Working to increase production, enhance sustainability and improve food security

Although agriculture comprises only a small proportion of the emirate’s GDP, the authorities regard it as an important sector from a number of perspectives including its potential to aid economic diversification, which is a key element of the Abu Dhabi Economic Vision 2030, as well as its role in helping to perpetuate key elements of local culture, environment and climate, and to create jobs. The emirate’s government has consequently sought to invest in the sector, with the aim of increasing production and improving the industry’s sustainability, above all in the area of water consumption.

Key Figures

According to the Statistics Centre - Abu Dhabi (SCAD), the contribution of agriculture, forestry and fishing to the emirate’s economy stood at Dh5.4bn ($1.5bn) in 2013, up 1.3% on 2012 figures in real terms, following real growth of 5.2% the previous year. The sector represented 0.57% of total GDP and 1.27% of non-oil GDP in 2013. However, its contribution to employment is substantially higher, standing at 5% of the total in 2013.

The total number of farms in the emirate in 2013 was 24,394, according to SCAD, of which nearly half, or 11,985, were in the Al Ain region and 8572 in Al Gharbia, with the remaining 3837 farms located in the Abu Dhabi region.

Although agricultural activity takes place in all three regions of the emirate, Al Ain is its agricultural capital. For example, the total size of plant holdings in the emirate was 752,839 dunums (a dunum is roughly 0.1 ha) in 2013, of which 446,898 were in Al Ain. By way of comparison, the regions of Abu Dhabi and Al Gharbia accounted for just 95,483 and 210,458 dunums, respectively.

More than half, or 57%, of the emirate’s productive greenhouses – of which there were 8817 in 2013, up from 4864 three years previously – were also in Al Ain. The region of Abu Dhabi by comparison was home to just 731 greenhouses in 2013, or 8% of the total, while Al Gharbia had 3098, or 35%.

Of the total area of plant holdings across the emirate, 40.3% were devoted to growing fruits and 34.9% had been left fallow. Just 2.4% of the total area of plant holdings was devoted to growing crops in 2013 and 1.7% went to vegetables.

Total output of field crops was 34,809 tonnes in 2013, with 30,426 tonnes of this coming from Al Ain. Production of vegetables totalled 47,749.3 tonnes in 2013, with most of this accounted for by cucumbers (19,341 tonnes), tomatoes (6863 tonnes), peppers (6780 tonnes), cabbage (3887 tonnes), potato (3647 tonnes) and aubergine (1697 tonnes).

Most farms in Abu Dhabi are also relatively small in size, with 23,806 of the emirate’s total of 24,394 farms under 49 dunums as of 2013. Of the remainder, 163 farms were 50-59 dunums and 425 were larger than 60 dunums.

Aricultural Trade

The value of agricultural and food exports in 2013 was Dh514.6m ($140m), down from Dh617.9m ($168.2m) in 2012, according to SCAD figures.

The largest category of these exports was animal and vegetable fats, oils and waxes, which were worth Dh183m ($49.8m); followed closely by foodstuffs, beverages, spirits and tobacco with Dh180.8m ($49.2m); and then fertilisers with Dh54.7m ($14.9m), live animals and their products with Dh52.6m ($14.3m); vegetable products with Dh43.2m ($11.8m); and pesticides with Dh337,000 ($91,731).

“The greater region is very much dependent on food imports,” Iqbal Hamzah, the CEO of Agthia, told OBG. “That presents opportunities to utilise Abu Dhabi’s robust infrastructure and market proximity in order to develop local manufacturing to service neighbouring countries. The emirate has great potential to act as a regional hub for the food processing industry, especially with the establishment of both Khalifa Industrial Zone Abu Dhabi and Khalifa Port, which will allow companies to access global markets more quickly and efficiently.”

Imports of agricultural goods and food were worth Dh7.5bn ($2bn) in 2013, down from Dh8.42bn ($2.3bn) the previous year and resulting in an agricultural trade deficit of Dh6.95bn ($1.9bn). The largest category of imports for the year was vegetable products, at a cost of Dh2.81bn ($764.8m); followed by foodstuffs, beverages, spirits and tobacco with Dh2.15bn ($585.2m); and live animals and their products with Dh2.01bn ($547m).

