Targeted investments to enhance food security have seen Oman’s agriculture and fisheries sector make advances as the government seeks ways to sustain a growing population and foster a more diverse economy. According to the Ministry of Agriculture and Fisheries (MAF), in 2016 production rose by 4.3% for agriculture and 8.7% for fisheries to 1.87m and 280,000 tonnes, respectively. Production is estimated to increase further given ongoing state support in areas ranging from dairy and aquaculture, to livestock and produce. Although Oman is in a strategic location between the vast markets of Europe and Asia, it is constrained in the types of products it can easily make commercially viable due to its arid climate, soil salinity and water scarcity. Still, the sultanate forges ahead with development plans by leveraging technology to open up new pathways to growth.
Under its ninth five-year plan (FYP) for 2016-20 and the overarching Vision 2040 blueprint, the government is funding research to identify and test the most efficient and sustainable means to use available resources, including switching fields to crops that can tolerate high salinity levels, installing wireless smart meters to regulate water usage and using seawater to cool greenhouses. According to Fatma Rashid Al Kiyumi, the director of strategy and planning at the MAF, Oman could double or triple its food production simply by managing resources efficiently, with a focus on value-chain analysis and integration. To carry this out in an age of low oil prices, the sultanate is turning to the private sector, creating new opportunities for foreign investors and multinationals.
SLOW & STEADY: In 2016 the agriculture and fisheries sector grew by 16.3% to OR506m ($1.3bn), well above its five-year average of 6.4%, according to the Central Bank of Oman (CBO). This pushed its GDP contribution to 2%, up from 0.7% in 2014 and above its previous five-year average of 1.3% – a phenomenon partly due to the drop in oil price that shrank the value of Oman’s top-earning industry by over one-third. It declined slightly to 1.5% of the total in the first half of 2017, as petroleum activity recorded a nearly 35% year-on-year rebound in current price terms. Oman’s Vision 2040 goal is to reach a combined 5.1% by 2020: 3.1% for agriculture and 2% for fisheries.
Although still a relatively small contributor to GDP, agriculture and fisheries play a key role in the economy. As of 2015 these two industries employed around one-third of Oman’s workforce of nearly 1m people, while the food security of approximately half of its 4.4m population depends on their success, according to a report by the Australian-based research institute, Future Directions International.
RULES & REGULATIONS: The sector’s supervisory authority is the MAF, which has broad powers to draft laws, set policy, issue directives, conduct research, supervise quality and safety, and invest in development, though separate authorities oversee special economic zones where factories and processing centres are located. The Ministry of Commerce and Industry, for its part, oversees all commercial licensing, while the Ministry of Manpower regulates labour and training. Laws affecting the sector include but are not limited to those on product quality control (1998), conservation (2001), the establishment of a development fund (2004), and a package covering pest control, plant disease prevention, bee-keeping and enforcement (2006). Others that followed concern fertiliser use (2006), new plant varieties (2009), irrigation support (2010) and aquaculture (2012).
DEDICATED DEVELOPMENT: The Omani Agriculture Association – known as the Al Batinah Farmers Association until the Ministry of Social Development renamed it in February 2017 – pursues local development projects and represents farmers to government officials and in public forums. After Cyclone Gonu hit the country in 2007, damaging many productive facilities and causing significant food shortages, the government established a state-owned enterprise called Oman Food Investment Holding Company (OFIC), tasked with the primary mandate to develop food security through partnerships among state agencies, private firms and investors. OFIC companies now operate across staple food industries including dairy, flour, poultry, livestock, meat and fisheries.
In 2011 the government established The Research Council (TRC) as an independent body with the mandate to build Oman’s research capacity and encourage innovation in both agricultural and non-agricultural science sectors. The TRC now runs several grant programmes to this end, as well as an animal and plant genetic research centre, and since 2012 has commissioned the UN to conduct science, technology and innovation policy reviews to assess needs and make policy proposals. Additional state-funded research is carried out at the College of Agricultural and Marine Sciences at Sultan Qaboos University (SQU).
