Why You Should Start An Agribusiness In The UAE

Why You Should Start An Agribusiness In The UAE

Author

Ambia Hoque

Date

The realm of agribusiness in the United Arab Emirates (UAE) is a burgeoning frontier for entrepreneurs and investors like you. With a vision to enhance the nation’s food security and diversify its economy, the UAE is fostering a dynamic agribusiness ecosystem. Initiatives underscored by innovative technologies, government support, and strategic positioning make the UAE an attractive destination for agribusiness ventures.

The country’s commitment to transforming its agricultural sector isn’t just a response to the challenges of an arid climate; it’s also an opportunity to tap into the growing global demand for sustainable and technologically advanced farming practices.

If you’re considering where to sow the seeds of your agricultural ambitions, the UAE’s fertile business landscape offers an environment where your agribusiness can flourish.

Lettuce Growing In Greenhouse

Agribusiness in the UAE

Economic Impact of Agriculture in the UAE

The UAE has embarked on a transformative journey to bolster its food and agriculture sector. The aim is to increase its economic contribution by  AED 2.7 trillion ($10 billion) and create 20,000 jobs within five years. This strategic initiative isn’t just about boosting food security; it’s also about diversifying the economy beyond its traditional oil base.

In 2022, the UAE’s trade in food products surged by 24%, reaching a value of AED 130 billion ($35.4 billion). This highlights the sector’s robust growth and potential.

The country’s leadership has recognised the sector’s resilience and adaptability, which are key in navigating the uncertainties of global food supply.

Modern Agricultural Technologies Adopted

Innovation and technology are at the heart of the UAE’s agricultural evolution. The country has made significant strides in adopting modern agricultural technologies to overcome the challenges posed by its arid climate. Precision agriculture, vertical farming, and climate-controlled greenhouses are leading the way in enhancing productivity and promoting sustainability.

Hydroponics, a method that requires less water and no soil, is gaining traction in the region. This reflects the UAE’s commitment to resource-efficient farming practices. The International Center for Biosaline Agriculture (ICBA) has successfully cultivated crops using saltwater, showcasing the UAE’s innovative approach to agriculture.

Government Initiatives and Support

The UAE government has launched a comprehensive National Food Security Strategy 2051. The aim is to position the country at the pinnacle of the Global Food Security Index by 2051. To achieve this, the government has outlined seven key pillars, including nurturing local talent and innovation, fostering a UAE-first culture in the food value chain, and providing ample funding to industry players.

The Emirates Development Bank’s AgTech loans programme, with AED 100 million earmarked for the sector, exemplifies the financial support available to agribusinesses. The Ministry of Climate Change and Environment has partnered with private entities to support farmers. New criteria for the “Farmer Support” programme have been introduced, ensuring that innovative and sustainable practices are at the forefront of agricultural development.

Opportunities and Challenges in UAE Agribusiness

The UAE agribusiness landscape presents a mix of opportunities and challenges. While the country’s cereal production is moderately high, it still relies on imports to meet its needs.

However, the organic farming area has expanded by 15% from 2017 to 2020, indicating a growing demand for organic products.

The government’s support is a driving force behind this development. Date production, a traditional staple, remains significant, with 312,657 metric tons produced in 2020. The UAE’s focus on diversifying farming methods to reduce water and fertile soil reliance has led to the establishment of over 1,000 hydroponic and more than 100 organic farms.

The Abu Dhabi Agriculture and Food Safety Authority has been instrumental in marketing local produce and training farmers on best practices. With the UAE’s strategic initiatives, such as the Water Security Strategy 2036 and the establishment of a gene bank, the country is well-positioned to overcome its climatic challenges. It aims to become a global leader in agricultural technology and sustainability.

Agribusiness Greenhouse Setup

Financial Benefits of Starting an Agribusiness in the UAE

Tax Advantages and Exemptions

The UAE presents a compelling case for agribusiness entrepreneurs, especially due to its tax policies. With globally competitive tax rates, the country offers a financially conducive environment for businesses. The recent amendment to the UAE’s commercial companies law is a game-changer, allowing 100% foreign ownership, which was previously restricted.

This significant change means international investors and agribusinesses can now have full control over their operations without the need for a local partner. As a result, it’s more financially appealing for entrepreneurs to initiate an agribusiness in the UAE.

