A combination of food security concerns and a focus on economic diversification have made agriculture and fisheries an area of priority government investment in recent years. Agricultural self-sufficiency, as defined by decreased dependence on imports, continues to grow in the sultanate. Despite the irrigation challenges presented by limited rainfall and decreasing ground reserves, 2019 will see food production receive a significant boost with the launch of new facilities for dairy, red meat and poultry. Fisheries, a priority sector under the ninth five-year development plan (2016-20) of the Oman Vision 2020 strategy, is also poised for take-off, with the first legal deployment of industrial fishing techniques in Omani waters, as well as a number of aquaculture initiatives, under way.
Structure & Oversight
The Ministry of Agriculture and Fisheries (MoAF) is the sector’s primary governmental body, bearing responsibility for setting policy, drafting laws, sponsoring research, supervising industry standards and investing in development. Some of the largest companies in both agriculture and fisheries are government-owned and consolidated under Oman Food Investment Holding Company (OFIC), which was established in 2012 with a mandate to invest in food security, economic diversification and the provision of jobs to Omani citizens.
OFIC has since brought four of the largest state-owned agri-food companies under its purview, namely Oman Flour Mills Company, Oman National Livestock Development Company, Oman Fisheries Company and Oman Food International. These were added to the companies already founded by OFIC to meet the country’s food security needs: A’Namaa Poultry Company, Osool Poultry Company, Mazoon Dairy Company, Al Bashayer Meat Company and Al Murooj Dairy Company, all of which were established between 2015 and 2016 and are expected to come into operation by late 2019. The companies each cost between OR10m ($26m) and OR100m ($259.7m), and are partly funded by OFIC, with the rest supplied by investment funds, financial institutions and private companies.
Policy
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 thereby reduce its reliance on imports. Under the eighth five-year plan (2011-15) the sultanate invested just over $4.9bn in agriculture and fisheries-related projects, as well as upgrading existing infrastructure. This saw the country’s self-sufficiency in overall food production increase by 32.8% between 2011 and 2013.
While primarily overseen by the MoAF, agricultural policy has in recent years also been dictated by OFIC and Tanfeedh, the government initiative tasked with bringing together various sectors with the goal of diversifying national income resources. Fisheries is one of five sectors – along with manufacturing, tourism, transport and mining – prioritised for development under Tanfeedh. Agriculture will also benefit from a number of food processing and production initiatives under the manufacturing arm of the programme.
The fisheries policy under Tanfeedh overlaps with a previous policy document, the National Fisheries Development Strategy 2013-20, which stated its aim of doubling the contribution of the fishing industry to GDP from OR369.6m ($959.9m) to OR739.2m ($1.9bn) by investing $1.6bn over eight years. Initiatives launched under Tanfeedh are intended to continue this expansion beyond 2020, with Hamad bin Said al Oufi, undersecretary at the MoAF, saying in September 2018 that the ministry was targeting the contribution of fisheries to GDP to reach OR1.3bn ($3.4bn) by 2023.
Performance
However, state funding has not always been readily available. As the government continued to navigate the challenging fiscal situation created by declining global oil prices beginning in mid-2014, civil development expenditure allocated to agriculture and fisheries experienced a steep decrease in 2017, with the total amount falling by 23.1% from OR38.1m ($98.9m) in 2016 to OR29.3m ($76.1m).
Government expenditure cuts were accompanied by a period of private sector credit growth, however, with loans dispersed by conventional banks to agriculture and allied activities growing 7.7% to OR61.8m ($160.5m). This may have contributed to the sector’s robust performance that year, with the Central Bank of Oman (CBO) stating that the GDP of agriculture and fisheries grew by 7% to reach OR529.4m ($1.4bn), accounting for 2% of overall GDP. While not quite as strong as the sector’s performance in 2015 and 2016, when average annual growth reached 14.1% and 9.3%, respectively, the figures reflect a small sector taking rapid strides. Figures from the CBO indicated that agriculture and fisheries should maintain momentum, with the sector expanding by 7.6% in the first quarter of 2018, compared to overall GDP growth of 6.5%.