PUBLIC SPENDING: As the government continues its diversification initiatives amid a push for cost-optimisation, public spending on the sector has shifted away from subsidies that prop up the private sector and towards targeted investments that help industries stand on their own. While recurrent spending in the sector was cut by 2.7% to OR60.9m ($158.1m) in 2016, according to the Ministry of Finance, development spending, including direct investment in new projects, increased by 1.6% to OR38.1m ($98.9m).
Research and development spending shows a similar pattern. Recent data from the International Food Policy Research Institute shows Oman boosted public spending on agricultural research and development by one-third in constant price terms from 2007 to 2012 to $110m at purchasing power parity. At 6.5% of agricultural GDP, this gave the country one of the highest research and development intensity ratios in the world, and the highest among Arab nations, supporting 244 full-time-equivalent researchers, or 64 for every 100,000 farmers. Meanwhile, credit issued for agricultural and related activities in 2016 rose 7.7% to OR7.9bn ($20.5bn) – on trend with the previous two years at about 40% of total bank lending.
GROWING CONDITIONS: Oman’s arid climate and soil conditions place constraints on what it can easily produce. According to the Oman Soil Atlas prepared by the UN, average rainfall is about 110 mm per year, of which just 15% soaks into the soil after evaporation (80%) and seaward flows (5%); as a result, nearly two-thirds of its 310,000 sq km of land area is desert, and 93% is not arable. Due to this topography, most agricultural production occurs in a fertile, 400-km strip in the north-east between the Hajar Mountains and the Al Batinah coast, where alluvial soils and groundwater irrigation are able to support the growth of dates, vegetables, fruit trees, livestock and fodder. In coastal plains near Salalah, in the southwest Dhofar Governorate, there is substantial cultivation of coconuts, bananas, vegetables, maize, papayas, fodder and Rhodes grass. Further inland, in the Hajar, various wadis (valleys) – which constitute approximately half of Oman’s productive agricultural area – receive runoff from the northern mountain ranges, and support the growth of date palms and other crops. Lands suitable for animal grazing total around 1.4m ha, mostly in the Al Batinah and Dhofar regions, while fodder crops covering around 1200 ha in Dhofar supply just over half of national demand, with the remainder imported.
Oman’s extensive coastline of over 3000 km is lined with fishery landing sites receiving catches of sardines, bluefish, mackerel, tuna, lobster, oysters and abalone from the Indian Ocean, mostly through traditional fishing but also from limited commercial trawling in the 400,000-sq-km exclusive economic zone waters it controls and regulates.
FARM OUTPUT: Agricultural production has grown at a significant rate in recent years. Total output in 2016 reached 1.87m tonnes, up 4.3% on the previous year and 49.8% higher than the 1.25m tonnes output of 2012. The National Centre for Statistics and Information (NSCI) indicates cultivated area rose to 202,000 feddans (84,800 ha) in 2016, up 2.5% on 2015 and nearly one-quarter higher than in 2013.
As a result of this increase, as well as the oil price drop that shrank the value of Oman’s main revenue-earning industry, agriculture contributed 1.2% to GDP in 2016, up substantially from 0.7% in 2014. According to the NCSI’s 2017 estimates, the largest haul continued to be fodder crops, which made up 52% of the 1.87m-tonne total crop production, followed by fruit at 24% (of which dates made up 80%), vegetables such as tomatoes and cucumbers at 22%, and field crops such as maize and wheat at 2%. Honey production did exceptionally well, up 54% to 600,000 tonnes from 389,000 tonnes two years earlier.
HOLDING STEADY: The livestock industry continued its steady growth in 2016 with a total of 3434 tended animals, an increase of 2% over 2015 but a 28% rise over 2012. Between 2012 and 2016 distribution of livestock also continued to be steady, with approximately 64% goats, 17% sheep, 11% cows and 8% camels. Production of dairy rose, up 2% in 2016 to 95,000 tonnes, red meat production increaed by 2.3% to 44,000 tonnes, eggs by 17% to 400,000 tonnes, and poultry by 1.2% to 84,000 tonnes.
FISH CATCH: Traditional fishing accounted for 99% of Oman’s total catch of 280,000 tonnes in 2016. According to the NSCI, this was up 8.7% on 2015 and 46% on 2012. The number of fishing licences reached 47,900 in 2016 after the MAF renewed 7545 and issued 1320 new ones, an overall increase of 65.5%. The licences are split between 47,900 fisherman and 25,800 boats, up 2% and 12% on 2015, respectively.
