Given that fishing and agriculture have historically formed central parts of Oman’s economy and society, it is not surprising that the country has the highest rate of food self-sufficiency in the GCC. Targeted investments to further enhance food security have seen the sector advance on all fronts – but most notably in terms of technology – as the government seeks ways to sustain a growing population and foster a more diverse economy. Support for innovative state-backed dairy, red meat and poultry projects continue to boost production and provide investment opportunities, while niche segments such as organic farming need more robust regulation. The sultanate is forging ahead with development plans in all segments to open up new pathways to growth.
Structure & Oversight
The Ministry of Agriculture and Fisheries (MoAF) is responsible for setting policy, preparing legislation, providing training, carrying out research and apportioning government investment in sector development. The MoAF is headed by Hamad bin Said bin Sulaiman Al Aufi, who was appointed as the minister of agriculture and fisheries in April 2019. Al Aufi is also the chairman of the state-owned Oman Food Investment Holding Company (OFIC), which is mandated to improve food security through partnerships with government agencies, private operators and investors.
In 2015 and 2016 OFIC launched a number of companies aimed at ramping up local production, including A’Namaa Poultry Company, Al Bashayer Meat Company, Osool Poultry Company, Mazoon Dairy Company and Al Murooj Dairy Company. During that time OFIC also took control of pre-existing operators Oman Flour Mills Company, Oman Fisheries and Oman National Livestock Development.
Food security has been at the heart of Oman’s agricultural policy since the spike in global food prices in 2007-08. This focus has seen the government increase domestic production and reduce its reliance on imports. Under its eighth five-year plan, spanning 2011-15, the sultanate invested just over $4.9bn in agriculture and fisheries-related projects, as well as in infrastructure upgrades. This saw the country’s self-sufficiency in overall food production increase by 32.8% between 2011 and 2013. In 2019 Oman was the most self-sufficient country in the GCC in terms of food production, meeting 25%, 70% and 80% of its respective dairy, fruit and vegetable demand with local sources, according to a report by investment bank and advisory firm Alpen Capital.
Oman’s ninth five-year plan, for 2016-20, selected agriculture and fisheries as one of its priority sectors under Tanfeedh, the government initiative tasked with diversifying national income resources. Tanfeedh forecast that the sector would achieve an average annual growth rate of 6.5% during the years of the plan. The fisheries policy under Tanfeedh overlaps with the National Fisheries Development Strategy 2013-20, which stated a goal of doubling the nominal contribution of the fishing industry to the economy from OR369.6m ($959.9m) to OR739.2m ($1.9bn) over the eight-year period by investing $1.6bn. Both fisheries and agriculture are implicated in Tanfeedh’s drive to develop agro-industry. The ninth five-year plan outlined five food manufacturing projects to be implemented, namely in the areas of vegetable processing, seafood processing and canning, integrated dairy farming, enhanced poultry production and date-related products.
The agriculture and fisheries sector expanded by 9.3% in 2017 and 6.9% in 2018 to stand at OR670.2m ($1.7bn), according to the 2018 annual report issued by the Central Bank of Oman. Growth in 2017-18 was supported largely by a rapidly expanding fisheries sector, which saw a jump of 59% over the two-year period.
As a percentage of GDP, the sector’s contribution has tended to hover around 2% since rising from 1.3% to 2% in 2015. In 2018 this figure reached 2.2% – the highest among GCC member states.
Performance & Size
One of Tanfeedh’s key objectives for the fisheries segment is to develop a modern commercial fleet, which is expected to double the segment’s contribution to GDP. In 2018 the total weight of fish landed reached 553,445 tonnes, up 59% on 347,541 tonnes in 2017, according to the National Centre for Statistics and Information (NCSI). This was on the back of increasing demand for fishing licences, with almost 1700 individuals receiving new licences in 2018, the highest number recorded in the last five years. As has traditionally been the case, artisanal fishing using small crafts accounted for 99% of fishing activity in the sultanate, bringing in 548,672 tonnes of fish. Most of Oman’s fishing activity occurs in the governorates of Al Wusta and Ash Sharkqiyah South, which respectively accounted for 37% and 27.4% of small-craft fishing in 2018.
In line with the total weight of fish landed, the amount of fish exported from Oman increased by 60% in 2018, from 158,500 tonnes in 2017 to 253,000 tonnes. The value of exported fish also increased significantly, rising from OR27.8m ($72.2m) to OR102.2m ($265.4m) over the same period. Four out of every five units of Omani fish were exported to GCC member states, with the UAE and Saudi Arabia being the largest importers, accounting for 52,886 tonnes and 24,577 tonnes, respectively.
Regarding the types of fish, sardines, yellowfin tuna and small jack accounted for the highest volumes over the course of 2018. A total of 289,163 tonnes of sardines was landed, followed by 28,601 tonnes of yellowfin tuna and 18,084 tonnes of small jack. Although varying greatly in size, all three species are pelagics, the largest category of fish landed in Oman by a factor of more than three. Within the artisanal fishing total, the categories of big and small pelagics accounted for a combined total of 439,632 tonnes, while the other categories (demersal fish, sharks and rays, crustaceans and molluscs) produced a combined 109,040 tonnes.
