhabi’s climate and environment including plentiful land availability, natural heat and sunlight conditions.

These sub-sectors align with Abu Dhabi’s priorities and desert environment:

·    Algae-based biofuels: Increasing demand for biofuels, as an alternative to traditional fuel, makes algae-based biofuels an attractive sector. All-year-round sunlight, access to saltwater and abundant land provides companies with an ideal environment for algae biofuels development and scaling in Abu Dhabi. Current global market size: USD 7Bn with multiple applications beyond biofuels.

·  Indoor farming technology: In line with Abu Dhabi’s aspiration of water conservation, advancement in indoor farming technology and adaptation of the most advanced solutions to the desert environment is a priority area. With growing local and international population, Abu Dhabi’s demand for high-quality farming produce will put indoor farming technology at the forefront. Current global market size: USD 3.6Bn.

·  Precision agriculture and ag-robotics: Abu Dhabi is an ideal place for companies pursuing precision agriculture and ag-robotics to base their R&D operations, offering proximity to a growing demand base for agriculture technologies locally and regionally. This will help local farmers to minimize resource utilization and wastage of critical resources including water, energy and land. Current global market size: USD 16Bn.

Importantly, there is no fixed number of businesses that will be applicable to the incentives. However, if a company does not qualify directly for the agricultural technology initiative, it may be eligible for other incentive programs operated by the ADIO.

These sub-sectors will all have potential for exponential growth. Expected CAGR for the next 5 years for each subsector; ~14% for precision ag., ~7% for bioenergy and ~22% for indoor farms.

Why the drive to establish an agtech sector in Abu Dhabi?

For Abu Dhabi, the capital emirate of the UAE, the government, and ADIO have identified agtech as a priority sector and is committed to establishing Abu Dhabi as a global center for desert environment agriculture innovation.

Whilst the incentive packages will benefit the UAE and enable the creation of advanced agtech knowledge in Abu Dhabi, the creation of a new leading agtech ecosystem will also help to solve traditional farming challenges whilst supporting other nations across the world with arid conditions.

This drive is a part of Ghadan 21, Abu Dhabi government’s accelerator program.

Any further information on the current ecosystem and strategy?

The development of a vibrant agtech sector in the emirate, is part of the Abu Dhabi government’s Ghadan 21 program, as well as the broader UAE federal agenda. The programme was established in 2018 to accelerate the economic agenda and Abu Dhabi’s transformation to a new world economy, with a central ambition to make Abu Dhabi one of the best places in the world to do business, invest, live, work and visit.

The initiative will create new opportunities that will positively impact the economy in the mid and long-term future, aiming to generate over AED 1.650 billion ($450 million) of GDP contribution and stimulate 2,900 new jobs by 2021.

When it comes to FDI, our aim is to target sectors where it makes true commercial sense for the companies to establish in Abu Dhabi and where they may benefit from the environment and conditions that are prevalent, which agtech clearly fits into.

Abu Dhabi is already attracting investment from businesses, foreign government, venture capitalists and personal investors. In addition to providing generous incentives, Abu Dhabi offers a wide range of benefits to potential investors including globally competitive tax rates and world-class infrastructure. Most recently with positive regulatory changes aimed at attracting global companies to establish an advanced agtech ecosystem in the UAE.

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