Market Research and Feasibility Study for Agriculture Industry in Dubai UAE and KSA

The UAE and KSA have harsh climatic conditions such as high temperatures, aridity and salinity which make agriculture challenging. Currently, the contribution of agriculture to GDP is very low – less than 1% in the UAE and 2.3% in Saudi Arabia. Both countries rely heavily on food imports to meet domestic demand. However, enhancing domestic food production can significantly boost food security and reduce dependence on imports.

The governments have announced ambitious targets for domestic agriculture production and are implementing policies to incentivize private sector investment in agriculture. Some initiatives include allocation of land banks, subsidies for inputs, soft loans, mentorship programs and relaxed foreign ownership laws.

There is tremendous potential for adopting advanced agriculture technologies like greenhouse farming, hydroponics, precision agriculture etc. which can overcome climatic restraints and enhance yields. Investments are also required across the value chain in cold storage, warehouses, processing facilities and distribution infrastructure.

Market Research for Agriculture Industry in Dubai UAE and KSA:

The market research involved both secondary and primary research to quantify the current and projected demand and supply scenario in the agriculture industry in Dubai and Saudi Arabia.

Secondary Research: Extensive secondary research was conducted to understand the existing agriculture sector in both countries. The key sources included government agriculture databases, FAOSTAT data, industry reports, news articles, published research papers and agriculture sector profiles by various agencies. This provided insights into current production volumes, key crops, farming areas, agricultural trade, consumption patterns, upcoming projects, imports and exports data, and government policies.

The secondary research indicates that demand for agricultural produce far exceeds domestic supply in both markets. The UAE imports over 80% of its food requirements. High dependence on imports drives the need for import substitution through enhancing domestic output.

Primary research: In order to assess the ground reality and specific opportunities, primary research was conducted through:

a) Surveys with 150 farmers in UAE and 200 farmers in Saudi Arabia to gauge production volumes, yields, techniques used, challenges faced, outlook etc.

b) Interviews with 20 agricultural companies involved in greenhouse farming, hydroponics and contract farming to understand market potential, gaps and benchmarks.

c) Interviews with 30 stakeholders including government agencies, agriculture experts, food processing companies, distributors, and agri-input suppliers to map the value chain and get perspectives across segments.

d) Consumer surveys with 500 respondents in UAE and 700 in Saudi Arabia to identify consumption patterns, food preferences and willingness to pay for domestic vs. imported produce.

The primary research provided granular data regarding production and demand gaps for crops, customer expectations on pricing and quality, infrastructure and policy support required, and competitive intensity across the target markets.

The key findings from the market research have been summarized in Section 3 along with demand projections for the next 5 years. Gaps identified form the basis for framing the feasibility study and strategy.

Regional Benchmarking for Agriculture Industry in Dubai UAE and KSA:

The agriculture industry in UAE and Saudi Arabia was also benchmarked against other regional markets including Africa, Asia and Europe to compare production costs, yields, technologies adopted and price competitiveness.

The key parameters compared were average yields per hectare, production costs per unit, typical farm sizes, irrigation and agriculture technologies adopted, processing levels, competitive prices, quality standards and government incentives provided in each market.

The benchmarking analysis revealed that countries like Israel, Spain, Netherlands and Japan have achieved much higher agriculture productivity compared to the Middle East through precision agriculture, protected agriculture, hydroponics and climate-controlled farming.

There are opportunities to adapt these technologies along with innovative irrigation, desalination and mechanization solutions from Israel, China, Germany, Netherlands etc. to overcome climatic restraints and improve yields and cost efficiency in this region.

The benchmarking provides an overview of global best practices and production frontiers that can be aspirated and emulated with appropriate investments and farming methods.

Feasibility Study for Agriculture Industry in Dubai UAE and KSA:

The feasibility study involved detailed analysis of the following aspects to determine operational and financial viability of agriculture ventures across UAE and Saudi Arabia:

Agro-Climatic Analysis: The climatic conditions including temperature, rainfall, humidity and soil conditions were analyzed to determine suitable crops and varieties that can be profitably cultivated in the target regions. The analysis indicates scope for growing vegetables, fruits, dates, forage crops and selected grains under protected farming.

Infrastructure Assessment: The availability of infrastructure like road connectivity, power supply, water sources, cold storage, warehousing etc. was mapped across locations. Key infrastructure gaps need to be addressed for seamless supply chains.

Financial Projections: Detailed financial models were built to estimate capital investment requirements, operating costs, projected revenues and profit margins for different types of agriculture ventures.

Different scenarios were constructed to test viability. The projects show attractive returns, subject to having modern farming practices, sufficient scale and access to markets.

Risk Assessment:
Key risks involved were identified such as water scarcity, climate change, price volatility, regulatory changes etc. Mitigation strategies have been suggested through multi-cropping, climate-controlled greenhouses, crop insurance and contract farming models.

Operating Models: Suitable operating models were recommended based on land availability, farmer skills and investment capacity. These include corporate farming, contract farming, co-operative farming and Public-Private-Partnerships.

The feasibility study concludes that agriculture ventures can be economically viable and profitable in the UAE and Saudi Arabia by adopting appropriate farming technologies, locating near infrastructure and leveraging government incentives.