The Middle East is primarily an import driven region for food supply demands. Lately food security has become an important agenda for the countries in the region especially in the GCC area.

Lack of fresh water source, harsh weather conditions and suitable soil for vegetable and fruit farming has led them to turn into aquaculture projects as a viable source for improving the regions food security. This report examines the aquaculture developments in the GCC countries of Oman, UAE and Saudi Arabia. Modern aquaculture is still in its infancy in the GCC region with minimal production in Oman and UAE and comparatively better production in Saudi Arabia. The governments of these countries have lately been encouraging foreign and local investments in aquaculture developments by providing a number of incentives for the sector, as well as providing fingerlings of local species, creating aquaculture frameworks, relaxing institutional and investment constraints, and mapping out suitable sites for development. These incentives and the highly favorable supply and demand fundamentals from fish farming coupled with the steady increase in fish prices have made the aquaculture in the region as an attractive investment proposition to the private sectors. Currently there are many new aquaculture projects planned in Oman, UAE and Saudi Arabia.

In 2014 Oman granted aquaculture license to 19 projects worth USD 332 Million. UAE has many new aquaculture Projects planned including for high value seafood such as Middle East’s first farm for sturgeon caviar and salmon. In case of Saudi Arabia, the government has proposed 10.6 Billion investments in the aquaculture developments to increase their fish production from 100,000 tons to 1 million tons in the next 16 years. The developments mainly through their state owned National Prawn Company also includes international investments of USD 1 Billion in a 31,000 hectare aquaculture project in Mauritania. There are also many challenges for the sector in the regions such as the need to import the fish feeds, machineries and spare parts, replacing the dependency for import from one commodity to another; exposure to extreme weather and environmental conditions and difficulty in securing finance from banks because of the uncertainty in production during the hatchery stage.

Introduction

The seafood industry is expected to double over in the next 45 years if the present global seafood per capita consumption of 18.4 KG is to be maintained with the population growth rate of 1.3 percent per year. The Food and Agriculture Organization of the UN emphasizes Aquaculture as one of the fastest growing food production sector in the World, now accounting to nearly 50 percent of the fishes used in the global consumption. Even though the aquaculture industry is fairly new and small in the Middle East, it has been growing very fast as well. Recent cultured fisheries data shows a 20% growth rate in 10 years period from 490 thousand tons in 2001 to 1.5 Million Tons in 2011 with 66.5% of this production happening in Egypt (FAO Fish stat J). However this is still minuscule when compared to global aquaculture production of 84 Million Tons in 2011. Given the global decline in wild catches, the growth trend in aquaculture is expected to continue even in Middle East to keep up with the seafood demand.

Traditionally in the region capture whole fish is preferred to aqua cultured due to the local perception that wild caught is natural, fresh, tastier and healthier. However this perception is bound to change in the coming years with aquaculture becoming more acceptable. Recently a university in Oman conducted an experiment handing out unmarked wild caught and cultured tilapia to students to understand their taste difference. The blind test revealed that 48.6% of the respondents preferred cultured as tastier given their distinctive softness of flesh flavor against only 8.6 percent preferring wild caught. The rest didn’t recognize any difference in taste at all (Sultan Qaboos University, 2014). These results could have been different if the test was not blind test where the preconceived judgment could have altered the perceived taste. Still this test showed the importance and potential of aquaculture in the region as a source of protein with consumers actually preferring the culture fish taste.

Presently 44 per cent of seafood produced in the Middle East already comes from aquaculture source mainly from Egypt, Iran and Turkey which are consumed domestically. The richer oil producing GCC states except Oman have been growingly depending on Imports to meet their seafood demand. Lately there have been new investment waves into aquaculture in the Middle East to achieve food security and reduce dependence on imports for it. This report will look into the aquaculture developments in the GCC regions of Oman, United Arab Emirates and Saudi Arabia.

