Agriculture, including the increasingly important fishing industry, is more important for Oman than any other GCC country and is enjoying huge government investment. Published in MEED, 2 April 2014
Oman is often something of an outlier in the GCC. The only sultanate among the six countries, it tends to go its own way in terms of foreign policy and avoids intra-GCC squabbles, such as the current one between Qatar and Saudi Arabia backed by allies in the UAE and Bahrain.
When it comes to agriculture, the country is also distinct, not least because Oman has a far more rural society than its neighbours. Almost a quarter of the population, 23 per cent, live in rural areas, compared with an average of 13 per cent across the GCC as a whole, according to the Arab Organisation for Agricultural Development. Of the total workforce, 17 per cent are employed in the agricultural sector, compared with an average of just 6 per cent for the region as a whole.
However, there are some inescapable similarities with the rest of the GCC. Like the other Gulf territories, Oman is poorly suited to agriculture. The most important growing area is the Batinah plain to the north of Muscat, which has long benefited from the springs at the base of Jebel Akhdar, but that area is the exception.
Overall, the climate is an arid one, water resources are limited and much of the land area comprises either mountains or desert. As a result, the local farming sector is only able to provide 40 per cent of the sultanate’s needs, says the Agriculture & Fisheries Ministry, and it must import most of the food it consumes.
There is one area where it does have an advantage. The country’s long coastline of about 3,000 kilometres borders the Gulf of Oman and the Arabian Sea and, from there, the rest of the Indian Ocean. The huge fish stocks in these waters mean the fishing industry is able to buck the trend of a reliance on imports and the sector accounts for almost half of all fish landed by GCC countries combined.
The volume of fish production has been rising in recent years. Production reached 191,000 tonnes in 2012, according to the ministry. This was a 21 per cent increase on the 158,000 tonnes hauled ashore the year before. Oman now produces 54 per cent more fish than it consumes, allowing it to be a net exporter.
The strength of the fishing industry is something the government is keen to develop further, and a large investment programme is being rolled out. In 2012, preparations began on building nine new harbours around the coast. Work has already started at several sites such as Taqah in the southwest and three locations running up the coast to the north of Muscat at Barka, Masanah and Liwa. There are plans for other new fishing ports at Duqm, Mahoot, Rakhyut, Sadah and Al-Shuwaimiyah.
At the same time, existing harbours at Dibba, Al-Khabourah, Kimzar, Masairah and Mirbat are also being improved.
Duqm will be the largest fishing port in the country once the work is complete and will form part of a wider fisheries industry area in the Special Economic Zone at Duqm. The total cost of the development will be about $150m, with the port accounting for $100m of that. The main construction contract is due to be awarded in June and the project should be finished two years after that. The ultimate aim is to turn Duqm into a regional fish-processing hub, serving the fleets of other countries, as well as Oman.
There are also plans to develop more fish markets around the sultanate. One at Mutrah, in the Muscat governorate, is currently being built by Oman Shapoorji Construction Company and should be completed by August, according to regional projects tracker MEED Projects. In all, the government is planning to develop a network of 41 markets around the country, says Agriculture & Fisheries Minister Fuad bin Jaafar al-Sajwani.
There are dangers in building up the sea fishing industry, however, not least the risk that overfishing will become a problem. In May 2013, Al-Sajwani banned the export of some types of fish, including tuna, kingfish and crayfish, for three months, from July to September, to help maintain stocks for local markets.
At the same time, the minister imposed limits on exports of five other types of fish including hammour (grouper). As Oman’s fishing fleet expands, the risks of depleting local fish stocks will rise, but restricting the activities of fishermen is likely to become harder.
Al-Sajwani explained the rationale for export restrictions in an appearance in front of the Majlis al Shura in December. “We can’t allow the export of certain varieties of fish, such as sahwa [king fish], uma [sardine] and kanad [mackerel], as these particular varieties are in demand in the local market,” he said. “If we allow the export of all kinds of fish, we will suffer from shortage and we will be forced to re-import them at higher prices.”
