With 3200 km of coastline and swathes of cultivated land, agriculture and fisheries are key economic activities across the sultanate, providing employment opportunities, and supporting the country’s economic diversification and food security efforts. These were vital industries prior to the discovery of hydrocarbons, particularly for coastal communities.
The climate allows for year-round fishing, and Oman is the only net exporter of fish in the GCC, accounting for over 31% of the region’s fisheries production. Increased government support under Fisheries and Aquaculture Vision 2040, a long-term plan for the sector announced in December 2015, seeks to turn it into a profitable, sustainable industry.
Although the agriculture sector faces environmental challenges, Oman scored 35th out of 113 countries and third in the GCC in Economist Impact’s Global Food Security Index 2022, as the sultanate has been able to secure food stocks despite its reliance on imports and fluctuations in prices. To complement its food procurement policies, Oman has increased its investment and partnerships with private players to boost local food production, increase productivity and encourage the adoption of new technologies. Ultimately, agriculture and fisheries are among Oman’s long-term strategic priorities, not only to reinforce its food security and price stability, but also to act as significant growth engines for the economy.
Structure & Oversight
In August 2020 the government published Royal Decree No. 92 of 2020, amending the name of the Ministry of Agriculture and Fisheries (MoAF) to the Ministry of Agriculture, Fisheries and Water Resources (MAFWR). The decree reiterated the ministry’s primary functions as creating policy, preparing legislation, regulating investment in relevant sectors, conducting research and nurturing innovation to ensure sustainable production. The MAFWR also absorbed the obligations and assets of the Public Authority for Stores and Food Reserve, as well as those of the Ministry of Regional Municipalities and Water Resources’ water-related divisions, and its Food Safety and Quality Centre.
This further cemented the MAFWR’s leadership in the sultanate on food security and widened its focus to protect living water resources from misuse, and to ensure the safety and quality of food reserves. Saud Hamoud Al Habsi, the former undersecretary of fisheries who became head of the MoAF in July 2020, was named the minister of agriculture, fisheries and water resources after the re-organisation.
Fisheries
Al Habsi is also the chairman of Fisheries Development Oman (FDO), the sector development arm of the Oman Investment Authority (OIA), the sultanate’s sovereign wealth fund. Together with the OIA’s food investment and development arm – Oman Food Investment Holding Company (Nitaj) – FDO plays a significant role in advancing the country’s food security agenda. FDO has emerged as a key catalyst for the growth and profitability of fisheries by developing projects that contribute to the local value chain and incentivise its modernisation.
FDO was formed in January 2020 through a merger of three companies: commercial fishing firm Al Wusta Fishery Industries, and fish farming companies Blue Water and Oceanic Shrimp Aquaculture. As part of FDO’s five-year plan for 2020-25, the company is pursuing projects to build and expand infrastructure, transfer knowledge, facilitate market access, and stimulate research and development to satisfy local demand and increase exports.
Since its formation, FDO has grown into a group of five companies that add value to different stages of the industry’s lifecycle, with its processing and canning affiliates International Sea Food and Oman Fisheries building a seafood canning complex in Al Wusta Governorate that is expected to be commissioned in late 2023. The OR28m ($73m) project is expected to result in a plant that can produce 100m cans per year once it begins operations. Similarly, FDO is developing the 30,000-ha Bar Al Hikman shrimp farm, a OR500m ($1.3bn) project with an expected capacity of 215,000 tonnes of shrimp annually once at full capacity. Khalid bin Ali Al Yahmadi, then-CEO of FDO, told local media in July 2020 that the farm was expected to come on-line in November 2023.
Food Security
Front and centre in Oman’s agriculture strategy is food security, which is being tackled on multiple fronts by setting up new production facilities, expanding domestic agriculture, and building food storage and distribution infrastructure to facilitate imports. In 2021 the sultanate fulfilled 101% of its date requirements and achieved self-sufficiency rates of 84% for milk, 58% for poultry meat, 52% for red meat, 66% for vegetables and 49% for fruits. To further boost these figures, Nitaj announced plans to set up 23 new food-related ventures at a cost of around OR366m ($951m) between 2022 and 2026, creating an estimated 4100 new jobs.