Sultanate of Oman

The Sultanate of Oman located in the Arabian peninsula bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west and Yemen to southwest has centuries of fishing tradition thanks to her 3,165 kilometers long pristine, unpolluted coastline featuring a deep drop off ocean shelf and nutrient-rich upwelling. Before Oman produced its first barrel of Oil, fishing has been a prominent part of the Sultanates economy, community and way of life. The country has a multitude of small towns and villages along the coastline where many residents earn their living through fisheries and knowledge of fisheries business and aquatic life are deeply ingrained in the local culture. Currently Oman is a major producer in the GCC region with more than half of its production being exported. The traditional fishing industry in the country currently provides employment to over 2.4% of the national labor force and is considered the second most important employer with at least 25% of all households relying on fisheries for part of their income (MAFW, 2011). Interest in aquaculture has been growing in the country recently with more support from the government to boost employment opportunities to its population and increase their fisheries trade with the more seafood hungry neighbors in the GCC and worldwide. Furthermore fisheries are a vital part of Oman’s food security, accounting to 34% of total agriculture production (MAFW, 2011). Per capita Seafood consumption in Oman is also one of the highest in the word as per FAO with 28.7 Kg/year.

In 2013 the Ministry of Agriculture and Fisheries revealed their plan of investing USD 1.3 Billion in fisheries development from 2013 to 2020 to help promote sustainable fishing and provide necessary infrastructure to increase fisheries production in the country. Aquaculture is a part of this plan as a solution to mitigate the declining wild fisheries stocks and its effect on the livelihood of fishermen. According to the minister of Agriculture and Fisheries, Oman, one ton of aquaculture production is expected to create 50 jobs (FAO News, 2012).

In contrast to the more mature capture fisheries sector producing out over 191,000 Tons in 2012, aquaculture is still in its early stages. At present only Indian white shrimps and red Tilapia are cultured producing only 168 tons in 2012, 165 Tons of it being shrimps. Only two aquaculture projects are operational in Oman one a marine cage culture and the other, shrimp pond farming. But recently private sector investments have resulted in opening of 8 additional small aquaculture farms of tilapia with a combined production capacity of 1000 tons. According to the Ministry of Fisheries and wealth, they are aiming to produce 2000 tons of shrimps valued at USD 10.4 Million and 500 tons of fish with an estimated market value of USD 5.2 Million by 2015 (MAFW, 2012). Oman has about 15,000 ha of land available for aquaculture development. In 2007 FAO developed an aquaculture strategy for the country and recently the government released an “Atlas for Establishing Aquaculture Sites” that evaluated all potential aquaculture sites in the country in relation to the geographical, topographical, climatic and oceanographic features as well as for the availability and utilization of water, land resources and relevant infrastructures (Al-Yahyai et al. 2004). This atlas also assessed potential aquaculture output from the country in the next 10 to 15 years from the sites evaluated which is shown in the table below. By 2030 to 2040 the governments of Oman anticipate aquaculture to contribute USD 5.2 Billion to the GDP and create employment to 11,000 people, producing as much as 220,000 tons with an estimated market value of USD 900 Million (FIS, 2012).

The Atlas was produced by the Ministry as part of their plan to attract aquaculture investments into the country. With help of this atlas, investors do not have to start from the scratch as the basic ground work has already been laid down for them. Apart from this, Oman has started offering incentives to aquaculture investors such as:

• Free repatriation of capital and profits
• 70% foreign ownership which may be increased to 100% on providing 70% of the financing
• No corporate tax of 12% for 5 years extendable to 10 years
• No custom duties on aquaculture machinery, equipments, spare parts and raw material for 5 years
• Soft loan of maximum USD 2.6 Million, at 3% interest rate for 10 years for projects with at least 30% Omani ownership 
• Appropriate land right for passed aquaculture projects on the suitable sites from the Ministry

Till date (2014) the Omani government has received 31 applications for aquaculture projects with a total investment value of USD 390 Million. These were for farming shrimps in ponds, fin fishes in cages and in tanks and also farming projects of sea cucumber, lobster and abalone. In 2014, a total of 19 aquaculture provisional license were granted having a combined investment value of USD 332.4 Million. The provisional licenses were issued to investor who met the technical criteria and allows the investors to prepare their feasibility study and environmental performance, after which they will be provided with an operational license of 25 years. The ministry will grant the land and the investors will be responsible for preparing the land and developing the project.

Some of the big investments projects they have received are

1. USD 100 Million Project to produce 3000 tons of shrimps by a Thai company. The Thai company will invest USD 70 Million while the rest will be provided by the Oman Government. As per the incentives, the Thai company will retain 100% ownership since they invested 70% of the capital.
2. USD 100 Million Project to farm 4000 tons of shrimps and 1000 tons of sea cucumber from a Singaporean company (The Lim Shrimp Organization) teamed up with an Omani bank (Bank Sohar) and Arabian Marine Development.
3. Project to produce sea bass by a New Zealand company

One of the main opportunities in Oman is their free trade agreement (FTA) with the United States of America set up 2009 enabling Omani seafood exporters to take advantage of premium prices for seafood in the USA markets. A new large shipping port coming up in Duqm, Oman with its strategic location in the Arabian Sea and direct access to the Indian Ocean will further improve the export situation.

