Middle East countries need to adopt the latest agricultural technologies (agritech) to make their farming sustainable, and to overcome their food supply and security challenges. The near-term challenge for many Middle East countries is that they are import dependent, buying more food than they export. That makes them vulnerable to supply chain disruptions. For example, in 2019 before the COVID-19 pandemic, Saudi Arabia imported $10.5 billion of key agri-food products and exported just $1.7 billion—a deficit of $8.8 billion. Introducing agritech can cut such deficits, make food supplies more reliable, and stimulate innovation.
Middle East agriculture also suffers from a variety of economic and policy problems. There is a lack of agricultural labor. The sector’s capabilities are underdeveloped, yields are low, soil salinity is an issue, and there are shortages of arable land, feed resources, and water. Although many of these challenges are longstanding, the COVID-19 pandemic has exacerbated them. Recent supply disruptions, some caused by geopolitical instability, are reminders of the region’s food insecurity. Globally, the stress on supply chains has made countries more conscious of the need to source food locally, focus on food security, and reduce reliance on a few food processing plants.
To overcome these challenges, Middle East countries need to develop agritech and promote the latest advances. Agritech provides a range of options with substantially higher yields that use fewer resources, including labor, water, and land than traditional farming–which means fewer emissions. There are six main forms of agritech that can work in the Middle East:
To take advantage of agritech, Middle East countries need to invest to bring down costs so that these technologies are financially attractive at scale. At present, the production costs of agritech remain considerably higher than those of traditional farming, which discourages adoption.
Governments in particular have an important role to play beyond their usual mixture of regulation and facilitation.
There are five measures Middle East governments can take to push the use of agritech in the region.
First, governments and farmers can agree partnerships with leading technology suppliers. Countries should not move from importing food to growing food domestically based on imported technology, as that simply shifts the trade deficit from agriculture to capital goods. Instead, governments and farmers can seek arrangements to manufacture some agritech in the Middle East and ensure that it is adapted to the regional environment.
Second, governments can offer financial incentives, regulatory flexibility, and commercialization support for agritech. For example, the government can identify and facilitate partnerships between agritech firms and food distributors as a means of supporting the sale and distribution of agritech produce.
A third approach is the co-investor model, which is an ideal middle ground between the previous two. In this model, the government either has a direct stake in the key players and their commercial activities or acts as co-investor for riskier and more uncertain ventures. The government provides capital, and may also underwrite pricing, thereby generating confidence and attracting further investment.
Fourth, governments can help to attract skilled labor and talent by providing high-quality job opportunities and incentive packages. Such talent is particularly important for R&D efforts.
Fifth, governments can establish state-of-the art research, prototyping and testing facilities to provide space for students, startups, and businesses to innovate. The Netherlands, for example, hosts the World Horti Center which focuses on greenhouse agriculture.
Middle East countries can ease their near-term food security and promote innovation by actively supporting agritech. Better, by adopting agritech Middle East countries can make their agricultural sectors more efficient and more sustainable.
This article originally appeared in TRENDS MENA, November 2022.
Salim Ghazaly and Roger Rabbat are partners, and Makram Debbas and Aya Hallak are principals with Strategy& Middle East, part of the PwC network.