As a result, the industry was able to boost its exports of fish in 2016 by 2.7%, or 114,000 tonnes, earning OR58.8m ($152.7m), 20% more than in 2015. Currently, the largest export market is the GCC, which received 57% of the total, worth OR15m ($39m), followed by the US at 17%, or OR4.7m ($12.2m), and Europe at 1% with OR1.7m ($4.4m).
PUBLIC SUPPORT: Sector expansion is enabled mostly through government support, ranging from improved seed distribution and research, to veterinary services and vaccinations. The ministry conducts horticulture experiments at its 21 research farms, 16 plant and 10 animal laboratories throughout the country, and has around 2400 extension fields set up at private farm operations to help ensure the nation’s food security, covering 1730 feddans (725 ha). In 2016 the ministry distributed 89,000 kg of seeds and 235,000 kg of fruit seedlings to farmers through 76 agricultural development centres, while for livestock it conducted 2.7m vaccinations and 2.3m animal treatments at its 68 vet hospitals and clinics. However, in the wake of the oil price drop, the ministry enacted a selection of cost-cutting measures, including cancelling its distribution of fishing equipment in 2016; in 2014 and 2015 the governorates had provided 774 boats, 891 outboard engines and 93 cranes. It also phased out its provision of insecticides to combat agricultural pests between 2010 and 2012.
DEVELOPMENT STRATEGY: The government’s plans to support the development of the sector are laid out in a range of published policy documents. The ninth FYP names fisheries as one of the five key industries to be a focus of diversification efforts – alongside manufacturing, tourism, logistics and mining – and it expects growth of 7% per year over the five-year span driven by investments totalling OR1.1bn ($2.9bn).
To accompany the FYP, a sister programme was drawn up in 2016 called the National Programme for Enhancing Economic Diversification (Tanfeedh). In order to enable and accelerate the FYP’s implementation, Tanfeedh conducted deliberative workshops with experts and stakeholders in late 2016 to identify development challenges, propose solutions, and outline ways to monitor and evaluate key performance indicators so as to audit and ensure accountability. The results of these workshops were published in the “Tanfeedh Handbook” in July 2017. In addition, between 2013 and 2017 the UN Food and Agriculture Organisation (FAO) conducted $1.4m worth of studies and technical missions to advise the Supreme Council for Planning on its forthcoming Sustainable Agriculture and Rural Development Strategy 2040, submitting its conclusions in October 2016. During this same period the MAF and the World Bank published a programme called Sustainable Management of the Fisheries Sector in Oman, laying out steps to manage overfishing and put the sector on a sustainable path to growth. To address the continuing problem of seawater intrusion that is raising soil salinity levels in coastal areas, the MAF and Dubai’s International Centre for Biosaline Agriculture developed and published the Oman Salinity Strategy in 2012. Further relevant documents include the National Water Resource Management Master Plan and the Oman Food Security Strategy.
FOOD SECURITY: Oman enjoys a high degree of food security for a country with its growing population and climate challenges. According to the Economist Intelligence Unit’s Global Food Security Index (GFSI) from September 2017, Oman is ranked third out of 15 countries in the MENA region and 28th out of 113 nations worldwide, in line with its reputation as one of the region’s most stable markets. Out of 19 categories contributing to its overall rank, Oman received perfect scores in five (agricultural infrastructure, proportion of population under global poverty line, presence of food safety net programmes, nutritional standards and public expenditures on agricultural research and development) and received strong marks in seven (food safety, food loss, volatility of agricultural production, agricultural import tariffs, sufficiency of supply, diet diversification and access to financing for farmers). The only identified challenges are political stability risk, at 17% below the global average, and urban absorption capacity – a measure of food security’s resilience to urbanisation pressures – at 21% below. Oman enjoys the best self-sufficiency ratios – domestic production as a share of consumption – in the key food groups: fruit (74%), vegetables (73%) and eggs (51%), followed by milk (45%), poultry (41%) and red meat (34%). Grains consumed in the sultanate are 99% imported and are likely to remain so given the amount of water required to grow them, at 500 litres per pound of product. “Importing grain makes sense given water scarcity: Oman is correctly using most of its water for fruits and vegetables, which have a higher yield value per litre used,” Rhonda Janke, professor of crop science at SQU, told OBG. “Beef and dairy are water-intensive per unit of output, but largely because of the water that is required to grow the feed. They are feasible in Oman if at least some of the hay and other feeds are imported.” As in many GCC countries, Oman may not be able to achieve full self-sufficiency in other water-intensive categories of the sector, such as rice production.