United Arab Emirates (UAE)

Before the discovery of Oil, fishing used to be a major industry in the United Arab Emirates. But after the discovery of oil, like many other traditional activities, it started to decline. With the economic boom brought forward by oil production, the population became increasingly urbanized with better education and career opportunities. As such the number of Emiratis employed in the sector has been declining. Moreover with environmental degradation and overfishing, the wild stock has fallen to just 20% of the 1970’s level according to the Environment Agency in Abu Dhabi. In the case of orange spotted grouper locally known as Hamour, a local favorite, the stock stands to just 10% of the 1970’s level in the local waters (EAD, 2003). In 2011 only 46,000 tons of capture production took place in UAE (FAO, 2012).

UAE is a country with a high seafood per capita consumption of 28.6 kg/year as per FAO (2012). Most of the nation’s demand is met by imports. Interest in aquaculture has been increasing in recent times to reduce the dependency on imports for food security and as a commodity to export as the country is the biggest re-exporter in the region, exporting seafood caught by the neighboring Oman and Yemen. The government is also particularly interested in aquaculture, as unlike fruits and vegetable farming, marine aquaculture does not strain the precious fresh water resources by using only sea water. Currently the UAE’s aquaculture production is minimal with producing only 172 tons in 2011 (FAO fish stat J, 2012).

Most of the aquaculture development in the country is carried by Marine Environment Research Centre (MERC) established in 1984. The research centre is heavily involved in re-stocking the waters with local species by producing fingerlings. Till date fingerlings of species such as white spotted spinefoot, orange spotted grouper, large scale mullet and sobaity sea bream are produced as a method of annual restocking program which are released into sea. The MERC with Ministry of Environment and Water have recently started to pay attention to attract more private sectors into the aquaculture activities. To support the aquaculture development they provide fingerlings, mangrove seedlings and technical assistance.

Some of the big new aquaculture developments in UAE includes:

• Development of a 360,000 square mere fish reserve in the coast of Fujairah, which feature the establishment of fish reserve of 450 environmental friendly caves and five fishing zones with 50 reef balls to encourage fishermen to adopt sustainable fishing methods (GulfNews, 2013).
• A 56,000 sq m Siberian caviar farm in Abu Dhabi by Royal Caviar Company, with a production capacity of 35 tons of caviar and 700 tons of sturgeon meat per year (thenational, 2014). In addition to being the first plant of its kind in the Middle East, it is also the largest re-circulation plant in the world (RAIS, 2011).
• A land based 500,000 sq m salmon, grouper and sea bream RSA farm in Abu Dhabi with production capacity of 4000 tons per year. For salmon culture, the farm will be equipped with chilled on shore pools which maintain the sea water temperature at below 13 degree Celsius in order for the salmons to survive. The development will cost around USD 27 Million (Arabianindustry, 2013)

The main opportunity in UAE is its highly diverse population with high seafood consumption. The tourist inflow into the country and lower income disparity among the population further fuels the local seafood needs. Currently UAE depends on imports for a large portion of its demand.

Saudi Arabia (KSA)

Saudi Arabia occupies 80 percent of the Arabian Peninsula land surface and has the highest population in the GCC region with around 28 Million people. The country has long coastline and warm-water inlets which are ideally suited for marine aquaculture. Aquaculture in Saudi Arabia started in the early 1980’s and since the Ministry of Agriculture identified it as a priority economic sector due to country’s favorable environment for fish farming (FAO, 2010). In 2011, out of the 91,000 tons of total fisheries production, 27,000 tons was from aquaculture producing mostly Indian white prawn from Marine aquaculture and Nile Tilapia from Fresh water (Fish Stat J, 2012). The Ministry of Agriculture is exerting considerable effort to fully developing aquaculture in suitable coastal and interior areas in order to augment food security and self-sufficiency as well as produce high-value seafood products for export (WTO, 2011). In 2012 the kingdom signed an agreement with FAO to allocate USD 66.7 Million for the latter’s technical assistance and expertise for a span of 5 years in several fisheries projects worth USD 10.6 Billion to boost their production to 1 million tons as an effort to improve local food supply and security and reduce their dependency on imports (Saudi Gazette, 2014). Currently the kingdom imports 60% of all their seafood needs and the demand is increasing for fish. Encouragement for private sector investments has been increasing as well with the Ministry providing assistance in respect to research and development, technology transfer, manpower training and marketing support (WTO, 2011).

