Without the use of water, soil or fertilisers, vertical fields of “red gold” have been produced in Sharjah as preparations are made for the UAE's first saffron harvest.
Agricultural technology firm VeggiTech has cultivated roughly 150,000 crocus sativa bulbs from the Netherlands, growing them in vertical farms in Al Zubair.
Saffron is one of the most precious spices in the world because of the extremely labour-intensive process required to cultivate crops.
We play with the temperature to create the perfect environment for it to grow, with each bulb producing two to three flowers
Ghazal Shafiee,
quality manager at VeggiTech, Sharjah
Each flower produces approximately three tiny stigmas from which the saffron is extracted. This first crop in the UAE grown this way is expected to yield about 5.5 kilograms of saffron.
Depending on the grade and quality, a kilogram of saffron can sell from $850 to $3100.
“This is the first time saffron has been grown this way in the region by using vertical farming,” said Ghazal Shafiee, quality manager at VeggiTech.
“Saffron is an important crop that originates in Iran and it is also grown in parts of Spain.
“It is a sensitive crop to grow and not everyone has the knowledge required to cultivate saffron in this way.
“Using this system, we have much less area required for the entire production.
“Usually, land water and herbicides are used, but by vertical farming a smaller area is needed with greater production and quality.”
Due to water scarcity and climate change, vertical farming is providing an increasing number of crops in the UAE.
The process uses tightly controlled soil techniques with artificial LED lights to stimulate growth, with some farms able to produce 10 times the amount of traditional farming methods.
The technique is particularly useful in the UAE, due to the harsh growing conditions.
As one of the top five buyers of Iranian bulk saffron, developing a home-grown market would make the country less reliant on imports.
VeggiTech cultivates about 50 other crops using similar methods of hydroponics and aquaponics farming at four farms in the UAE.
It takes between nine and 10 months for the saffron bulb to reach maturity, before it is ready to be harvested.
Each purpose-built laboratory is equipped with a special air handling unit to create the precise environment required — with the right CO2, light, temperature and humidity — for saffron to grow.
“We play with the temperature to create the perfect environment for it to grow, with each bulb producing two to three flowers,” said Ms Shafiee, who is from Iran.
“Once the flowers appear, the bulbs are transferred to the greenhouse for the next stage of the crop cycle.
“Saffron can be grown anywhere, but the challenge is creating the perfect environment for it.”
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.”
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