Transforming the Primary Sector

During 2010-11 the government has invested over $360mn towards modern systems of irrigation, directed at changing patterns and methods of traditional farming, introducing greenhouses and other new farming technologies with a view to increasing yields.

While oil might be occupying the headlines in Oman, the past year has seen remarkable growth in one of the Sultanate’s more traditional sectors. Indeed, the Ministry of Agriculture and Fisheries (MOAF) is now looking to develop the primary sector – agriculture and fisheries – as one of the most important pillars of economic and social development. Aquaculture, in particular, has been identified as having the capacity to not only offer a major contribution to GDP, but to provide employment for around 11,000 people by 2020, according to MOAF estimates.

The Sultanate has a centuries-old tradition of fishing, but until now both aquaculture and agriculture have been relatively small scale, low-yield activities. Yet a combination of necessity and untapped potential are behind the government’s prioritisation of primary sector activity.

Demand for food
Omani agriculture, from arable to pastoral farming, is not currently yielding the margins it might. Just 0.1 per cent of the country is currently used for arable farming, while the Sultanate is blessed with long stretches of coastal waters rich in supplies of fish and shrimp, resources which remain largely unexploited. Instead, there has been an increasing dependence on imported food. Last year, research published by the Economist Intelligence Unit estimated the value of food imports to Oman would more than double over the next decade, to $4.8bn by 2020. Indeed, over 80 per cent of demand for food in Oman is met through imports, according to the same study.

This reliance on food imports is not only costly, but it offers no long-term solution to the issue of food security – an increasing concern as Oman’s population grows. Moreover, with food inflation for the GCC region forecast by the QNB Group at 4.1 per cent for the remainder of 2012, and predicted to possibly spike again in 2013, domestic food supplies will become increasingly important in preventing another “global food crisis”, such as was seen in 2007, from reoccurring.

Oman is far from alone in its dependence on imports, and the GCC average is estimated to be slightly higher, at around 90 per cent – equivalent to 51 million tonnes of food for the period 2011-15 – according to food event organiser SIAL Middle East. But unlike its neighbours, the Sultanate believes it has untapped natural resources which can enable it to become vastly more self-sufficient.

In order to capitalise on this potential, and raise levels of production within its farming industries, the government has adopted a strategy of improving farming infrastructure and developing new regulations to oversee the sector. Most noticeably, the government has invested over $360mn towards modern systems of irrigation, benefitting 398 farms and covering 21,700 acres, during 2010-11. More specifically, this investment has been directed at changing patterns and methods of traditional farming, introducing greenhouses and other new farming technologies with a view to increasing yields.

Furthermore, the training and technology involved in agricultural expansion and development is having a positive effect on Omani society, especially given the government’s approach has been to work from the bottom up, imparting knowledge and skills among the rural population. One such MOAF project, which concluded in September, 2012 focussed on the social advantages of helping women generate a source of income, by establishing small pastoral farm manufacturing units for milking cows, as well as separating and hatching chicken eggs. The MOAF found that not only did the use of such equipment result in marked efficiency improvements (compared to traditional, manual processes) but it also boosted family income by around 30 per cent, with the financial status of an estimated 326 families improved.

Extending cultivable land
While only a small proportion of Oman’s largely desert countryside is used for farming, it is hoped that the Sultanate can extend the area of land suitable for cultivation through a combination of irrigation, pest control and crop diversification. With such measures in place, the expansion of wheat production has become a possibility, and the MOAF is now planning to plant an additional 230 acres during the coming season. In July 2012 it was also reported that a new programme to expand the distribution of palm seedlings, as well as fruits such as mango and lemon seedlings, was set to get underway, although further details have yet to be made available.

It seems bigger plans are in store for aquaculture. Replacing the traditional fishing boats to make way for more efficient fishing of the region’s abundant marine wealth, the government is hoping to turn aquaculture into a major GDP contributor. Indeed, the extent of coast available for aquaculture stands at about 15,000 ha – some 3000 ha of which has already been approved by the MOAF for immediate development.

At the time of writing, the bidding for the contract to develop the Duqm Fishing Harbour project was nearing the closing period. The project, which is set to be an integral part of the Duqm Special Economic Zone, is designed to enhance the commercialisation of the region’s prodigious fishery resources, and will offer fishing vessels almost 3.5km of breakwater arms, as well as facilities for repair work, berthing and mooring aids. With such facilities in place, it is hoped there will be an increase in private fishing enterprises coming to the area.

This development is part of a government investment programme amounting to $100bn, but the sector is also expected to create opportunities for private sector involvement amounting to a further RO320mn by 2030. Indeed, the government hopes Duqm will help catalyse the creation of a major fishing industry. Fahad Ibrahim, director of the Aquaculture Centre at the MOAF, has said he expects the overall sector to contribute $2bn to the gross domestic product by 2030. Moreover, it is hoped that aquaculture will have the capacity to generate jobs for Omanis, to the tune of 50 jobs for every tonne produced by aquafarming and its associated activities. And so far, the figures suggest that raid growth is already afoot; while output for the sector stood at 127 tonnes (combined shrimp and fish catches) in 2010, that figure rose to 251 tonnes in 2011, according to the MOAF.

New laws for aquaculture farming
To stimulate private investment, the Minister of Agriculture and Fisheries Wealth has also announced that a new regulatory framework for aquaculture farming. These new bylaws have been designed to facilitate investment with guidelines that enable foreign investors to enter the market easily. Whereas in the past activity within the segment was largely unregulated, clearly-defined rules have now been outlined regarding a governing body for the industry, environmental concerns, threats to human health, sustainable growth and promotion, licensing, fees, investment guidelines and quality controls. Furthermore, government incentives for farmers and investors include soft loans, no tax on imported equipment and farm inputs, and no income tax during five years.

With these laws in place, the MOAF anticipates local and foreign investments of around $100mn during the first round of announcements and project tenders, which were ongoing at the time of writing.

Whilst the figures may be relatively small in comparison to Oman’s recent oil revenues, agriculture and aquaculture, taken together, offer rich potential for employment and improved food security and, consequently, sustainable alternative growth drivers.


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