Focus on sustainability: State-backed efforts are under way to boost the value of agricultural output and enhance food safety and security

Agricultural production in Abu Dhabi has increased considerably in recent years, driven primarily by a series of state-led initiatives and development programmes put in place beginning in the mid-2000s. According to preliminary figures from the Statistics Centre - Abu Dhabi (SCAD), in 2012 the emirate’s agriculture, forestry and fishing segments combined contributed Dh5.32bn ($1.45bn) to GDP, up from Dh5.14bn ($1.4bn) in 2011 and Dh4.56bn ($1.24bn) in 2010. Despite the industry’s small size – total agricultural production in 2012 was equal to less than 1% of Abu Dhabi’s GDP – it is considered to be a key component of the government’s push to diversify the emirate’s economy with the goal of ensuring long-term sustainability and security.

New Direction

 While the sector has grown in recent years, farmers and other players face a number of challenges. With the exception of date palms (see analysis), most plants cannot survive in Abu Dhabi’s harsh desert climate. The rapid diminishment of water resources throughout the region has led to the implementation of a number of water-saving initiatives in Al Ain and Al Gharbia, the emirate’s inland agricultural regions. Training farmers in irrigation techniques and encouraging them to make use of new technology has been a major focus for the Abu Dhabi Farmers’ Service Centre (ADFSC), the entity charged with supporting farmers and expanding agricultural production.

Overcoming these hurdles and ensuring the long-term sustainability of the sector has become a government priority in recent years for a variety of reasons. Like most other countries in the Gulf, the UAE imports the majority of its food. According to the ADFSC, imports account for more than 90% of food consumption in Abu Dhabi, for example. Consequently, the country is highly sensitive to fluctuations in international food prices. With this in mind, boosting local agricultural production is seen as a key way of protecting against food price inflation and enhancing the UAE’s overall food security.

Oversight & Regulation

 Until recently Abu Dhabi’s agriculture policy was managed on an independent basis at the municipal level, with regional leaders in Al Ain, Al Gharbia and Abu Dhabi City overseeing most aspects of local production and marketing.

In practice, until the mid-2000s most local agricultural crops were grown on a semi-commercial basis, with a considerable percentage of production going towards animal fodder or local distribution. Many farms were operated by part-time or absentee owners, who tended to rely on inefficient irrigation systems and other out-dated techniques.

In 2005 the government set up the Abu Dhabi Food Control Authority (ADFCA), a regulatory institution with a mandate expanded to include agriculture in 2007. The ADFCA has played a central role in creating and implementing a cohesive development plan for the sector, with the goal of formalising and commercialising agricultural practices, developing new markets for local products and boosting revenues at all levels of the industry. The ADFSC, which was established by the government in 2009, provides technical advisory, marketing and supply chain support to farmers in the emirate.

Other organisations involved in regulating the sector include the Environment Agency - Abu Dhabi (EAD) and the emirate’s three municipalities, namely Abu Dhabi, Al Ain and Al Gharbia.

Food security has been an area of focus for ADFCA’s Food Security Centre, set up in 2010. Ensuring a stable, long-term, affordable food supply is a major challenge for Abu Dhabi, considering the emirate’s hot, dry climate, lack of arable land and low levels of groundwater. The government has taken a number of steps to protect against food price inflation, regional and global instability, and climate change. Authorities have worked to build up the emirate’s strategic staple food reserves in recent years. At the same time, the ADFCA has made it clear that the government does not consider total self-sufficiency in food production to be a realistic long-term goal. Instead, ADFCA is working to build up the private sector, which is expected to play a leading role in the industry in the coming years. The government has offered its support to private firms that have invested in agricultural projects outside of the UAE, such as the Al Dahra Agricultural Company, which owns farms and other related developments in Egypt, Namibia, Pakistan, Spain, Sudan and the US.

By The Numbers

 Raw agricultural exports brought in Dh51m ($13.88m) in 2012, according to data from SCAD, while processed food exports brought in Dh525.6m ($143.07m). These figures are both up considerably from previous years. Despite rising local output and exports, the emirate has also seen steadily increasing food imports, due primarily to population growth. In 2012 Abu Dhabi imported Dh448.7m ($122.14m) in raw agricultural materials and Dh6.16bn ($1.68bn) in processed food products, up from Dh424m ($115.4m) and Dh6.09bn ($1.66bn) in 2011.