AGRI-BUSINESS: Boosting agricultural production and processing of poultry, dairy and beef is at the forefront of state-led efforts to improve food security. In each, OFIC is carrying out projects through subsidiaries at a total cost of OR270m ($701.1m). The first is A’Namaa Poultry, a large-scale chicken farm that aims to produce 60,000 tonnes of white meat by 2020 and, according to OFIC’s action plan shared with OBG, is set to reduce the imported share of poultry consumption from 71% to 34%. The second initiative is Mazoon Dairy, a OR100m ($260m) farm and factory complex in As Sunaynah that will start production in 2018 with 4000 cows and has a projected herd size of 25,000 by 2026. Milk production is slated to reach 985m litres by 2040. In total, Mazoon Dairy and other dairy projects are meant to close the gap between consumption and production from 71% to 33% by 2020. In the beef category, red meat company Al Bashayer Meat is set to start production in 2019, producing 12,000 tonnes by the following year, cutting imports from 64% of consumption to 56% by 2020 and 41% by 2028. “Our model with all of these projects is ‘least-cost production’ that can deliver local halal products at a reasonable price,” Saleh Mohammed Al Shanfari, CEO of OFIC, told OBG. “Oman imports a significant portion of its foodstuffs. But with the right investments and economies of scale, it can build its own industry in these areas, thereby enhancing food security, boosting economic diversification, and creating new wealth and jobs.”
In fisheries, Oman has 66 factories for salting and drying seafood, four producing fish meal and fish oil, and one focusing on advanced processing. Under the current FYP, the government plans to boost production from 260,000 tonnes to 480,000 tonnes, creating 20,000 jobs and delivering returns of OR739m ($1.9bn) per year by 2020. A significant fisheries project is the Duqm Fishery Harbour, where OR100m ($260m) is being invested in fishing and fish-processing facilities. The government has identified aquaculture as well as value-added fish products as areas with potential that are in need of further development. “For value-added products, we encourage investors to target the industry, fisheries, aquaculture and advanced processing, as it can yield high economic returns,” Hamed Said Al Oufi, undersecretary of fisheries wealth, told OBG. Increasing margins is a high priority for this sector, given some of the challenges inherent to the local market. “An increase in transport and transfer costs and high export duties have had a negative impact on the profit margins of Oman’s food sector,” Prem Maker, managing director of Areej Vegetable Oils & Derivatives told OBG. “However, opportunities remain for those that process and package food in Oman.”
RESEARCH & DEVELOPMENT: A range of initiatives are being pursued to substantially raise sector productivity through the modernisation of existing crop technologies. The ministry is supporting the cultivation of improved varieties of wheat, such as the 81 ha pilot wheat project in Al Batinah which will grow the improved “Wadi Qurayyat 110, 226” wheat crop and is expected to produce 250 tonnes in the 2017/18 season. According to Salim bin Al Omrani, director-general for agriculture and livestock in the region, the project’s expected productivity of 486 kg per ha is an achievement given the climate and water resource constraints. The results of the project will therefore be studied for application elsewhere. Similar projects focus on a variety of other key Omani staples such as barley, maize, fenugreek and beans.
In another promising project, in 2016 Sohar University was awarded a $500,000 grant from the UK’s University of Sheffield. Led by professor Barry Winn, the vice-dean of Sohar University, researchers are using low- and high-tech methods to develop so-called grow-dome greenhouse prototypes that use a combination of mirrors and seawater to regulate temperature, and use solar energy to desalinate the same water, which is then used to irrigate growing produce. The project also incorporates synthetic soil polymers that are able to retain water longer than standard Omani soil, releasing it slowly over time, achieving even further water savings. If successful and economically viable, this grow-dome could raise yields while reducing groundwater draw, creating a method for anywhere with a similar growing environment.
