Abu Dhabi boosting the local food industry

The Abu Dhabi authorities are seeking to develop the local agriculture and food-processing sector as part of wider efforts to improve food security and diversify the economy. They are also working to render activities in the sector more sustainable, particularly in terms of water usage. To this end the emirate is investing in the development of a range of new technologies and agricultural solutions, notably hydroponics and water-usage monitoring systems, while also helping farmers upgrade their irrigation systems. Although the sector is a small contributor to the overall economy, the emirate is a major international producer of dates, home to the largest date company in the world, and is emerging as an important regional food-processing centre, with a number of investments and capacity-expansion projects in both farming and agri-business.

Economic Contribution

The total value of activity in the agriculture, forestry and fisheries sector stood at Dh5.99bn ($1.6bn) in 2014, equivalent to 0.6% of Abu Dhabi’s GDP, according to data from Statistics Centre - Abu Dhabi (SCAD). Sector output was down 3% on 2013 in real terms, after increasing by 2.3% the previous year. The sector also accounted for 2.2% of the employed population, rising to 2.3% for non-nationals. Wages paid to agricultural workers stood at Dh1.94bn ($528m), up 6.3% in nominal terms from 2013, SCAD reports.

Fruits, Vegetables & Field Crops

According to the latest available data from Abu Dhabi Food Control Authority (ADFCA), the largest category of plant holdings by land use in 2014 was fruit trees, which took up 272,322 dunums (a dunum is roughly 0.1 ha) out of a total of 750,000 dunums devoted to plant holdings. A total of 59,198 dunums were devoted to field crops and 20,490 to growing vegetables. Of the emirate’s three regions, Al Ain accounted for the bulk of this cultivated land, with 452,503 dunums, or 60.3% of the total.

There were 131,699 fruit trees, excluding date trees, in the emirate in 2014. Mango trees accounted for 15,480 of these, with lemon trees the next largest group at 10,655. Regarding vegetables, the emirate produced 80,385 tonnes of produce during 2014, where protected greenhouse production formed 42,907 of this amount compared to 37,478 in the open fields. The most important crop by production volume in the greenhouses was cucumber, with an output of 29,842 tonnes, followed by tomatoes at 6938 tonnes and peppers with 2938 tonnes. Regarding open field production, the tomato crop was ranked the highest, with an output of 9426 tonnes, followed by cabbage at 6773 tonnes and eggplant with 3808 tonnes.

Dates

Dates are Abu Dhabi’s most important crop and largest agricultural export by value. The emirate produced 93,592 tonnes of the fruit in 2014; while this was down slightly from 99,136 in 2013, the longer-term trend has been one of rapid growth, with output up from 72,900 in 2010. The Al Ain region was responsible for the bulk of date production, at 57,729 tonnes in 2014. By value, the 2014 crop was worth Dh629.2m ($171.3m), equivalent to 10.5% of the value of the total output of the agriculture, forestry and fisheries sector for 2014.

Date sales and marketing is dominated by the state-owned Al Foah, which buys the product from local independent farmers and markets them domestically and abroad, to more than 48 countries. Exports represent more than 90% of the company’s total sales, and Al Foah also processes associated products including date syrup, date paste and date confectionery products. It has agents in a number of major markets including Jordan, India, Oman, Morocco, Saudi Arabia, Malaysia, Bangladesh and Sri Lanka and sells five separate brands, all aimed towards different customers, from its bulk brand, Al Saad, to the high-end boutique label, Zadina.

The firm processes dates at its factories in Al Saad and Al Marfa, which have respective capacities of 90,000 tonnes per annum (tpa) and 50,000 tpa. Al Foah Farm in Al Ain City is the largest organic farm in the world, with a total area of 745 ha, and more than 63,000 date palms. The farm management applies the latest technologies in date palm cultivation and dates production. Al Foah applies organic agriculture systems according to international standards, and the company has invested heavily in technology, including improvements to washing lines, production and packaging. RF Biocidics, a US-based food safety company that provides environmentally friendly and chemical-free alternatives for disinfection and disinfestation, formed a partnership with Al Foah in 2014 to help assure the highest standards of quality go into its products.

Dates are also part of the emirate’s national and economic identity, with date farmers providing the foundation for the development of the palm industry in the sector, and playing the primary role in assuring the globally competitive levels of quality for Emirati dates. An increasing flow of locally produced agricultural goods is highly significant for the progress of the emirate’s economic diversification goals, and influential regional media outlets such as The National have declared that Al Foah has “put Emirati dates on the map” across the world.

