UAE is embracing new technologies to increase agricultural productivity and improve self-sufficiency. Antonie Robertson / The National
UAE is embracing new technologies to increase agricultural productivity and improve self-sufficiency. Antonie Robertson / The National
UAE is embracing new technologies to increase agricultural productivity and improve self-sufficiency. Antonie Robertson / The National
UAE is embracing new technologies to increase agricultural productivity and improve self-sufficiency. Antonie Robertson / The National


Can the UAE’s agritech plans help meet the global food challenge?


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July 11, 2021

Throughout history, humans have had to innovate to produce enough food to eat. Even as technology advances today, that challenge has not gone away.

According to the Food and Agriculture Organisation, the world’s population is expected to grow to almost 10 billion by 2050, boosting agricultural demand by 50 per cent compared to 2013. Rising living standards in the developing world are also likely to result in a higher consumption of meat, fruits and vegetables, which are more costly to produce than cereals and grains.

The biggest challenge, however, is to meet demand in a more sustainable manner. Agriculture currently accounts for 70 per cent of water use and contributes a significant share of the greenhouse gas emissions that cause climate change. A World Bank report suggests one-third of food produced globally is also either lost or wasted.

So how do we increase output on the scale needed without irreversible environmental degradation, and where does the UAE fit into this picture?

The famous American agronomist Norman Borlaug is considered to be the father of Green Revolution, a period in the late 1950s and 60s that saw a dramatic increase in agricultural output thanks to improved farming practices and agricultural innovations. Borlaug was awarded the Nobel Peace Prize in 1970 for his contributions to world peace through increasing food, and is credited with saving more than one billion people worldwide from starvation.

Food production has continued to increase since then, by around 30 per cent over the past 30-40 years, partly thanks to further technological advancements and the globalisation of inputs, which triggered a massive expansion in the use of agricultural inputs worldwide.

For example, fertiliser use rose dramatically, which was crucial to increasing yields. However, many of the key ingredients in fertilisers are derived from non-renewable sources, such as nitrogen from natural gas and phosphorus from phosphate rock. In tropical regions, there was also a substantial expansion in the use of land. Rainforests were cleared, in Indonesia to ramp up palm oil production and in Brazil to farm cattle and soybean.

Looking ahead, developments in the genetic engineering of new crops should continue to increase yields, along with the adoption of new seed strains. Allayed to the use of technologies such as artificial intelligence, drones, and the Internet of Things for soil monitoring and vertical farms, for example, the future of agritech has been labelled as a second Green Revolution that could help keep pace with demand.

In the meantime, there are important questions around whether we can meet the future demand for food, without expanding agricultural frontiers at the expense of forests and other important natural biomes. For example, a big part of the population growth for the next 30-40 years will come from Africa, where the population is expected to double by 2050, accompanied by substantial economic growth. We will face difficult questions about fairness and how the world can collectively produce more food in a sustainable manner.

An Abu Dhabi apiary. Chris Whiteoak / The National
An Abu Dhabi apiary. Chris Whiteoak / The National
We are essentially learning how to produce food in places where we would not be producing without technology

Like many other nations, the UAE considers food security to be essential to the security and well-being of its citizens and residents. In 2018, the UAE launched its National Food Security Strategy to increase production by 30-40 per cent in 10 years. Last year, the Cabinet approved a national system for sustainable agriculture to improve the efficiency of farms in the UAE, in line with the UN Sustainable Development Goals.

In a country where less than one per cent of the land is arable, according to the World Bank, advances in agritech are crucial to the government’s plans to increase production. In April last year, the Abu Dhabi Investment Office invested $100 million into four Abu Dhabi-based agritech companies, while UAE-based Pure Harvest secured $100m for future expansion. More recently, Dubai launched a food technology hub to further develop vertical farming, which uses 90 per cent less water than traditional farming, along with other advanced agriculture technologies, including climate resilient crops, to bolster the UAE’s food security.

The time is right for bold investments. Massive improvements in the energy efficiencies of greenhouse in recent years make them much more viable for use in the UAE. Today, the UAE has more than 1,000 hydroponic farms, according to the International Centre for Biosaline Agriculture, up from 50 in 2009. Consumers can now easily find agricultural produce from these farms in grocery stores around the country.

The UAE’s plan is for half the food consumed in the Emirates to be produced locally by 2051, compared to 20 per cent today. While the UAE’s production might account for a tiny percentage of global agricultural production, the implications of this plan go well beyond national borders. The transference of technologies from temperate to regions closer to the equator has historically been limited due to the drastic differences in agro-climatic conditions.

The development of new agricultural technologies in the UAE can serve as a proof of concept for non-temperate regions where farming is difficult. By investing in agritech, the UAE can be a market leader, helping to drive down costs and showing which technologies can work. This is especially important considering the Middle East and North Africa population is expected to double by 2050 to reach 724 million people.

As a medium to long-term project, the UAE’s plans are exciting. We are essentially learning how to produce food in places where we would not be producing without technology. And this will be crucial to feeding a growing population in our region, and across the planet, on a sustainable basis in the coming decades.

Heitor Pellegrina is an assistant professor of economics at New York University Abu Dhabi

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: July 11, 2021, 11:05 AM