In 2012 there were 24,394 mazra’a(traditional farms) in the emirate, covering a total area of 75,284 ha. Just over 86% of these farms were less than 4 ha in size. The sector is centred in Al Ain, which is home to 59% of the emirate’s land under cultivation, while Al Gharbia has 28% and Abu Dhabi the remaining 13%, according to the SCAD’s “Agricultural Land Uses 2012” report. Land ownership in the UAE is restricted to GCC citizens, and locals own most of Abu Dhabi’s farms, though many individual plots are worked primarily by foreign labourers. While ADFCA is working to boost industrialisation in the sector, there are still very few large-scale, integrated agribusiness operations in Abu Dhabi.

Dates

 Dates constitute a large percentage of local agricultural production. Date palms are one of the few crops that can be grown outside in the region’s hot, arid climate, though they do require a considerable amount of water. According to a report published by the UAE’s Ministry of Foreign Trade, in 2009 the country was the world’s fourth-largest date producer – after Egypt, Saudi Arabia and Iran – and top date exporter. Date palms can be found on most farms in Abu Dhabi. In 2012 the emirate produced 80,461 tonnes of dates, up from 76,980 in 2011, 72,900 in 2010 and 62,591 in 2009. The emirate’s date crop was worth Dh548.39m ($149.27m) in 2012, up from Dh516.37m ($140.56m) in 2011 and Dh439.87m ($119.73m) in 2010.

Since 2005, the development of Abu Dhabi’s date industry has been the responsibility of the Al Foah Company, a state-owned firm with a mandate to streamline and commercialise the segment, support local production and boost exports to date markets around the world. The company’s primary responsibilities include working with the UAE’s 17,000 date farmers to ensure that the local date crop meets pre-arranged quality standards; purchasing the bulk of the harvest from individual farmers; and, finally, marketing, processing and selling branded dates within the UAE, throughout the Middle East and further afield. In recent years Al Foah has worked to add value to the date industry by introducing a number of new, high-end products, such as date ice cream (see analysis).

Other Crops

 As a result of a push to reduce water consumption throughout the agriculture sector, crop yields have changed dramatically in recent years. Rhodes grass, a water-intensive crop grown for animal fodder, was one of the emirate’s largest field crops until 2010, when the ADFCA stopped subsidies to farmers growing the plant. Prior to the change, Rhodes was a major drain on local water resources, accounting for an estimated 59% of all irrigation in the emirate, according to ADFCA data. As of mid-2013 Rhodes had been almost entirely phased out, with the government making up for the loss in local production by boosting animal fodder imports. Consequently, the value of Abu Dhabi’s field crops segment – which was made up primarily of Rhodes grass – has declined considerably in recent years, from Dh2.18bn ($593.4m) in 2011 to just Dh59m ($16.06m) in 2012, according to data from SCAD.

At the same time, the ADFSC has worked to boost production of a wide variety of other crops, particularly those that do not require much water. Potatoes, for example, produce the same calorific energy as grain, require half the amount of water to grow and can be stored safely for long periods of time. With this in mind, in 2010 the ADFSC launched a programme aimed at ramping up local potato production. In 2012, according to SCAD figures, Abu Dhabi’s farmers produced 3710 tonnes of potatoes, up from just under 900 tonnes in 2011. Other crops that have benefitted from ADFSC investment in recent years include cabbage, which grows well in sandy soil and requires little water relative to other leafy greens; carrots; and capsicum. In total, farmers in Abu Dhabi grow more than 40 types of produce, including cucumbers, tomatoes, aubergine, cauliflower and broccoli, among others. Many of these vegetables are grown in climate-controlled greenhouses, of which there were a total of 8808 in the emirate in 2012, up from 5633 in 2011 and 4864 in 2010. Local farmers also produce a wide variety of fruits, mostly in relatively small batches, including lemons, mangos, watermelon, figs, grapes and oranges.