Despite its relatively small contribution to overall GDP, the sector is nonetheless key to the economy, employing 4.5% of all private sector workers in 2017 and playing an increasingly important role in guaranteeing long-term food security. The current workforce is dominated by foreign labour, with expatriates accounting for 91,349, or 98.8%, of the 92,426 jobs in the sector in 2017. However, by deploying the latest technology and providing skilled jobs, OFIC companies are expected to improve sector Omanisation rates. “Our twin goals are to improve local food production and provide employment. The jobs required at our companies will cover the whole spectrum, from research and development (R&D) to purchasing and logistics,” Saleh Al Shanfari, CEO of OFIC, told OBG.
Fisheries
As highlighted by its selection as one of the five priority sectors under the ninth five-year development plan (2016-20), Oman’s fisheries segment is one of the economy’s high-potential assets. Sardines, bluefish, horse mackerel, tuna, lobster, oysters and abalone are among the 1000-plus varieties of fish and marine invertebrates that live off Oman’s 2000-km coastline. Under Tanfeedh the government aims to raise production from 257,172 tonnes per year in 2015 to 480,000 tonnes per year by 2020, with the majority of this increase set to come from commercial fishing initiatives. In 2016 the MoAF and Oman Investment Fund established private company Al Wusta Fisheries to use industrial fishing methods to capture unexploited fishing stock and engage in value-added processing.
At present, despite having an exclusive economic zone (EEZ) extending 370 km from the coastline, commercial and industrial fishing in the sultanate remains limited. Artisanal fishing accounted for 343,926, or 99%, of the 347,541 tonnes caught in the sultanate’s coastal waters during 2017. According to John Nollimore, business development officer at Al Wusta Fisheries, scientific data indicates trawlers fishing the offshore waters within Oman’s EEZ could catch 120,000-300,000 tonnes of horse mackerel per year.
The potential of deep-sea fishing in Oman could be expanded further if Oman’s succeeds in its bid to have its territorial waters expanded. The government has applied to the UN to legally extend the definition of its continental shelf to 648 km, a move that would expand the country’s EEZ by 278 km.
Aquaculture could also contribute a comparable amount to annual production, with a total of 24 projects producing up to 293,000 tonnes of fish set for implementation by 2020. In May 2018 Blue Water, a subsidiary of government-owned Aquaculture Development Company, completed its first harvest of sea bream in Qurayyat, a small fishing town some 80 km south of Muscat. Fish processing will also play an increasingly important role in the segment’s activities. As part of the greenfield development of a special economic zone at Duqm, a proposed fishery harbour will encompass retail and export markets, fish processing, canning, fish oil and animal feed industries. Upon completion of all phases, as many as 60 fish manufacturing facilities are envisaged at the harbour, including facilities for cooling, freezing and fish farming.
Agricultural Land
The availability of land suitable for agriculture in Oman is limited by the country’s climate and topography. With average annual rainfall of 110 mm, according to the UN’s Oman soil atlas, nearly two-thirds of its 310,000-sq-km territory is desert, with only 7% of the territory classified as arable land. Batinah is the country’s most agriculturally important region, accounting for almost 60% of production. A low-lying alluvial plain that runs 240 km north of Muscat to the UAE border between the Hajar Mountains and the Gulf of Oman, Batinah primarily supports the cultivation of dates, fruit, alfalfa and vegetables.
In coastal plains near Salalah, the capital city of Dhofar Governorate, there is substantial cultivation of coconuts, bananas, vegetables, maize, papayas, fodder and Rhodes grass. Further inland, in the Hajar area, 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.
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, the government is supporting increased use of desalinated seawater and treated wastewater, which currently account for 5% and 1% of total water consumption, respectively. A project to increase the use of treated wastewater in agriculture is being piloted by private firm Haya Water, which is building a pipeline that connects Al Ansab Sewage Treatment Plant near Muscat International Airport with the coastal city of Barka, where the treated water will be sold to farmers.