According to Al Foah, supporting Emirati date farmers is one of the most important priorities that the company has, and the official policy of training, equipping and developing these farmers as a key national resource has been in place and expanding since 2007. The company holds that the success of the agricultural sector as a whole is based upon constantly updating the date segment, which provides a high-quality product that embodies the globally successful image of production in the UAE.

Al Foah has also led the way in making the dates segment financially viable and internationally competitive. In September 2015 the company announced it paid a fourth instalment of Dh158m ($43m) to over 8000 farmers for marketing their dates through the company’s receiving centres. The company works with over 18,000 farmers across the UAE and this fourth instalment is the largest ever paid by the company since the beginning of the dates marketing season; the company had disbursed a total of Dh427m ($116.2m) to farmers.

Livestock & Animal Products

There were 31 commercial livestock farms operating in Abu Dhabi in 2014, up from 26 a year before, including 13 cattle farms and nine broiler chicken operations. The emirate was home to nearly 3.1m sheep and goats, 322,006 camels and 72,871 cows (including 19,628 in commercial cattle farms, with the rest held in traditional holdings) at the beginning of 2015. The total value of meat production stood at Dh840.2m ($228.7m), down from Dh903m ($245.8m) in 2013 but up from Dh473m ($128.8m) in 2010. Sheep and goat meat accounted for 65% of the 2014 total.

The total volume of egg production rose to 309.4m units in 2014, up from 248.3m a year before. Commercial milk output stood at 95,727 tonnes, up from 87,368 tonnes in 2013. Major producers include Al Ain Dairy, which was the first commercial dairy to be established in the UAE, in 1981. With around 6000 cows, the firm already describes itself as the largest vertically integrated dairy producer in the country and is planning a major expansion through the establishment of a new 16,000 cow unit and milk production factory, which is due to be completed within three years.

Fisheries & Aquaculture

A total of 4290 tonnes of fish were caught in the emirate’s waters in 2014, with a value of Dh105.6m ($28.7m), up from 3862 tonnes and Dh84.8m ($23.1m), respectively, in 2013. The scombridae family, which includes mackerel and tuna, accounted for 42% of fish caught by value and 34% by volume, more than any other group in both cases. The authorities are encouraging the development of fish farming in order to reduce pressure on fish stocks in local waters, with a particular focus on the emirate’s Al Gharbia region. As of 2014 there were approximately 30 licensed fish farms in the emirate, and the sector has been attracting substantial investment in recent years. For example, in 2013 Emirates AquaTech inaugurated a 56,000-sq-metre caviar farm in Mussafah in Abu Dhabi region, which it described as the largest farm of its kind in the world at the time.

Trade

The total value of exported agricultural goods stood at Dh750m ($204.2m) in 2014, up from Dh514.5m ($140m) a year earlier. Exports of raw agricultural materials were worth Dh56m ($15.2m) in 2014, well over double the 2013 figure of Dh23.2m ($6.3m). Exports of food products in 2014 stood at Dh649.1m ($176.7m), compared to Dh526.1m ($143.2m) the previous year and Dh493.1m ($134.2m) in 2010, according to figures from SCAD. Exports of live animals and live animal products stood at Dh186.2m ($50.9m), while vegetable products reached Dh57.5m ($15.6m), and animal and vegetable fats, oils and waxes totalled Dh204.5m ($55.7m). Imports of agricultural raw materials were worth Dh478.3m ($130.2m) in 2014, up from Dh476.8m ($129.8m) in 2013, while the value of imported food products stood at Dh6.55bn ($1.8bn), up from Dh5.97bn ($1.6bn).

SUSTAINABLE STRATEGY: ADFCA, which was spun off from the Abu Dhabi Municipality as an independent food safety agency in 2005 and saw its mandate extended to cover agriculture two years later, is currently implementing a strategic plan for the agriculture and food sector that will run from 2016 to 2020. The plan aims to develop a sustainable agriculture and food sector that ensures the delivery of safe food to the public and protects the health of animals and plants. It also seeks to promote sound agricultural and food practices through cohesive and effective policies and regulations, quality standards, research and awareness. The body aims to implement 22 strategic projects between 2015 and 2020, with an estimated combined value of Dh1.5bn ($408.3m).

Government Support

In 2009 the authorities, in cooperation with the Australian firm GRM International, established the Abu Dhabi Farmers’ Services Centre (ADFSC) to support local farmers, who face a number of technical challenges including the hot climate, high water and soil salinity, and low soil fertility, through initiatives such as training and extension programmes. The centre is currently implementing a programme to develop 20 training farms across the emirate, where it provides demonstrations of agricultural development activities. It is also working to establish a network of ADFSC centres that, among other activities, will provide training for extension engineers, with initial plans for one centre in each of the emirate’s three regions.