Having launched a number of companies, Nitaj is looking to exploit the food industry’s potential further through partnerships with government agencies, private operators and investors. Some upcoming projects include vegetable and fruit collection centres; animal feed production; cotton farming; the expansion of Mazoon Dairy, whose processing plant is capable of producing over 1m litres of milk per day; the OR100m ($260m) Al Namaa Poultry project, which is expected to meet 70% of the country’s poultry demand by 2030; and an agro-tourism project.
Economic Contribution
Agriculture and fisheries production together contributed OR759m ($2bn) to GDP in 2021, a 6.4% increase from 2020. In 2021 the agriculture sector witnessed 4.6% growth to OR467m ($1.2bn), while fisheries reported a 9.6% increase to OR292m ($760m). This was part of a longer-term trend in the industries; production grew at a combined average annual rate of 8.1% from 2015 to 2021 to a total output of 4.6m tonnes in 2021. The agriculture sector accounted for 3.2m tonnes, growing at an average annual rate of 5.5% between 2015 and 2021; livestock and fish production grew by average annual rates of 10.6% and 22.7%, respectively, during the same period. At the end of December 2022 local media reported that fish farming production in Oman had reached 1700 tonnes in 2022, with 1350 tonnes coming from commercial production.
While still a relatively small contributor to GDP, agriculture and fisheries play a significant role not only in the sultanate’s food security, but also in job creation, with the fisheries segment expected to contribute OR387m ($1bn) to GDP and produce over 1.3m tonnes by 2025, compared to 922,000 tonnes in 2021, as reported by the National Centre for Statistics and Information (NCSI). According to MAFWR forecasts from January 2021, the fisheries segment is expected to generate an additional 8500 direct jobs and attract around OR450m ($1.2bn) in investment by 2025, expanding output and further strengthening its role in the country’s long-term economic growth.
Performance & Size
Agriculture and fisheries have been consistent performers despite overall GDP falling by 1.1% and 3.2% in 2019 and 2020, respectively. The sector maintained its positive trajectory through the pandemic, although it still accounts for a relatively small proportion of GDP, at an estimated 2.5% in 2021. In 2020 the fishing industry recorded a 44.5% growth rate in production, while production value surged by 19% to OR365m ($949m).
Fisheries and Aquaculture Vision 2040, which is part of broader efforts to diversify the economy away from a reliance on hydrocarbons production, outlined a plan for a profitable aquaculture industry, which was estimated as of March 2022 to reach an annual production value of OR770m ($2bn) by 2040. In February 2023 Issa bin Mohammad Al Farsi, director of the Fisheries Development Department at the MAFWR, reported that Oman’s fish farms had produced nearly 3500 tonnes in total in 2022, with the value estimated at OR7.3m ($19m).
A key priority for boosting the fishing industry’s economic contribution is increasing exports, which reached over 300,000 tonnes in 2020, up 47.3% from 2019, with total value estimated at OR114m ($296m). The GCC is the largest export market for Omani fish, with the region’s countries importing nearly 76,200 tonnes of fish from Oman in 2021. The UAE received 56% of Omani fish exports to the region, or roughly 42,600 tonnes; Saudi Arabia received 33%, or more than 25,000 tonnes; and Bahrain received nearly 6%, followed by Qatar (4%) and Kuwait (1%).
At the same time, NCSI data show that total cultivated area increased by 7.7% from 257,000 feddans at the end of 2020 to 276,700 feddans at the end of 2021. Of the area under cultivation, fodder crops accounted for the largest share, covering 110,800 feddans and producing more than 1.5m tonnes. Fruit crops were next, with a total cultivated area of 80,000 feddans and production of 469,800 tonnes. Vegetables covered 66,100 feddans of cultivated land, with 1.1m tonnes produced, while field crops comprised 19,800 feddans and 96,400 tonnes.
MAFWR Initiatives
The MAFWR is expecting to attract OR1.3bn ($3.4bn) in investment for the approximately 128 food security projects that were identified during the four-week Food Security Laboratory held in September 2021. The projects, which are expected to be carried out by 2026, are expected to support the development of the private sector and attract foreign investment to add value to local food production and strengthen food security.