Supporting Farmers

 The ADFSC has brought about significant changes. “Prior to 2009, the government was routinely buying large amounts of vegetables, Rhodes grass and a handful of other crops from local farmers, often at above-market prices,” Christopher Hirst, ADFSC’s CEO, told OBG. “Much of this produce was irregular in supply and of low quality, and subsequently was not attractive to the local market.” In an effort to reduce spoilage, boost farmer revenues and increase the value of local produce, the ADFSC has carried out several reforms. On the production side, the centre offers training and technical advice to all farmers and encourages them to plant certain high-value crops and invest in appropriate modern farming techniques and technologies. In addition to providing technical assistance on the ground, ADFSC has developed an initiative pricing scheme to minimise some of the risk to farmers. The ADFSC offers farmers a minimum guaranteed price (MGP) for their products, dependent on previously established quality standards and growing contracts, and sells the produce in various markets and shops in the UAE and throughout the region, returning any revenue earned above the MGP to the farmer. This streamlined system has resulted in considerable improvements throughout the industry – in 2012, for example, agricultural production marketed through the ADFSC increased by a total of 206% on 2011 levels.

The ADFSC is working to boost production and revenues further in the coming years. In late 2012 the centre announced that it would sell fresh, local vegetables, poultry, meat and eggs under the new Local Harvest brand, which will be available at a number of markets in Abu Dhabi and Dubai, including Spinneys, Carrefour and the ADFSC’s own network of Souq Supermarkets.

The ADFSC plans to market only the best local produce and other products under the new brand, with the goal of boosting Abu Dhabi’s reputation as a producer of various high-end agricultural products.

Additionally, by highlighting the quality and provenance of Local Harvest products the ADFSC is aiming to raise awareness among local consumers about the benefits of purchasing locally produced food, particularly in relation to food safety and security. “The community wants local products,” Hirst told local media.

“However, shoppers aren’t going to buy vegetables or meat just because they’re local. They have to be as good, or better, than the imported [items].”

Additionally, organic food is increasingly in demand.

While only a handful of local farms are certified as organic producers, the local market for naturally produced food is considered to be growing rapidly.

Animal Matters

 Local farmers have kept livestock – including camels, goats, sheep, cattle and fowl – for non-commercial use for many years, traditionally in rudimentary pens in the desert. With the changes to the farming sector, the ADFSC has seen the opportunity to further improve sustainability through integration of livestock onto farms, with the long-term goal of commercialising the production of key animal products, including chicken, mutton and eggs.

In 2012 there were around 2.5m sheep and goats in Abu Dhabi, up from just over 2m in 2011, according to data from SCAD. Cows, which are mostly kept for milk, totalled 21,139 in 2012, down slightly from 22,217 in 2011. Camels, meanwhile, totalled 330,220 in 2012, up from 277,577 in 2011. Local meat consumption is primarily of mutton and chicken. Abu Dhabi is home to a number of dairy farms, including Al Ain Dairy, one of the largest dairy operations in the Middle East. Camel milk, which is high in protein and generally more nutritious than cow’s milk, has become popular in recent years. For example, in 2013, Costa Coffee outlets in the UAE introduced camel milk as an optional premium alternative to cow’s milk in coffee drinks. Al Ain Dairy produces fresh camel milk under the Camelait brand.

Agribusiness & Processing

 In an effort to increase food security, the government has invested in a number of agribusiness concerns in recent years. Large-scale infrastructure and industrial developments, such as Khalifa Port and the attached Khalifa Industrial Zone Abu Dhabi (Kizad), have contributed to the emirate’s reputation as a burgeoning regional industrial and logistics centre. In September 2013 Kizad announced it had signed a Dh533m ($145.08m) agreement with Brasil Foods, South America’s largest food processing firm, under which the firm will produce a variety of food products for distribution primarily in regional markets. Indeed, Abu Dhabi could become a key regional location for agriculture-related processing. Ahmed Mohamed Al Dhaheri, the chairman of Bin Salem Investment, a local business group, said, “With its advanced infrastructure and proximity to growing markets in the Middle East and Asia, Abu Dhabi is well placed to become a food manufacturing and processing centre.”

A number of other local players are also active in processing. Through its ownership of local food brands such as Al Ain Mineral Water and feed and flour producer Grand Mills, Agthia, a subsidiary of Abu Dhabi’s General Holding Company (SENAAT), oversees a variety of food processing divisions. It also manufactures and distributes a handful of foreign-branded products in the GCC, including Capri-Sun juice products, Yoplait dairy products and Monster energy drinks. “Due to the eclectic range of consumers that exist throughout the UAE, there is an equally diverse range of products required to meet the needs of the local market,” Agthia’s CEO, Ilias Assimakopoulos, said. Other local agribusiness and food processing companies include Al Foah, which is also under SENAAT; the National Food Products Company; and Al Ain Dairy, among others.