Oman produced 2.95m tonnes of agricultural produce in 2018, an increase of 12.3% on 2017. This production uptick came with an expansion of the country’s total cultivated area, which saw a rise from 1009 sq km to 1089 sq km, or 7.9%, during the same period. The top crops in terms of cultivated area in 2018 were the fodder crop Rhodes grass and dates, which accounted for a respective 349.7 sq km and 242.1 sq km, or 33% and 23% of the total planted land.
In terms of quantity of produce, the leading crops were Rhodes grass and alfalfa, amounting to 1.2m and 378,510 tonnes, respectively, closely followed by dates with 368,808 tonnes. Among fruit and vegetables, the crop with the highest production volume was tomatoes at 199,232 tonnes, followed by melons (89,510 tonnes) and cucumbers (73,267 tonnes).
With the sultanate’s fishing industry dominated by small-scale operations, the government has identified commercial fishing as an area with high potential for growth. One such prototype for the development of commercial fishing is Al Wusta Industrial Fisheries. Owned by the country’s sovereign wealth fund, Oman Investment Fund (OIF), the company’s intention is to target previously unfished horse mackerel located within Oman’s Exclusive Economic Zone. Operating one vessel fishing at a sustainable rate of 100,000 fish per year of the available 1.3m tonnes, Al Wusta Industrial Fisheries began a two-year period of trial fishing in early 2019. During this trial period the company also intends to gather data on stock seasonality, fish size and maturity, and data for biomass estimates.
Another prong of the government’s approach to growing the fisheries segment is to encourage artisanal fishermen to replace traditional dhow boats with more modern vessels and employ more effective techniques. To this end, the MoAF worked with the Al Raffd Fund in 2018 to grant approvals for 30 new coastal fishing vessels and 20 modern boats. Other initiatives to augment the industry include port and harbour infrastructure projects.
In total, 10 fisheries and aquaculture projects under Tanfeedh have been earmarked to receive OR487.2m ($1.3bn) in public investment, and they are currently being tracked by the state’s Implementation Support and Follow-up Unit (ISFU).
Although the aquaculture segment accounted for just 451 tonnes of production in 2018, the segment’s mid- to long-term prospects look bright, especially on the back of major investments. In June 2019 Dawood Al Yahyai, director of aquaculture development at the MoAF, told local media that the segment would add OR300m ($779.1m) to GDP and create 5000 jobs by 2023. Al Yahyai indicated that the ministry was dealing with 19 applications for aquaculture projects at various stages of development, varying from the use of floating cages to abalone, shrimp, grouper and algae cultivation. In 2017, as part of the its programme for economic expansion, Tanfeedh set the objective of having 100,000 tonnes of fish produced via aquaculture by 2023. The ISFU, which is tasked with overseeing the programme, reported in April 2019 that five shrimp farms, two abalone projects, a fish hatchery, algae cultivation and a recirculating aquaculture system were all under development. This includes the OR59.5m ($154.5m) Al Jazer Shrimp Farm, which will be capable of producing up to 17,600 tonnes of Indian white shrimp annually upon completion in 2021.
The state-owned Oman Aquaculture Development Company (OADC) was established in 2014 by the OIF as part of a $1.3bn budget for fisheries and aquaculture approved by the government for the 2013-20 period. OADC has since grown to include two subsidiaries, Oceanic Shrimp Aquaculture and Blue Water. In May 2018 OADC harvested its first fish at the 3000-tonne-capacity sea bream farm off the coast of Qurayyat. In February 2019 the company reported it had plans to develop up to six on- and offshore aquaculture projects, including cage and long-line sites at Musandam and Masirah, shrimp farming at Al Wusta, onshore marine finfish projects at Al Sharqiyah, and abalone and marine finfish at Dhofar.
Oman continues to support research and development to find technological solutions to increase domestic production of two of the agriculture sector’s key inputs – water and fertiliser. To this end, in early 2019 the government-owned Oman Environmental Services Holding Company entered into a joint venture with local firm Omshore to establish a fish waste recycling facility. The project will see the construction of a manufacturing plant to divert fish waste from landfills and process it into nitrogen-rich hydrolysate fertiliser.
The Oman India Fertiliser Company (Omifco) is also seeking to increase production via a debottlenecking project in 2019 at its facility in Sur. Established in 2006 the Omani-Indian joint venture operates a two-train fertiliser production plant with an annual capacity of 1.65m tonnes of urea and 350,000 tonnes of ammonia. The bulk of the fertiliser produced is currently exported to India under long-term offtake arrangements. Indian fertiliser cooperatives Krishak Bharati Cooperative and Indian Farmers Fertilisers Cooperative are also shareholders in Omifco, with each holding a 25% stake in the project.
Agriculture accounts for nearly 83% of Oman’s total water consumption, of which 95% is derived from groundwater. Around two-thirds of groundwater stocks are accessed by wells, while the other third is accessed by aflaj, a traditional system of irrigation that uses long channels dug underground. Given the gradual depletion of groundwater stocks due to low levels of rainfall and issues related to climate change, the government is supporting increased use of desalinated seawater and treated wastewater, which currently account for 5% and 1% of total water consumption, respectively.