Of the 128 initiatives and projects identified during the four-week event, 37 are in the agriculture sector, 29 in livestock, 28 in fisheries, eight in water resources and 26 in other fields. “Oman is capitalising on untapped resources, and there is a greater emphasis on reducing its dependence on agricultural imports,” Ali Bin Said Al Uraimi, CEO of the Nakheel Oman Development Company, told OBG. “At the same time, Oman is paying more attention to enhancing efficiencies while reducing and recycling waste, thus increasing the long-term sustainability of the sector.”
Project Pipeline
In tandem with Oman Vision 2040, the sultanate’s long-term economic framework, investments are being made to modernise and strengthen the agriculture and fisheries sector. Government projects and agreements with the private sector have resulted in a robust pipeline of infrastructure, technological innovation and development projects. In July 2022, 28 land usufruct contracts – which give signers the right to use another person’s property and profit from it – worth a total of OR33m ($86m) were signed between the MAFWR, the Ministry of Housing and Urban Planning, and a number of private institutions to establish agriculture and fisheries projects in various governorates, covering an area of more than 8m sq metres. Similarly, in September 2022 the MAFWR signed three agreements worth a total of OR5.7m ($15m) to build fishing ports and landing facilities in the Musandam and Al Sharqiyah South governorates.
These projects complement the OR63m ($164m) multipurpose fishing port developed by the Duqm Special Economic Zone in partnership with FDO. Completed in October 2021, the 10-metre harbour is the sultanate’s largest fishing port. Investment has incentivised more projects, including a OR14m ($36m) sardine canning complex with a processing capacity of 30,000 tonnes per year that is expected to commence operations in the first quarter of 2024. This project is the result of the National Programme for Enhancing Economic Diversification, and it is in line with Vision 2040. FDO subsidiary Al Wusta Fishery Industry is planning to procure two fishing vessels for commercial-scale tuna fishing with a combined annual capacity of about 20,000 tonnes by 2024, adding to the company’s three existing commercial vessels.
Elsewhere, Oman has an extensive project pipeline to improve its food self-sufficiency, create job opportunities and increase the sector’s contribution to GDP. In partnership with the Arab Authority for Agricultural Investment and Development (AAAID), the sultanate has sought to develop projects focused on priority crops and enhancing food procurement capabilities. The AAAID has invested OR2m ($5.2m) in Omani Euro Food Industries, which produces baby food; OR28.9m ($75m) in Osool Poultry Company, Oman’s largest breeder farm, which targets annual production of 150m hatchery eggs by 2040; and OR24.5m ($64m) in Al Bashayer Meat Company. The AAAID also has a 20% stake in Al Murooj Dairy Company.
All these investments target food security and aim to help the sultanate reach 100% self-sufficiency rates. Oman is already self-sufficient when it comes to dates, the sultanate’s most cultivated crop, with roughly 9m date palm trees spread across 61,900 feddans, or 22% of the country’s total cultivated area. The GCC’s second-largest and the world’s eighth-largest date producer, Oman farmed 374,000 tonnes of dates in 2021, up 49% from 2005 thanks to targeted projects and a development strategy.
Food self-sufficiency is also supported by more effective procurement. Oman’s annual wheat requirement was between 320,000 and 350,000 tonnes as of July 2022. In February 2023 the MAFWR signed an agreement with Oman Flour Mills to purchase wheat from local farmers during the 2022/23 harvest for OR500 ($1300) per tonne, with the ministry stating that the total cultivated area of wheat had doubled to more than 2000 ha compared to the 2021/22 harvest season, with the yield for 2022/23 expected to surpass 5000 tonnes. In January 2023 Sohar Flour Mills opened 12 grain silos with a total capacity of 160,000 tonnes at the Port of Sohar to bolster grain storage.
Foreign Investment
To support the sultanate’s current and future self-sufficiency, Oman has pursued strategic investment projects with foreign partners to develop the potential of its agriculture and fisheries sector. “Oman has improved its food-security ranking in recent years, as the government had initiated plans and strategies in this area long before the pandemic,” Ali Kashoob, CEO of industrial bakery Atyab, told OBG. “There is still much to do, although the country is making progress, which is creating opportunities for local and international investors.”
