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Not just coin farming: Is San Salvador ready to farm something beyond crypto?

El Salvador's daring foray into cryptocurrency with its Bitcoin experiment has thrust the nation onto the international stage as a hub for technology businesses. While the outcomes so far have been mixed, this initiative has undeniably kick-started a wave of infrastructural improvements and regulatory reforms. These changes attract a new class of economic players, including venture capitalists and digital nomads, intrigued by the possibilities at the intersection of technology and policy.

Meanwhile, El Salvador's agricultural sector remains far behind in terms of progress. "Agriculture, since the late 1990s, due to the implementation of neoliberal structural adjustment programs, has been virtually annihilated to make way for maquila production, services, and the export of labor, mainly to the United States," says Fidel Nieto Laínez, Rector of Salvadorian Lutheran University (ULS).

"Since then, there has been no effort to intervene in agriculture, resulting in the recognition that almost 400,000 hectares of agricultural land remain abandoned." What remains relies on traditional staples like coffee, corn, and sugarcane, with no significant intervention or support from the state.

The state appears oblivious to the agritech revolution transforming much of the food industry in developed countries. Peter Nataren, Vice President of the Nueva Heroica Santa Marta Cooperative, describes the situation: "The State does not have a strategy, nor separate investment programs in advanced agriculture right now. Even if any sporadic investment has been made, we consider it a political move, an 'electoral investment.' So, no high-tech greenhouses or indoor farms with automated climatization and software-controlled environments are in perspective. If any idea of such an enterprise arises, it stems from urban businesses in the retail or hospitality sectors, entirely unrelated to agriculture, and is immediately met with a general lack of enthusiasm."

This "blank slate" starkly contrasts with countries like the United States, where hundreds of vertical farms not only operate but thrive. Even neighboring Latin American countries have examples of successful companies like Brazil's Livre, Mexico's HortAmericas, and Chile's AgroUrbana. These enterprises are not merely experimental; they are profitable ventures supplying high-quality produce directly to retail markets and upscale restaurants.

In El Salvador, such ventures face substantial hurdles, marked by a pervasive lack of understanding among both government officials and large agricultural companies. According to Gomez Restrepo, a CGIAR analyst, "the country's agriculture sector is significantly behind in adopting modern technologies and decision support tools".

In many countries that adopted pipelines for food security or sustainability five to seven years ago, it became clear that participation was necessary at the governmental level. This led to the creation of tax incentive programs, direct investments, and the alteration of laws and regulations to promote advanced agriculture. Contrastingly, in El Salvador, such proactive engagement is noticeably lacking. Salvadoran economist Keny Zeneyda Arias pointed that out in a conversation, noting, "There is a weakening, if not the complete absence, of interest in agricultural innovation, exacerbated by a lack of understanding of how the technology works, its purposes, and potential benefits." This, in turn, makes it difficult to keep pace with global advancements in agricultural technology.

'High-tech farming can work here'
Nevertheless, there are entrepreneurs in El Salvador who are keen to prove the viability of advanced agricultural concepts within the country's emerging "high-tech" economy. They aim to establish urban food production that aligns with modern technological advancements. José Mario Cuellar, a Swiss-Salvadoran entrepreneur, and co-founder of miTerra, an enterprise working towards enhancing food production with agritech innovations, has been diligently working for the past two years to promote and implement vertical farming initiatives. His goal is to bring cutting-edge technology to develop products and services that meet essential human needs.

"We conducted a detailed market research study on the community's food habits. The local demand for leafy greens is significant, driven by both financial growth and evolving social trends towards healthier lifestyles," says Mr. Cuellar during our conversation. "I had a series of meetings with industry partners and realized that the demand for such produce would be substantial. By implementing just one high-tech indoor farm, we could not only satisfy a large part of this demand but also propel El Salvador toward the forefront of modern agricultural practices. We'll showcase how to maximize space, conserve water, and boost yields, situating the nation at the vanguard of sustainable agriculture."

The study commissioned by Mr. Cuellar indeed revealed promising data: approximately 3.5 million potential consumers of farm-to-table fresh produce live within a 25-minute drive from downtown San Salvador. Of these, about 210,000 are high-income individuals and upper-middle-class professionals.

With such a substantial target market identified, Mr. Cuellar continues to invest time and effort to make this vision a reality. "This will require government support. And my recent meetings with the Ministry of Agriculture have been promising," he emphasizes, clearly pleased with recent developments. "They're positive and supportive, and willing to support our launch. They are looking for approaches to reduce the country's dependency on importing produce. This requires, among other things, legislative improvements to help vertical farms face fewer hindrances in establishing themselves within urban infrastructure, particularly in the capital. Which is especially crucial with the explosive growth of tourism and the influx of digital nomads".

Indeed, by 2024, El Salvador is set to become the fastest-growing tourist destination in Latin America. The Ministry of Tourism expects the number of tourists to rise to 3.8 million in 2024, a 35% increase from early 2023, with tourist visas now extended from three months to six months. This rapid growth in both the number of visitors and their length of stay is already prompting the government and businesses to swiftly expand hotel capacities and meet the growing demand.

A consistent supply of "farm-to-fork" leafy greens is crucial for establishments like luxury hotels and fine-dining restaurants. Freshness here isn't just a perk—it's a necessity, synonymous with quality and crucially influencing consumer choice. According to José Cuellar, his first facility—a vertical farm covering 400 square meters with a growing area of more than 900 square meters—will supply about 90 kg of greens daily. This is enough to serve several dozen restaurants or to stock several megamarket's fresh produce departments.

It is abundantly clear that as urban populations continue to grow and environmental challenges make traditional farming less viable, the shift towards indoor agriculture is becoming increasingly topical. By the latter half of this century, a significant portion of plant-based foods, including berries and tomatoes, is expected to be grown in cities. Given this trend, if Mr. Cuellar's project gets off the ground, it will most likely become a focal point for both supporters and detractors. As with similar initiatives worldwide, debates about the high energy consumption of such operations will inevitably arise.

At our request, Timo Koljonen, a representative of the iFarm technology company, calculated that a farm with the parameters discussed above would consume 67 megawatt-hours per month, comparable to a large commercial bakery. "However, we are continually seeing improvements in the efficiency of grow lights and reductions in electricity costs," he adds. "The ongoing LED revolution in energy-efficient lighting has been underway for about ten years, and the price of such lighting has dropped more than tenfold during this time."

And according to many experts, even more significant advancements lie ahead. This prompts us in El Salvador to ask ourselves—can we achieve similar breakthroughs in the agtech sector as we have in the financial and scientific-technical sectors? It seems that without intervention from national lawmakers, this will be impossible.

"In my opinion, what is urgently needed is a response to the problem of food security and sovereignty. The urgent task is the substitution of the traditional agricultural model with a new model that ensures the production of healthy food, free of substances harmful to health, and contributes to the restoration of ecosystems highly affected by decades of harmful agricultural practices," says señor Laínez, whose university is actively involved in exploring new agricultural methodologies.

"Vertical farming is part of the array of productive modalities we must test to verify its relevance in terms of product quality indicators and production costs."

Authored by Konstantin Buzin