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An industry overview:

Vertical farming in Saudi Arabia

Rapid growth of urban populations, climate change, and a growing demand for local produce are all working to increase adoption of vertical farming across the world.

The Vertical Farming Global Market Report from 2022 predicts that the global vertical farming market will grow from $ 4.21 billion in 2021 to $ 11.58 billion in 2026 at a CAGR of 23.15%.

The unique traits of different regions greatly influence the adoption of vertical farming technologies in the agricultural sector. For example, Japan and Singapore were the first pioneers in vertical farming, with land and labor limitations in these countries driving innovative farming solutions. The United States, the UK and Germany also started to prioritize sustainable food production and renewable energy, reflecting their commitment to environmentalism and a growing demand for premium foods. Meanwhile, the market in Denmark is primarily motivated by the demand for locally-sourced, organic foods that are difficult to cultivate outdoors.

The countries of the Gulf Cooperation Council (GCC) region, on the other hand, have only recently started to embrace vertical farming.

Drivers for vertical farming in Saudi Arabia
MENA countries import up to 90% of their food, with Saudi Arabia as the largest importer. At the same time, the Kingdom’s self-sufficiency ratio is not yet high enough to meet all its needs. Home-grown production of produce is growing rapidly in Saudi Arabia, however, increasing to over 36% in 2019, according to the 2021 Alpen Capital GCC Food Industry report.

The need to become more self-sufficient in food production and processing, as well as to diversify imports, seems to be one of the main drivers for the investment in AgTech in Saudi Arabia. The Agricultural Development Fund of Saudi Arabia intends to invest around $ 220 million (SAR 825 million) into high-tech greenhouses between 2021 and 2025. The fund will finance up to 70% of the capital expenses for these projects. It will also offer a two-year moratorium on profit demonstration for the supported businesses.

Another crucial driver for vertical farming is the constraint in water supplies. Growers are being urged to adopt hydroponics, a technology that requires 90% less water than conventional farming methods.

"Over 26 billion cubic meters of water is consumed by the agricultural sector", stressed Dr Abdulrahman Al Ibrahim, the advisor to HRH Minister of Energy in Saudi Arabia. "We need to rationalize water use through modern agricultural technologies, while maintaining or even boosting agricultural production," he added.

The government supports farmers who would like to integrate soilless farming systems, including hydroponics, to their production cycle.

There is also a need to address the challenge of limited farmland in the Kingdom. In the last 60 years Saudi Arabia has transformed 24,000 square kilometers of desert into fertile land.

This "desert farming" in Saudi Arabia is challenged by the limited water resources in the country. Even though center-pivot irrigation systems allow farmers to manage water more efficiently, water availability still remains an issue.

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