Funding and Financial Support

The government is actively fostering the growth of the agricultural sector through various incentives. For example, Abu Dhabi offers a series of cash and non-cash incentives to encourage local and global Ag-Tech firms to set up and expand their operations.

This includes a rebate on research and development expenses, which can cover up to 75% of the total R&D cost.

Such substantial support not only eases the financial burden on agribusinesses but also encourages innovation in a sector that’s key to the country’s food security and sustainability goals.

High Demand for Organic and Sustainable Produce

There’s a marked shift in consumer preferences towards healthier, organic, and sustainable produce.

This is shown by the significant growth in the organic sector, with the retail space stocking organic products increasing by 60% over the last four years. Organic dairy, in particular, has seen robust growth, accounting for a significant share of the organic market.

The trend towards health and wellness products, accelerated by the COVID-19 pandemic, has led to strong sales growth for organic products. With consumers willing to pay premium prices for high-quality standards, agribusinesses focusing on organic and sustainable produce can tap into a lucrative and expanding market.

Export Potential and Global Market Access

The strategic location of the UAE and its world-class infrastructure, including two of the world’s top 50 container ports, provide unparalleled opportunities for agribusinesses to access global markets. Among the top 10 busiest ports, Dubai serves as a gateway for bulk commodity exports. Additionally, the UAE’s membership in the GCC offers a common market and customs union, further easing trade and export activities.

With the country investing to become a top global manufacturing hub, agribusinesses are well-placed to meet local demand and serve international markets. They can take advantage of the UAE’s robust trade agreements and strategic geographic positioning.

Crops In An Agribusiness

Strategic Location and Infrastructure

Geographic Advantages for Trade

The UAE’s location at the crossroads of major trade routes makes it a central hub for international trade flows, particularly beneficial for agribusinesses aiming to reach a global market.

State-of-the-Art Irrigation and Farming Facilities

The Ministry of Climate Change and Environment has prioritised hydroponic technology, which conserves water and extends the growing season.

With 87 commercial farms employing this method, the UAE is a pioneer in agricultural innovation, aligning with the national strategy to become a leader in innovation-driven food security by 2051.

Connectivity to Major Markets

The UAE’s exceptional connectivity, with facilities like Jebel Ali Port and Dubai International Airport, provides agribusinesses with easy access to emerging markets. Its location is ideal for businesses targeting consumers in Europe, Africa, the Far East, and the wider Middle East.

Dubai’s status as the regional headquarters for a significant percentage ofFortune 500 companies underscores its business-friendly environment.

Presence of Advanced Logistics and Supply Chains

The UAE’s logistics and supply chains benefit from innovation and digitalisation, with smart trade initiatives that enhance efficiency. The integration of free zones and continuous infrastructure investments maintain Dubai’s status as a preferred regional hub for supply chain and distribution operations.

The UAE’s strong trade relationships and economic agreements with countries worldwide, including being a major investor in Africa and a key trading partner for India and China, provide a solid agribusiness growth and diversification platform.

Drone Flying Over Crops

Technological Innovations in UAE Agriculture

Use of AI and Machine Learning

AI and machine learning are increasingly being utilised to enhance agricultural efficiency. These technologies optimise resource management and increase crop yields. For instance, AI-driven smart irrigation systems utilise real-time data to adjust watering schedules, thereby conserving water.

Masdar City in Abu Dhabi is leveraging an AI-powered Smart Irrigation Management System to manage water distribution precisely. Additionally, the Emirates Institution for Advanced Science and Technology (EIAST) has created a system that uses satellite imagery and AI algorithms for crop health monitoring, pest detection, and resource optimisation, demonstrating the transformative impact of AI on the sector.

Advances in Hydroponics and Aquaponics

Aquaponics and hydroponics are being adopted as sustainable agricultural practices in the UAE. Aquaponics combines raising aquatic animals with cultivating plants in water, creating a symbiotic environment. This method is particularly water-efficient and suitable for the UAE’s conditions.

The UAE Hydroponics Market is anticipated to experience significant growth, reflecting the region’s dedication to innovative farming methods that mitigate environmental constraints.