Production
Food production has undergone a substantial increase in the last decade, with total agricultural produce going from 1.2m tonnes in 2008 to 2.6m tonnes in 2017. Vegetable crops accounted for 814,570 tonnes of the latter figure, followed by fruit crops (450,819 tonnes); field crops, such as wheat and barley (18,943 tonnes); and animal fodder, such as alfalfa and Rhodes grass (1.3m tonnes).
While the government is supporting research initiatives to improve crop productivity, the sultanate’s finite amount of arable land limits the extent to which output figures can rise. “The country’s self-sufficiency in food might go from 70% to 80%, but I think future progress in the food industry is likely to take the shape of a transition from low-value to high-value crops,” Rhonda Janke, a professor of crop science at Sultan Qaboos University (SQU), told OBG.
In contrast, national production figures for red meat, poultry, eggs and dairy are set to increase substantially once OFIC projects come on-line in 2019. According to OFIC forecasts, Mazoon Dairy and Al Murooj Dairy combined will add more than 96,000 tonnes to production by 2020, bringing dairy self-sufficiency to 67% by 2020, up from 31% in 2015. A’Namaa Poultry is set to contribute an extra 30,000 tonnes of chicken per year by 2020, bringing self-sufficiency from 29% in 2015 to 46%, while Al Bashayer Meat will add an extra 12,530 tonnes of farmed meat to production by 2020, raising self-sufficiency to 44%, from 36% in 2015.
Research & Development
Oman has spent heavily on agricultural research in recent years, a fact that is acknowledged by its achievement of the maximum score of 100 for public expenditure on R&D on the Economist Intelligence Unit’s Global Food Security Index 2018. With the support of the Research Council, an independent R&D body established in 2011, a couple of key institutions are responsible for the bulk of the country’s agricultural research, namely the College of Agricultural and Marine Sciences at SQU, MoAF research centres and the Diwan of the Royal Court.
In February 2018 OFIC and Oman Global Logistics Group (OGLG) signed a memorandum of understanding to cooperate on enhancing the agriculture and fisheries supply chain, including focusing on R&D to improve the management of food security, and the development of food processing, storage and distribution clusters. The agreement is intended to increase the food supply and create more efficient channels for the handling of consumable products for import and export. Abdulrahman Al Hatmi, CEO of ASYAD, told local media in February 2018 that Oman currently loses 24% of fisheries production and 40% of agricultural produce through the supply chain, figures that OGLG believes can be reduced to 6% and 10%, respectively.
Agricultural Insurance
While moves are being made to improve crop production, agricultural insurance is providing security to the country’s food producers. First launched in Oman in October 2017, the line is marketed by four domestic insurers, namely National Life and General Insurance, Dhofar Insurance, Al Madina Takaful and Arabia Falcon Insurance Company. Reinsurance under the scheme is provided by Oman Reinsurance Company, the only local firm offering such services in Oman.
The introduction of agricultural insurance was the result of a working group in place since early 2016 and made up of representatives from the MoAF, the Capital Markets Authority and the Oman Chamber for Commerce and Industry, and is intended to provide security to prospective investors in the sector. Initial policies will cover seasonal fruit and vegetables only, with coverage for other activities such as livestock and fisheries set to be introduced at a later stage. Policies will cover all major threats to crops, including natural fires and lightning, floods and cyclones.
Outlook
As a result of the government’s commitment to expanding fisheries and improving food security, the growth of Oman’s agriculture and fisheries sector seems assured for the near-to-medium term. Fisheries in particular is an area of high growth potential, with the opening up of fishing on a commercial scale likely to create associated downstream opportunities for the private sector in supply chain and processing operations. With OFIC projects in dairy, meat, poultry and fisheries set to come on-line by the end of 2019, the full effect of current initiatives on production figures is likely to be felt from 2020 onwards.
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