The ADFSC also provides certification for Global Good Agricultural Practices (Global GAP) – an international initiative that aims to provide consistent and transparent agricultural standards across the world, as well as indicating that vegetables are free from pesticide residues – to farms in Abu Dhabi; as of late 2015, approximately 190 farms in the emirate were certified according the centre.

Local demand for the Global GAP certification is significant and continues to rise; 76% of respondents to a 2011 survey by the ADFSC said they were willing to pay more for certified pesticide-free produce, rising to 83% and 80% of respondents in 2014 who said they would pay more for Global GAP and residue-free certified produce, respectively.

Local Market

Other ADFSC activities include the marketing of domestic produce on behalf of farmers in the emirate under its own brand, Local Harvest, through which it provides producers with a minimum guaranteed price. In 2015 the emirate also launched a government-funded initiative to provide retail outlets throughout the country with food grown locally using hydroponic technology. A 2014 survey commissioned by the ADFSC put domestic produce’s market share of local consumption of fruit and vegetables – which stood at 1.05m tonnes by volume and Dh2.4bn ($653.3m) by value – at 16% in volume terms. Consumption of local produce is growing rapidly, at a compound annual growth rate of 28.4% between 2010 and 2013 in terms of volume, compared to 7.9% for the market as a whole. The number of respondents who buy local vegetables rose from 73% in 2011 to 88% in 2014, and the number who strongly agreed that local produce is of good quality rose from 28% to 36%; the number who merely agreed was unchanged at 50%, while those who were neutral or disagreed declined in number. Locally produced agricultural goods with the highest estimated share of consumption include cucumbers, at 65-70%, capsicum peppers and chillies with 50-55% and cabbage, watermelons and corn, all at 30-35%. In absolute terms, the local product with the highest levels of domestic consumption was onion, at 249,231 tonnes.

Local produce’s share in the consumption of fresh meat, chicken and eggs – which is worth Dh3.7bn ($1bn) per annum, according to the 2014 study, equivalent to 255,000 tonnes – is higher still, at 49% in volume terms and 38% by value. Unlike vegetables, the consumption of local animal products grew at a slightly slower rate than the animal products market as a whole between 2010 and 2013, at rates of 4.5% and 6.2% respectively. Locally produced fresh chicken holds a 75% share of domestic consumption (not including imported frozen chicken, which is also popular), local eggs were 54%, fresh lamb and mutton 28% and fresh beef and veal 12%. Camel has a 98% share of domestic intake, although in absolute terms the volumes consumed are small. Retailers are also working to help improve the availability of domestic produce. In October 2015 the ADFSC and the Abu Dhabi Co-Operative Society signed a highly significant partnership agreement under which the firm will distribute 43 different varieties of locally grown vegetables.

Organic Agriculture

An estimated 50 organic farms cultivating a total of around 4000 ha operate in the UAE as a whole, according to “The World of Organic Agriculture” 2015 report. Major organic facilities in the emirate include a date farm operated by Al Foah in Al Ain, which the firm describes as the largest organic farm in the world.

The Abu Dhabi authorities are working to further develop the segment, in part because it benefits soil quality, which suffers from consistently sandy conditions. In October 2015 the ADFSC signed a contract with the Swiss Research Institute of Organic Agriculture (FiBL), under which the FiBL will help develop an organic section within the centre over a period of four years. The project, which aims to encourage around 100 more farms to convert to organic status, will include the creation of an applied research and development centre that will work in cooperation with local farmers, the establishment of model farms and training programmes in organic agriculture, and the development of marketing strategies for the segment.

Water Use

Agriculture accounted for more than 55% of water use in Abu Dhabi in 2014, according to the ADFSC. Most of the water used in the sector is non-replenishable groundwater, putting substantial pressure on already precious water resources in the emirate. The authorities are working to address the issue, and reducing the use of water in agriculture is one of ADFCA’s main objectives for the development of the sector. In 2009 the government set a goal of reducing the sector’s water use by 40% and has taken a series of measures towards achieving this, including the abolition in 2010 of subsidies for the production of Rhodes grass, which is used as animal feed, which accounted for around 59% of water use at the time. In 2010 the ADFSC also launched a project to reduce water usage in Al Gharbia in particular, involving the distribution of pressure-compensating bubblers to around 7000 farms, and the provision of extension and training sessions on irrigation techniques.

To further reduce the sector’s use of fresh water, the authorities are working to divert some of the nearly 50% of recycled effluent that is currently discharged into the sea into agricultural usage, with plans to capture and utilise all such water by 2018. Local and international research institutions are also seeking solutions to the sector’s water challenges. In early 2015 UAE University, based in Al Ain, and the University of Leeds began work on a comprehensive study of water use in the emirate commissioned by the Environment Agency - Abu Dhabi. The study focuses on setting a water budget for the emirate to manage demand. Al Ain Municipality and Al Ain Distribution Company are also working on a project to replace the use of groundwater to irrigate palm oases with alternative sources; the project is due to be completed by mid-2017.