A third initiative is developing small-scale integrated agricultural production by allocating 50,000 plots to citizens and small to medium-sized businesses for cultivation. Each plot’s 10 feddans (4.2 ha) are to be distributed into segments: five for open-field growing of climate-resilient crops such as potatoes and melons, three for the greenhouse production of less-resilient fruits and vegetables, and two for aquaculture using recycled irrigation water. Output from these plots will be linked to agro-processing and marketing through ties fostered and supported by the ministry. The second step of Tanfeedh, which consisted of deliberative workshops hosted by the ministry in 2016, saw stakeholders identify more than 90 new projects that, if carried out, have the potential to triple the sector’s GDP contribution and provide 8000 jobs. Of the initiatives’ OR1.7bn ($4.4bn) cost, the private sector expressed interested in providing 93% of the needed investments during the lab. Additional help for these projects may come from a commitment to increased public lending. November 2017 saw the Oman Development Bank (ODB) announce it was extending financing worth a combined OR5.7m ($14.8m) to more than 1300 entrepreneurial micro-projects. In partnership with the Oman Chamber of Commerce, the ODB financed 1306 fisheries, and 35 agriculture and livestock projects.
ADAPTATION & RESILIENCE: Among the sector’s biggest challenges are limited natural resources and resilience, for which the Economist Intelligence Unit’s GFSI ranks Oman 106th out of 113 index countries. Although scoring relatively high for its adaptive capacity (68th), its overall rank was affected by continuing demographic stresses (where it ranks last) and water scarcity (97th). Water is a scarce resource in Oman, with UN FAO numbers recording an annual shortage of more than 300m cu metres per year. According to the Ministry of Regional Municipalities, Environment and Water Resources, agriculture uses approximately 94% of all available water. Despite this, Oman’s renewable water resources are currently around 400 cu metres per inhabitant per year, making it – in this respect – the best placed within the GCC, although according to the UN, still in the “extreme water scarcity” category, applied when the figure is below 500.
Oman is developing and testing a variety of means to address the current and future scarcity of water. In September 2017 the Middle East Desalination Research Centre and the Korea Agency for Infrastructure Technology Advancement signed a memorandum of understanding to collaborate on seawater desalination technology to reduce consumption of limited groundwater resources. Another area of focus for Oman is the testing and installation of seawater greenhouse (SWGH) technology, which uses indoor farming to replicate the hydrology cycle to separate salt from water through condensation, reducing crop freshwater requirements by 67% compared to current open-field cultivation. In 2015 Abdulrahim Al Ismaili and Hemantha Jayasuriya of SQU conducted the first feasibility study of SWGH technology, concluding further research and design is essential to developing economically viable ways to implement these technologies, underscoring the need for technical research to be done alongside cost-benefit analyses. Where desalination technology is not an option, another series of government-supported field trials and feasibility studies are under way, installing smart water meters at farms and monitoring groundwater usage through a centralised online management system in an effort to rein in aquifer depletion. Such an undertaking could have a net present value of $1332 per ha per year, with a 93% internal rate of return. A 2017 study by Slim Zekri, head of the Department of Natural Resource Economics at SQU’s College of Agricultural and Marine Sciences, found smart meters can help authorities gauge and regulate water usage at low cost and with minimum intrusion. Zekri told OBG, “This has been done before at the municipal level, but we need similar detail on a national scale.” These collaborations have implications not just for Oman, but any country where only saline groundwater or seawater is readily available.
OUTLOOK: Oman’s agriculture and fisheries sectors continue to expand cultivated area and catch, boosting output of products in a concerted effort to sustain the population with fewer imports. Ongoing government emphasis on food security increases the likelihood that investments will continue beyond these medium-term projects in poultry, dairy and red meat. The authorities’ support for the study, research and implementation of solutions to long-term challenges – such as water scarcity and refitting existing technologies – need to continue if Oman is to retain its status as one of the most stable markets in the region.
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