For instance, the Gulf International Poultry Farm, a joint project between Oman Flour Mills, the Gulf Japan Food Fund, Japan’s Wise Foods and UAE-based IFFCO that opened in December 2022, is one of the largest egg production facilities in the GCC region. The OR26m ($68m) facility, which is located in Al Dhahirah Governorate, is projected to produce 360m eggs annually when the facility is running at full capacity, satisfying 30-35% of domestic consumption.
Strategic partnerships are also being oriented around the transfer of technology and know-how. In July 2022 Singapore’s Blue Aqua International, the operator of Singapore’s largest land-based shrimp farm, signed a memorandum of understanding with FDO to provide technical assistance at shrimp farming sites, starting with a project in the town of Shinas.
Similarly, a South Korean consortium comprised of POMIT and Nongshim became the sultanate’s first partner in its smart farm initiative in July 2022. The pilot project involves two 12-metre containers with 165 sq metres of cultivated area each, which Oman agreed to purchase for $200,000 in November 2022; operations management; training; and knowledge sharing. The country’s smart farm initiative aims to support food sustainability efforts.
Aquaculture
Consistent investment in infrastructure, new projects and research capabilities applied to fish farming has paid off, with aquaculture output in Oman surging to 1700 tonnes in 2022, up 500% from 282 tonnes in 2014. Developed in cooperation with the UN Food and Agriculture Organisation, the sultanate’s 2040 aquaculture strategy aims to develop both large-scale fish farms and smaller, more artisanal producers. This strategy has resulted in rapid growth in fish production, with the output from commercial fishing surpassing 1300 tonnes in 2022, while integrated freshwater fish farms increased their own production exponentially from 5 tonnes in 2014 to 353 tonnes in 2022 (see analysis).
Aquaculture growth is oriented around several large-scale fish farming projects. As of the end of 2022 Oman had 28 integrated freshwater fish farms, which rely on the appropriate mixing of agriculture activity and aquaculture to optimise land and water usage. These include a floating cage project in Quriyat, which is expected to produce 5000 tonnes of sea bream in 2023. In May 2022 FDO announced the first commercial harvest of shrimp from its OR20m ($53m) aquaculture project in Qurun in Al Sharqiyah South Governorate, with its full production capacity of 4600 tonnes of shrimp per year expected to be reached in 2023. In August 2022 Oman inaugurated its first abalone farming facility, with a capacity of 600 tonnes per year. The OR10m ($26m) Dhofar facility is a joint venture between Oman Aquaculture Company and Abagold, a South African abalone farming company.
Health & Wellness
Similar to the rest of the world, demand for healthy and organic food in Oman has risen sharply in recent years, driven by consumer concerns about health and wellness. With the sultanate trying to tackle the incidence of cardiovascular disease by promoting healthier dietary habits and establishing the National Nutrition Strategy 2020-30, this has translated into robust demand for fresh fruits and vegetables. “Demand for fresh vegetables and healthy produce is increasing in Oman at approximately 10% annually, following global trends,” Abdullah Nasser Al Hadhrami, CEO of Gulf Mushroom Products, told OBG. “This is mainly due to collaborative efforts from local stakeholders to raise public awareness of the benefits of such products. The impact in this area from tourists and expatriates has been notable, while social media has helped accelerate local trends in terms of healthy eating.”
Higher disposable income, and large expatriate populations of Indians and Indonesians, who have high per capita rates of vegetable consumption, have influenced the shift from a carbohydrate-based diet to a nutrition-dense one among Omanis. Similarly, the growing awareness of health among a larger section of the population, especially millennials, is accelerating the move toward organic products and consequently demand for organic farms. As a result, growth in household spending on leaf and stem vegetables is expected to grow 11.6% per year between 2022 and 2026, whereas the proportion of household spending on meat and poultry is projected to fall to 21.7% in 2026, compared to 27.9% in 2012.