On land, the picture is less promising. Oman has more land under cultivation than any other GCC state (with the exception of Saudi Arabia) but, according to an agriculture ministry report released in July last year, harvests still fall far short of needs. Oman only produces 72 per cent of the fruit it consumes, along with 62 per cent of vegetables, 48 per cent of eggs, 41 per cent of milk and other dairy produce, 31 per cent of poultry and just 23 per cent of red meat.
The most important crop produced by volume and value is dates. In 2012, Oman produced 270,000 tonnes of dates worth a total of $133.5m, according to the UN Food & Agriculture Organisation (FAO). Other important produce includes vegetables, mutton and milk, but nothing comes close to the scale of the date industry.
That much is clear when analysing how much land is devoted to different crops. Some 75,000 feddans (31,500 hectares) are dedicated to date production, out of a total planted area of 172,000 feddans, according to Agriculture Ministry statistics for 2010, the most recent available. Fodder crops take up 52,000 feddans, most of which is used to grow alfalfa and Rhodes grass. Beyond those crops, 18,500 feddans is used for vegetables, about 16,500 feddans is used for other fruits, and just 10,000 feddans is used for field crops, such as wheat, barley and sugar cane.
Much of the food imports that make up Oman’s production gap come from the UAE. In 2011, food imports from the UAE were valued at $687.5m, according to the FAO. The second most important source was India, but imports from there were worth less than a quarter of the UAE figure, at $163.5m, followed by Brazil at $145m. Oman’s food exports are even more concentrated in the region, with the top 10 export markets encompassing the other GCC countries along with Yemen, Jordan, Sudan and Somalia.
The reliance on food imports is something all Gulf countries are familiar with. What is perhaps more unexpected is that Oman has not followed the lead of its neighbours in terms of investing in farmland overseas. This has been an increasingly important aspect of the food security strategies of Saudi Arabia, Qatar and the UAE in recent years, but Muscat has appeared reticent to adopt the same approach.
According to Grain, a Barcelona-based non-profit organisation that tracks such deals, the only known instance of Oman considering an overseas agriculture investment was a proposal from the Philippines government for Muscat to participate in a project involving 10,000 hectares for the cultivation of rice. However, it is not clear if any deal ever went ahead.
In some ways, the lack of overseas investments is surprising. Oman is clearly dependent on food imports and has historic ties to parts of East Africa in particular, which have drawn interest from other Gulf agriculture investors.
For now Muscat seems more focused on developing its domestic capabilities. It is currently drawing up a national strategy for the further development of its agriculture sector through to 2040, with the assistance of the FAO. Getting this strategy right will be important, not just in terms of food production, but also in terms of the local labour market. About 42,500 fishermen work in Oman’s waters and around 255,000 farmers work the land, according to Al-Sajwani. Considering the total labour force is about 1.5 million, these are big numbers.
As a share of GDP, the agriculture sector has declined slightly in recent years, from 1.2 per cent in 2011 to 1.1 per cent in 2012 according to the Central Bank of Oman. Even so, the sector accounted for 7.9 per cent of non-oil exports between 2009 and 2012.
Oman’s National Fisheries Development Strategy 2013-20 aims to double the fisheries sector’s contribution to GDP, by increasing production to 480,000 tonnes and creating 20,000 new jobs. About $1.6bn of further investment is envisaged for the sector over the next seven years, including fleet expansion, infrastructure enhancements and the development of an aquaculture industry. In March, local media reported that the Agriculture & Fisheries Ministry had issued 19 licences to investors to set up aquaculture projects, including shrimp farming projects. The value of the fisheries industry in 2012 was $355m in first sale fish.
With more limited oil wealth than most GCC states, Oman arguably has a greater incentive to draw up a strategy for its agriculture sector so that it contributes to the wider economy in a meaningful way. If it can develop sustainable farming and fishing industries that can provide more for its people, it will really have marked itself out from its GCC peers.