One side of agriculture investment that is often overlooked by investors is now one of the most thriving sectors of the industry. The greenhouse industry is finding a huge market, as developers, farmers and investors look for better ways to grow their crops in various parts of the world.

What used to be a relatively simple and straightforward industry is now being transformed by technology. Companies aim to offer year-round crop production in some of the world’s hottest and driest locations. The greenhouse industry has become big business in places in the Middle East, such as Saudi Arabia, which have little arable land.

Beyond the norm

One such company is Australia-based Sundrop Farms, which uses what it describes as a process similar to thermal desalination, whereby the sun’s energy desalinates seawater to produce fresh water for irrigation. The seawater is then effectively cleaned and sterilises the air, which allows crops to grow without pesticides.

Philipp Saumweber, the firm’s managing director, confirms it is a very technology-driven industry. He says: “It has been moving in this direction for a while, but I would say that generally the greenhouse industry is there to overcome barriers that normal agriculture faces.

"There is an advantage to not being exposed to weather and being able to locate more or less where you want. The holy grail of the industry is to spread a fixed cost base over as high a yield as possible, so naturally the propensity is there for people to invest heavily in technology.”

Room for growth

As such, competition in the industry is largely driven by who can provide the most cutting-edge advances in greenhouse agriculture. Mr Saumweber says that in the more mature markets of northern Europe, competition is fierce, but in places where the industry is less advanced, such as in southern Europe and the US, there is less competition, and markets are thriving.

He says: “There is competition, but there is still plenty of room for growth. North America is probably five to 10 years behind where Europe is. Our intention is to get into markets that are behind the curve, but are still using modern technology.”

The company is currently only active in Australia, but is seeking to expand overseas in the next few years. Trends in where these companies have been investing abroad are evolving rapidly.

Traditionally, this industry was dominated by the UK and the Netherlands, but lately Mr Saumweber says there has been growing demand in places with better light but less available rainwater. He says some of the best growth has come from Mediterranean countries, the southern US and Mexico.

Another interesting trend, he notes, is that countries with food security issues, such as China and South Korea, have been among the most interested. China, he says, has gone from nothing to 2 million hectares of land devoted to greenhouses in only 30 years.