Aquaculture is more developed in Saudi Arabia compared to Oman and UAE with the sector constituting to 27,000 tons in 2011 which is 29% of all the fisheries production in the country. Shrimp farming is the most successful in the country with a production of 21,000 tons in 2011. They are mostly used for export since shrimps is not very popular in the country’s diet. This is followed by fresh water farming of Nile Tilapia (3,400 tons). Currently there are over 125 aquaculture farms in Saudi Arabia.

Some of the new aquaculture developments in the country are:

• Agreement with FAO, allocating 66.7 Million to implement its technical assistance in aquaculture projects which aim to benefit small scale agriculture producers and fishermen. The five year project will provide technical assistance and expertise in 17 initiatives in Saudi Arabia and covers transfer of technology, sustainable management of natural resources, sustainable crop production, management of fisheries resources and strengthening of rural institutions (theFishSite, 2012).
• State owned National Prawn Company’s (NPC) USD 350 Million investment in fully integrated hatchery, farm and processing facility in Jeddah. The project will be able to produce 50 tons of prawns daily according to regional aquaculture information system (RAIS). NPC currently export 13,000 tons per annum and with this project their annual production can be increased to 45000 tons annually. Apart from shrimps, they are also aiming to produce king fish, cobia, barramundi and milk fish in aquaculture installations on waste coastal desert land. The project will have its own de-salination plants and power generators (theFishSite, 2009).
• NPC with a Saudi Arabian bank Al Rajhi is investing USD 1 Billion in a foreign country, Mauritania for improving the kingdoms food security and export potential. The 31,000 Hectare aquaculture project aims to increase their production to over 100,000 tons per year in the next 10 years expanding into amberjack, barramundi and sea bream (cropwatch, 2014).
• Apart from the above there are several other new private sector investments. The Saudi Fish Company Al Shaqiq near the southern Red Sea currently produces 1500 tons of fish and the Gizan Agriculture Company is building factories to produce 1000 tons a year.

Challenges

Aquaculture is relatively new and still under developed in the Middle East. Each country has its own constraints and priority issue for developing aquaculture. To promote the industry in Oman, UAE and KSA, the governments have been trying to improve on some of the issues such as developing technologies and providing fingerlings of local species, creating framework for aquaculture, relaxing institutional and investment constraints, mapping out suitable sites etc. But general constraints such as limited availability of suitable sites with suitable soil and access to freshwater, insufficient tidal amplitude for land based culture and restrictions in the availability of suitable marine sites still affect the aquaculture development in the region. Furthermore the harsh weather is a challenge in the region and can restrict the economic productivity of land based aquaculture systems. Other challenges can be as follows:

1. For private sector investors, financing fish farming from local banks is still tough as the institutions can be reluctant to invest especially at the hatchery stage where the production can be uncertain. To promote the industry support from government is essential particularly during the research and development; and hatchery level.
2. Currently in the GCC region, Saudi Arabia is the only country that produces fish feeds. So through aquaculture projects when Oman and UAE will be less dependent on imported fish, the dependence will only be replaced by another commodity. Moreover there is a lack of other support industries such as for machineries, equipments and spare parts. 
3. Marine Farming of species that are not local to the waters is environmental risk as any damage to the cages could introduce them into the local water with potentially disastrous consequence. 
4. Marine Farms are also vulnerable to extreme environmental threats. For example in 2008 to 2009 the coasts of Oman and UAE was affected by red tide algae bloom that devastated the marine life. Waters around Dibba, UAE was affected the most where the number of fish fell by more than two thirds and the overall biomass of fish fell to just seven percent of what it had been. Dibba’s fish farm Asmak which had been operating since 1999 and used to produce 1200 tons a year has shut downed and not recovered yet (theNational, 2011). 
5. Another general issue in the region is the highly fluctuating air temperature and high water evaporation rates which can induce water temperature and salinities to rise above acceptable level for many farmed species (NOAA, 2000).

Author: Gemsheer Mon Chalil