A UAE bank is giving both Emirati and expat farmers in the country a loan of up to Dh5 million with the option to repay in instalments over several years to ensure food security. The Emirates Development Bank (EDB) began offering a first-of-its-kind financing initiative to support the country’s vital food security sector and according to a representative, it has been highly successful.
“We have financed several farms to expand and upgrade to new technology,” said Abdulla Al Hamed, Vice President of mSMEs at EDB. “We finance farmers up to Dh5 million to do this. Any project we are going to finance in this space is a high-risk project, but it is a risk we are willing to take because it contributes to the overall food security.”
He was speaking at a panel discussing about accelerating vertical farming the Middle East at the global vertical farming show in Dubai on Wednesday. He also said that the loan they give out was structured in a way to support farmers and understand their difficulties.
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“We can provide them two year grace period and the way we structure the loan is that we do not put pressure on the customer to pay for example when it is off-season for farmers,” he said. “We have tried to make a payment schedule that matches with their feasibility studies. We have a long period of ROI, ten to twelve years in general. Other financing institutes would not give 10-12 years to these types of businesses because of the risk attached to it.”
Innovation in vertical farming
According to another panelist, Amit Grover, founding partner and CEO of Grover Venture said that there were several innovations coming to the field of vertical farming.
“The key trends that are driving this space are robotics and automation,” he said. “We are also looking at a lot of artificial intelligence and machine learning. We are also seeing a lot of IoT being implemented to reduce labour costs. All of this technology will make it easier especially to do genetic optimisation of crops.”
He said this optimisation will eventually make it possible to mass produce agriculture commodities. “To be able to export that level of volume and to be able to service markets in the region one needs volume,” he said. “And that volume comes from genetic optimization of the crop that allows the yield to be taken to the next level. There is some cutting-edge research happening on that in several parts like Netherlands, Germany and Australia and it will soon come to the Middle East.”
Government support
The panelists highlighted that it was important for governments to provide support in order for vertical farms to be successful.
“There is a need for policies and frameworks as a priority,” said Halim Ben Haj Salah, Director – Technical Support Department, Arab Authority for Ag Investment and Development. “The first one is about land. For most farms, 50 percent of their total cost is land. Vertical farms will be set up around the cities so the cost for real estate will be a major factor. There should be a policy to protect the prices of agricultural land.”
He said it was also important to introduce a certification for vertical farming. “Vertical farms use reduced amount of water but there is no certification for such produce like there is for organic products,” he said. “This should be introduced because the consumers have become more sensitive to the environment.”