Smart Farming Solutions

Smart Farming is integral to the UAE’s agricultural advancements. It uses technology to enhance agricultural output. These techniques allow for precise monitoring of crops and livestock, improving overall productivity. Supportive policies encourage the adoption of Smart Farming.

Technologies such as HVAC systems and Nutrient Film Technology (NFT) are becoming more prevalent, providing the controlled conditions necessary for hydroponic cultivation. These innovations are indicative of the UAE’s proactive approach to modernising its agricultural practices.

Research and Development Facilities

Investment in R&D is a priority for the UAE in order to advance its agricultural capabilities. Researchers in Fujairah are pioneering improvements in desert agriculture, aiming to position the emirate as a model for sustainable and ethical farming.

Initiatives like the Ziraai programme and strategic plans such as Abu Dhabi Vision 2030 contribute to the nation’s goal of fostering agricultural innovation. These efforts, supportive policies, and public-private partnerships are integral to the UAE’s strategy to build a resilient and forward-looking agricultural industry.

Agribusiness Greenhouse

Steps to Starting Your Agribusiness in the UAE

Local Regulations and Legal Requirements

Understanding the local regulations and legal requirements is essential to initiating an agribusiness venture in the UAE. Foreign investors are permitted to purchase land in designated freehold areas, which allows them the autonomy to manage their property as they see fit. However, these privileges are confined to specific regions, and the stipulations can differ among the emirates.

Acquiring a No Objection Certificate (NOC) from the developer is mandatory for land within development projects, and you must register the property with the Land Department of the concerned emirate. This step involves a registration fee and mandates that all legal documents and contracts be in Arabic or accompanied by a legal Arabic translation. Due diligence is crucial, as the UAE’s legal framework and property rights may vary from those in other countries.

Engaging with a reputable real estate agent or legal advisor is recommended to assist in navigating these complexities.

Identifying the Right Location and Land

Selecting an optimal location is pivotal for establishing your agribusiness. The UAE offers diverse locations for land acquisition, each with unique advantages. For instance, Dubai is renowned for areas with high rental yields and appreciation potential.

Conversely, Abu Dhabi’s Saadiyat Island and Yas Island are known for their amenities. At the same time, Sharjah and Ras Al Khaimah offer distinct lifestyles. Land prices fluctuate across emirates and locations, with Dubai’s premium areas commanding higher rates than Abu Dhabi.

Closing costs in the UAE are relatively modest, generally ranging from 2% to 5% of the property value. This includes fees for real estate agents, property transfer, and legal services. For example, Dubai levies a 4% transfer fee on the property’s value.

Securing Investments and Partnerships

Understanding the nuances of property ownership laws, including the differentiation between “freehold” and “leasehold” areas, is vital for foreign investors. It’s important to be aware of the local market dynamics and economic factors that can affect property values and the success of your investment.

It is also important to consider transaction costs and the influence of exchange rate fluctuations. Collaborating with a local real estate agent or legal advisor can mitigate many risks of securing investments and partnerships.

Market Research and Consumer Trends

Conducting thorough market research and monitoring consumer trends are key to the success of your agribusiness in the UAE. In Dubai, land conversion is subject to official procedures and protocols, including the potential for changing agricultural land into residential or commercial plots, as Decree No governs. (4) of 2010.

Foreign investors must acquire property in areas designated for foreign ownership. Then, they should apply to the appropriate authorities for any desired land use changes. Transfer fees can be significant, often a percentage of the land’s market value. Understanding the policies or zoning requirements that may affect land conversion.

Unleashing Potential in UAE Agribusiness

The vibrancy and potential of the UAE’s agribusiness sector are as clear as the Arabian sun. With concerted government initiatives, a commitment to technological innovation, and a strategic location that opens the doors to a global market, the UAE presents a fertile ground for agripreneurs. Whether it’s leveraging tax advantages, utilising state-of-the-art facilities, or capitalising on the high demand for organic produce, the opportunities are bountiful.

The UAE’s vision to redefine its agricultural landscape is an invitation and a clarion call for investors and innovators to bring their green thumbs and business acumen to its sun-baked soils. For those willing to take the plunge, the rewards could be as abundant as the date palms dotting their legendary oases. Start your agribusiness in the UAE and be part of a future that’s being sown today.

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