To the south-east of Muscat, the construction of an independent water project connected to the Wadi Dayqah Dam is set to reinvigorate fruit production in the town of Qurayyat. The development is expected for completion in 2022 and will provide “cost-effective, sustainable and quality water supply” for both agricultural and domestic usage, according to a report by the Supreme Council of Planning. In April 2019 Oman Power and Water Procurement Company, the country’s sole off-taker of electricity and water, invited expressions of interest for a surface water treatment plant with a production capacity of 125,000 cu metres per day. The plant is scheduled to launch by October 2022.
Solutions for water or space-related issues in the agriculture sector include high-tech greenhouses with built-in solar desalination technology; hydroponics; aquaponics; urban and vertical farming; and drip irrigation. The majority of the 6516 greenhouses use hydroponics – or soil-less farming – while the MoAF has supported the introduction of vertical farming. In trials by the ministry’s Soil and Water Research Centre, the techniques led to “an increase in the efficiency of water and fertiliser use, improved productivity in quantity and quality, and reduced the use of pesticides”. A separate trial involving the cooling of hydroponic nutrient solutions resulted in improved cucumber yields, optimised ventilation and higher nutrient uptake.
In October 2019 Sultan Qaboos University (SQU) and Shell Oman, a subsidiary of Royal Dutch Shell, signed an agreement to find solutions that will address the issue of excessive soil salinity in the Al Batinah region. Daniel Blackburn, the projects head at SQU’s Department of Soils, Water and Agricultural Needs, said in a press conference at the time that “the salt contamination of agriculture soils in the Al Batinah region has been a real agricultural challenge, reducing farm yields and profitability and, in extreme cases, forcing farmers to abandon their lands”.
The farming of organic food products continues to be an emerging industry. According to the Research Institute of Organic Agriculture, the sultanate currently has 38 ha of organically farmed land. However, while increased shelf space is being given to organic products at retail outlets, greater regulation will be required in order to encourage local growth in the segment. The government’s “Sustainable Agriculture and Rural Development Strategy towards 2040” report, published in July 2016, sees improving organic agriculture certification as key to boosting broader sector competitiveness, and recommended that projects requiring certification – such as organic agriculture – partner with institutions that have a mandate to develop and train certification entities, such as the Riyada Public Authority of Small and Medium Enterprise Development. Similarly, a workshop on the date industry organised by the UN Conference on Trade and Development in March 2018 recommended adopting national organic agriculture regulations and establishing a national organic coordinating institution.
The lack of local organic certification requirements has led to issues. “Certification fees and inspection expenses start at about OR600 ($1560) per year, and go as high as OR2000 ($5190) or more for larger farms,” Rhonda Janke, professor of crop science at SQU, told OBG. “Because there is no law that forbids someone from labelling their packages as organic, it decreases the incentive for farmers to get certified. Implementing a label protection law and creating a separate Omani certification with a lower price point would be two proactive policy moves.”
The drive towards food security has also been characterised by a focus on increasing added-value processing. OFIC’s Al Bashayer Meat Company, for example, is seeking to increase self-sufficiency in red meat, while also creating a product with export potential for the GCC region. By importing live animals, feeding and slaughtering them in a recently constructed OR37m ($96.1m) facility in the governorate of Dhofar, the company aims to create a “Made in Oman” line of products to compete locally and in the GCC. Further construction began in February 2019 at the Dhofar site to build a veterinary quarry, animal husbandry pens, an advanced slaughterhouse, a rendering plant for hide processing and two plants for the utilisation of slaughtering wastes over 9 sq km. According to Naveed Ahmad, partner at meat product importers and distributors Muscat Livestock, this is the first time this model has been tried in Oman. “The existing fresh meat concept in the country is based off a just-in-time delivery model, with live animals imported via Salalah, mostly from Somalia, Ethiopia and Kenya,” he told OBG.
In the fisheries segment, Dhofar Fisheries and Food Industries is developing a value-added industrial project that will be located within the Duqm Special Economic Zone. The plant will focus on processing and canning tuna, sardines, fish meal and fish oil. A lease agreement for the 4.1-ha site was signed at the end of 2018 and the project is set to commence operations in 2020. Expected production capacity at the site is 27,200 tonnes.
Oman Fisheries, meanwhile, is the largest processor of fish in the country, with six coastal locations and one close to the border with the UAE. The newest and largest of the company’s plants has an annual blast freezing capacity of 16,500 tonnes per annum.
Following the significant increase in fisheries production and export volume in 2018, stakeholders will likely see growth continue to exceed expectations. From deepsea fishing to aquaculture and the modernisation of small-scale fishing boats, the segment has numerous areas that look primed for increased investment and rapid evolution in the years to come – making higher rates of foreign direct investment possible. Growth in the farming segment will likely maintain a more gradual trajectory, but it is still expected to benefit substantially as both regulatory and technological innovations come on-line.
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