Looking Abroad

 Local demand for food is expected to continue to expand for the foreseeable future. As a result, a number of local companies have set up farms and other agricultural enterprises outside of the GCC, primarily in countries where water and farm land are more plentiful. Al Dahra, a privately held Abu Dhabi-based firm, has purchased agricultural land in multiple climates around the world in an effort to be able to import products into the UAE on a year-round basis. The company produces, either directly or through subsidiaries, animal fodder, potatoes and corn in Egypt; dates and grapes in Namibia; rice, alfalfa and Rhodes grass in Pakistan; fodder in Spain; grains, cotton, sugar cane and hay in Sudan; and roughage in the US. Additionally, Al Dahra continues to operate farms and greenhouses in Al Ain. In general, around half of its foreign production is sold to the host country at market prices, while the remainder is exported to the UAE.

“Local cultivation to address food security will have a limited impact due to climate-related challenges,” Houssam Mahmoud, the CEO of Al Dahra, told OBG. “A more viable alternative is to invest in overseas agricultural products, which not only alleviates the pressure on water supply but also allows the emirate to control its own food supply chain.” Since it was established in 1995 Al Dahra has grown to become a major contributor to Abu Dhabi’s food security. In mid-2013 the firm was the single largest supplier of hay, rice and a number of other staples to the UAE.

A handful of other firms have also undertaken foreign agricultural development in recent years. In the summer of 2013 Nahtam Social Responsibility, a local private entity that is involved in a number of sectors, acquired 4000 acres of land near Accra, Ghana, where it plans to grow bananas, oil palm, mangoes and avocadoes, among other products. The produce will be sold locally and exported for distribution in the UAE.

Fisheries & Aquaculture

 With more than 650 km of coastline, fishing has been a key part of Abu Dhabi’s domestic economy for generations. In recent years EAD, the sector regulator, has worked to build up the nascent aquaculture segment, which is considered to be a key means of replenishing the UAE’s natural stock and meeting rising demand for fish and fish products throughout the region.

Though trawling has been banned since the 1970s and a number of more recent laws have limited fishing further, the Gulf region has seen a decline in its natural fisheries in recent years. Additionally, according to a 2012 report issued by Oceana, a non-profit organisation based in the US, some Gulf countries could lose as much as 50% of their annual fish catch in the coming decades as a result of climate change. At the same time, demand for fish – a staple of local diets – is expected to continue to rise over the same period, driven primarily by population growth.

While the UAE is committed to meeting rising short-term demand by ramping up imports, in the long term the country plans to rely heavily on aquaculture. A number of local firms have set up fish farming operations in recent years. International Fish Farm Holding, which operates under the Asmak brand, is involved in all aspects of aquaculture. In late 2012 the company announced two new large-scale farm projects in Al Gharbia. “The aquaculture industry in Abu Dhabi is still very much in its infancy,” Mamoon Othman, Asmak’s Group CEO, told OBG. “That said, there is a huge opportunity for the development of fish farming, as not only will it service local demand, but almost every country in the region is a net importer of fish.”

Another local player is Emirates AquaTech – a joint venture between local conglomerate Bin Salem Investment and various locals and international investors.

Completed in 2011, Emirates AquaTech is breeding and hosting the endangered sturgeon, which produces various types of caviar and is under protection by the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

In the next few years Abu Dhabi is set to become a major source of fine caviar when the farm reaches its maximum capacity of around 35 tonnes per annum of caviar and about 700 tonnes of sturgeon meat. “Demand for fine food locally and internationally is on the rise, and caviar is a globally sought-after fine food which we will be producing in Abu Dhabi,” Al Dhaheri of Bin Salem Investment told OBG.

Outlook

 As in much of the rest of the Gulf, fresh water is in short supply in the emirate. In recent years Abu Dhabi’s per capita water consumption rate has been among the highest in the world, largely as a result of local agricultural activity. According to ADFCA, in 2012 the agriculture sector consumed around 70% of the emirate’s fresh water budget. Reducing this number is considered to be a top priority in the sector (see analysis).

Other ongoing programmes aim to boost the value of local agricultural products, diversify the international market for said products, and enhance food safety and security. By developing the local agriculture sector the government aims to improve the skillset of local workers and increase diversification, both key priorities. Finally, the government is committed to developing the sector on the grounds that agriculture has played an important role in the emirate’s history, and is considered to be a pillar of its heritage and culture.

With all of this in mind, the sector is expected to play a growing role in the local economy for years to come.