Investing In Innovation

The emirate is also investing in the development of new technologies to improve sustainability and agricultural yields. In 2014 the Khalifa Fund for Enterprise Development, a Dh2bn ($544.4m) fund that seeks to develop entrepreneurialism and innovation in Abu Dhabi, also launched a Dh140m ($38.1m) programme known as Zaarie, under which it will support the development of up to 130 farms in the UAE through the use of hydroponics. The Zaarie programme will also help them to supply produce to local supermarkets, with the aim of boosting domestic produce’s market share by around 10%. Three of the farms, located in the emirate, began operations in July 2015, with 37 others due to start at different points later in the year. The authorities are keen to develop the hydroponic segment as a way to boost production efficiency and protect crops from local weather conditions, while also rendering output more sustainable by limiting the use of water, fertilisers and pesticides. The Khalifa Fund and the Agricultural Investment Fund are also financing farmers’ efforts to upgrade existing greenhouses and build a number of new high-tech facilities with features such as sensors to monitor humidity and temperature levels, as well as automate processes.

Biofuel

At the same time, the Masdar Institute of Science and Technology, a renewable energy and sustainability-focused research institution, is working on the development of micro-electromechanical systems such as gyroscopes, accelerometers and GPS systems for use in agriculture in order to boost yields and efficiency. Researchers at Masdar are also looking at different procedures for turning date palm waste into the charcoal-like substance biochar, which improves fertility and water retention in soil; the UAE has about 40m date palms, each generating about 15 kg of waste biomass annually, providing a ready supply of raw materials. Biochar has also been credited with preventing pests and diseases from spreading. The defence company AgustaWestland is also exploring applications for date palm waste. It is considering burning it to produce electricity and heat for industrial use, turning it into compost, creating building insulation and improving the capabilities of construction material.

Research is also under way in the emirate into the development of other new agricultural products. In September 2015 aircraft manufacturer Boeing announced the construction of a 0.40-ha pilot farm that it is building in conjunction with UAE flag carrier Etihad Airways, oil and gas major Total, the Masdar Institute and Abu Dhabi Oil Refining Company to produce aviation biofuel from a plant called 2016. The firm said that the partners plan to cycle through several harvests of the crop over a period of 12 to 18 months before evaluating options for running the project on a larger scale.

Agri-Business & Food Processing

Major local agri-business and food-processing firms include Agthia, which is majority-owned by the government investment fund Senaat and produces a range of goods including animal feed, flour, dairy products, juice and bottled water. It is the largest local supplier of bottled water with around 25% market share through its Al Ain and Alpin brands. In October 2015 the firm moved to further expand its presence in the market through the acquisition of three water-bottling companies. These included the Northern Emirates-based Al Bayan, a leader in the local five-gallon, bulk-container water market. Agthia hopes the purchase will make it the second-largest market player in this segment as well.

Another major local agri-business player is Al Dahra, which produces and trades in both human food and animal feed. Businesses the firm operates in the emirate include a 3300-cow dairy and a number of fruit and vegetable farms. The firm also works with the UAE federal government to help it implement its food security strategy (see analysis). In November 2015 Al Dahra and India’s Kohinoor Foods began construction work on a $38m, 100,000-sq-metre rice-processing facility in the Khalifa Industrial Zone Abu Dhabi, which opened in 2010 and includes a food products and processing cluster. The project is due to enter into operation in the second quarter of 2016. Other processing firms that have established themselves in Khalifa Industrial Zone Abu Dhabi include the Brazilian firm BRF, which opened a $160m, 160,000-sq-metre factory in December 2014, marking the first major facility to open in the cluster. The factory produces a range of food items, including frankfurters and hamburgers, and has a production capacity of 72,000 tpa. In November 2015 the firm announced plans to expand this to 100,000 tpa by the end of 2016. Dubai-based Binghatti Holding also announced plans in November 2015 to build a $41m food and beverage facility in the zone.

Outlook

The emirate’s food processing industry is set to grow as Khalifa Industrial Zone Abu Dhabi continues to attract investment from major players and other domestic firms expand their capabilities. Local demand for food produced within the emirate is also growing, bolstered by recent initiatives to increase the availability of domestically grown produce. Food security will remain an issue, but the UAE is showing success in this as well. In the 2015 Global Food Security Index, which ranks 11 food-security related issues, 10 of which were classified as strengths for the UAE, with the country receiving the maximum possible score in five of these categories.

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The Report: Abu Dhabi 2016

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