Roots’ new purchase order from large agri-food company Silal is almost as big as its own market cap

The $288,266 purchase order with Silal is a further foothold into the Middle East’s agriculture tech industry for Roots Sustainable Energy Technologies (ASX:ROO)
Two root zone cooling projects will be installed for berry production in the UAE
Roots has patents in the US and Canada for its temperature control systems

Israeli-based Roots is making further strides into the United Arab Emirates (UAE) with a significant purchase order for two cooling zone projects to aid sustainable food production in the region.

Roots Sustainable Agricultural Technologies (ASX:ROO) is developing and commercialising cutting-edge tech to address critical problems faced by agriculture today, including management of plant’s root zone temperatures and the shortage of water for irrigation.

By optimising and stabilising root zone temperatures ROO’s tech can significantly increase yields, increase growing cycle planting options, improve quality, and mitigate extreme heat and cold stress while significantly reducing energy consumption.

The company has now secured a $288,266 purchase order with one of the largest agri-food businesses in the Middle East, Silal, for two zone cooling projects for berry farming operations in the UAE.

When comparing the size of the purchase order with ROO’s market cap of just $346,000 this is highly significant.

As part of the agreement, it also has a potential representation agreement with Silal that will foster ROO’s foothold in the region.

UAE Agriculture growth

Dubai and Abu Dhabi – melting pots for business, tourism, and energy production – attract people from all corners of the globe.

Arid, dry, and humid at the same time, the UAE along with the rest of the Arabian Peninsula have long needed to import food stock from other countries.

In this region, critical problems are faced when it comes to agriculture, yet innovative ideas such as Roots’ zone heating, cooling and off-the-grid irrigation and condensation tech can make the growth of otherwise untenable localised food growth economically viable for UAE’s domestic market.

That’s why initiatives by companies such as Silal are looking to companies such as ROO for advanced agricultural technologies for the strategic and sustainable growth and stock of all types of foods that do not naturally grow in the region.

The United Arab Emirates agricultural market is set to grow exponentially for the next five years at a compound annual growth rate (CAGR) of 4.34% to 2028.

Silal, part of Abu Dhabi-based investment arm ADQ, is one of the region’s largest agri-food companies with a focus on food procurement and the development of food security measures.

ADQ is one of the largest investment arms in the Abu Dhabi. And, for a predominantly oil-producing nation, has firm commitments to the sustainable non-oil GDP for the Emirate, which last year equated to a substantial 22%.

Momentum in the Middle East

The zone cooling projects will commence immediately with a pilot grow period, where its proprietary root zone cooling system will be deployed by Silal for the forthcoming strawberry farming season.

The deal highlights the ongoing interest in the company’s technology and its potential across the region.

CEO Mr Boaz Wachtel says the company is very pleased to have secured this purchase order for two projects in collaboration with Silal.

“To have secured a partner of Silal’s calibre is a major achievement, and the initial order highlights the potential of the company’s technology and its broader applicability across the UAE,” Wachtel says.

“During the negotiation process, Silal’s large business scope, professionalism and commitment to study and embrace sustainable, effective agricultural technologies to support the food security vision of the region was very evident and we look forward to working with them.”

“Further, the company is excited at the prospect of a longer-term representation agreement, which will follow an initial strawberry growing period.

“Roots will provide additional updates to shareholders as installation progresses and contract terms are negotiated.”

Elsewhere

ROO’s been busy of late, submitting patents into the US and Canada for its fluid management system for supporting roots tech that controls root zone, irrigation and liquid fertilisation temperatures.

A design patent was granted by the United States Patent Office (USPO) in May, where ROO has the potential to service two large market segments – home gardens and commercial farms for its unique Heat Exchange Probe (HEP) technology.

The patent IP stands for a period of 15 years in the US, and in Canada the design patent there opens up a broader addressable market for Root’s products due to the country having one of the most sophisticated greenhouse and temperature-controlled agriculture industries in the world.

Back to the UAE and the company has already completed two HEPS agreements with EliteAgro, installing the tech across a 1.6Ha greenhouse with 9,000 coffee plants at the Coffee House Murmum project.

This article was developed in collaboration with ROOTS Sustainable Agricultural Technologies, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.