To help meet rising demand, the government is expanding access to fruits and vegetables by building markets across multiple governorates and investing OR40m ($104m) to move the Al Mawaleh Central Market to Khazaen Economic City. Improved wholesale and storage facilities at Khazaen are expected to not only bolster self-reliance on fruits and vegetables, but also enhance handling, logistics and quality assurance.
Water Resources
As part of the MAFWR’s expanded remit, water management within the context of climate change has become a priority, especially as it can impact groundwater through the intrusion of seawater, resulting in less cultivated land with access to clean water. In line with the World Bank’s roadmap for climate action in the region, Oman has focused on a climate-based smart approach to agriculture and natural resource management in its efforts to achieve food security and preserve biodiversity. The sultanate’s National Strategy for Adaptation and Mitigation of Climate Change 2020-40, announced in April 2019, focuses on using advanced tools to establish historical climate trends to better predict future change patterns, develop agriculture strategies aligned with climate scenarios and implement smart water management for irrigation.
“In line with Vision 2040 for expanding the share of non-oil sectors in GDP, the government is investing heavily in agriculture, launching policies, plans and programmes to promote and achieve sustainable development,” Ahmed Said Al Marhoubi, CEO of Oman India Fertilizer Company (OMIFCO), told OBG. “In addition, the decarbonisation initiatives of the government provide opportunities for further growth.”
The World Bank estimated that 4.7% of Oman’s land was suitable for agriculture and that 0.2% of its land was arable in 2020, while the UN Economic and Social Commission for Western Asia estimates that 7% is suitable for agriculture. Given its climate, the sultanate has developed multiple strategies to optimise the use of resources in food production, whether by developing smart agriculture or incentivising the reusing of water for irrigation. Increased uptake of new technologies has been critical to increasing crop productivity, monitoring levels of water usage, and utilising data management and remote-control technologies to make agriculture more productive and less harmful to the environment.
Quality
The sultanate ranked first in the Arab world in access to food and third in the index of food quality and safety in the Arab Organisation for Agricultural Development’s Arab Food Security Report 2021. Similarly, among GCC countries Oman was third in Economist Impact’s Global Food Security Index 2022, ranking second in food affordability, fourth in availability, third in quality and safety, and third in sustainability and adaptation. Globally, the sultanate ranked 35th out of 113 countries in the report. These rankings are due to continuous improvements in local agriculture output, efficient procurement and storage, and a more robust quality-assurance mechanism.
To reinforce quality standards and strengthen the food supply chain, the MAFWR and Al Madina Logistics Services partnered to open the Sohar Logistics Station for inspecting agriculture, fishery, livestock and foodstuff consignments in Al Batinah North Governorate in August 2022. The OR3.5m ($9m) project strengthens the marketing and quality standards of food imports and exports, offering a range of services across its inspection, handling and storage platforms.
Outlook
Oman’s plans for self-sufficiency in agriculture and fisheries are far-reaching. Both agriculture and fisheries have contributed to non-oil growth, and they have become sustainable, competitive and profitable. In order to support this upward trajectory, the sultanate has successfully deployed an investment strategy to develop strategic high-potential production and attract foreign partners. Such plans closely align with Vision 2040, which sees agriculture and fisheries production and exports having a more meaningful contribution to GDP.
Oman also has a number of strategic food security priorities in place, and the sultanate is expected to experience the fastest growth in food consumption in the GCC through to 2025, increasing at an average rate of 4.2% per year, according to a report by Dubaibased investment bank Alpen Capital published in September 2021. In comparison, the region itself is expected to experience a compound annual growth rate of 2.3% in food demand, with total consumption rising from 46.8m tonnes in 2020 to 52.4m tonnes in 2025 due to population growth and the post-pandemic economic recovery, with Saudi Arabia and the UAE – as the GCC’s two most populous countries – accounting for the majority of this.
As GDP growth is forecast to remain positive and Oman’s population is expected to grow by an average 2.8% per year through 2027, the Alpen Capital report forecasts consumption to rise from 3.8m tonnes in 2020 to 4.6m tonnes in 2025. Because of this, ensuring that Oman has access to affordable and high-quality agriculture and fisheries products in the medium and long term will be of the utmost importance when it comes to preserving the country’s food security.
Read More from OBG
