Come 2025, the Agriculture Tech, or AgTech, market is set to be valued at $35.8 billion, more than double 2021’s $16.6 billion. Supply chain management, farming, monitoring—the opportunities for AgTech companies are endless. One such company listed on the ASX making the most of this industry’s growth is Israel-based Roots Sustainable Agricultural Technologies (ASX: ROO). 

As the name suggests, the Company aims to provide smart agricultural technologies that meet sustainability standards. Its value proposition has caught the eye of Silal Food and Tech, which has placed a $288,266 purchase order from Roots for two root zone cooling projects connected to Silal’s berry farming operations in the United Arab Emirates.

This potential representation agreement with Silal, one of the largest Agri-Food Companies in the Gulf, marks a major opportunity for Roots. Silal was established in September 2020 to diversify sources of food products and stimulate manufactured and agri-food sectors. Its mandates include managing procurement programs and strategic stocks of foodstuffs. Silal also executes specialised knowledge transfer programs on farming techniques and devises research and development projects.

Roots Sustainable CEO, Boaz Wachtel, said, “We are 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. 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 were very evident and we look forward to working with them.”

Having started operations in 2012, Roots focuses on developing and commercialising disruptive, modular technologies to address critical problems faced by agriculture today. These include the management of a plant’s root zone temperatures and the water shortage for irrigation.

Though it has been in the biz for over a decade, the Company reports that it is still in its commercialisation stage and does not generate significant revenue. Its operations are financed mainly by the issuance of shares. In H1 2023, Roots’s revenue was up 384% on H1 2022 to $191.9k, but it suffered a loss of $1.1 million. Additionally, the Company’s cash in hand fell significantly from $547.3k to just $23.8k.

This agreement with Silal then becomes even more crucial for profitability. The Company’s installation team will initiate the project immediately with a pilot growth period. In this period, its proprietary root zone cooling system will be deployed for the forthcoming strawberry farming season. 

While the terms of this agreement are yet to be finalised, it highlights the ongoing interest in the Company’s technology and its potential across the region. 

Wachtel added, “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.”

The United States Patent Office (USPO) granted Roots a design patent for its ‘Adapter for Pipe Joints’ in the first half of the year. This is for its unique Heat Exchange Probe (HEP) technology and will provide 15-year protection for the Company from copying, manufacturing or using similar designs of heat exchangers and root zone temperature optimisation products in the American Agricultural market. 

Roots also completed a second root zone cooling project for commercial-scale coffee production with Elite Agro, a UAE-based agricultural company.

With commercialisation efforts going well, the Company is reaping the harvest of its past investments. If things stay on track, Roots can hope to recover its cash balance in the coming years.