Fruits & vegetables

There were 181,674 fruit trees planted over an area of 5578 dunums in the emirate in 2013; both figures were unchanged from 2012. The largest category of fruit trees by number was apple trees with 91,251, followed by lemon trees with 33,648 and fig trees with 14,627. Mango trees follow, with 11,910, and orange with 9243.

The Food Security Centre – Abu Dhabi marketed 47,749.3 tonnes of vegetables in 2013, according to SCAD data; the largest individual vegetable crop was cucumber, with output of 19,314 tonnes, followed by tomatoes with 6863 tonnes and peppers with 6870 tonnes. The Abu Dhabi Farmers’ Services Centre (ADFSC) anticipated that the value of local fruit and vegetable production would rise from Dh58m ($15.8m) the previous year to around Dh65m ($17.7m) in the 2014/15 season (which runs from November 2014 to October 2015).

Dates

Dates are the emirate’s most important commercial crop and agricultural export, with around 160 different species present in the country.

According to estimates from the UN Food and Agriculture Organisation, the UAE was the world’s ninth-largest producer of dates in 2012 (latest available data), when it accounted for around 3.3% of global production. The country was also the world’s sixth-largest exporter of the product in 2011, according to the most recent data, accounting for around 7.2% of worldwide exports.

Production of the crop is growing rapidly; the emirate produced 99,136 tonnes of dates in 2013, up from 80,461 tonnes in 2012, according to SCAD, citing the date producer Al Foah. Of the three regions, Al Ain was the largest producer of the fruit, with output of 62,397 tonnes in 2013. SCAD, citing Al Foah, put the value of date production across the emirate as a whole at Dh635.2m ($172.9m) for the year, up from Dh548.4m ($149.3m) in 2012.

The dominant player in the segment, Al Foah Dates, is the largest date company in the world, exporting up to 100,000 tonnes of dates per year to more than 48 countries. The company buys the crop from local independent farmers and markets them as dried dates under a variety of brands for regional and international export, including Date Crown, which is sold in high-end supermarkets in the Middle East and Asia; Al Dhafra, primarily for the UAE market; and Al Saad, its bulk brand. The state-owned firm’s marketing and operations have done much to enhance the reputation and economic importance of dates in the country. Indeed, when Al Foah was founded in 2005, dates were seen as a low-value commodity.

Al Foah is also a leader in innovation. Through a recent memorandum of understanding with RF Biocidics, a food safety company focused on environmentally friendly alternatives, Al Foah is in the process of developing a new residue- and pesticide-free radio frequency technology for disinfecting dates across the UAE and the Gulf. Emiratisation also ranks as a high priority for the company, with internal levels reaching 50% by end-2013 thanks to an initiative focused on recruiting national staff.

However, Al Foah it is not the only active player in the date segment; in 2012 the ADFSC launched a scheme to buy surplus dates that Al Foah had not yet acquired and then market them to local retailers as fresh dates under the Local Harvest brand.

The UAE date industry as a whole is taking steps to increase the use of sustainable irrigation practices, with a particular focus on groundwater use. For example, according to the Environment Agency - Abu Dhabi (EAD), date palm irrigation accounts for approximately one-third of all groundwater usage for major crops in the country – which is a major contributor to the depletion of groundwater levels, which are falling by as much as five metres per year in some parts of Abu Dhabi. To address this trend, the government is working to end the illegal sale of groundwater and promote efficient irrigation systems across the date industry.

Field Crops

Land devoted to field crops has been dramatically reduced in size in recent years as the authorities seek to devote water and other resources to higher-value and more sustainable products.

Having taken up 213,919 dunums of farmland in 2010, when output stood at 1.04m tonnes, the amount of land devoted to field crops had fallen to 34,809 dunums by 2013. This is in large part due to a decision in 2010 to stop subsidies for the production of Rhodes grass (which was sold as fodder for animals), which previously dominated the emirate’s field crop segment and was responsible for approximately 60% of the sector’s total water consumption. Production of the crop has now been phased out.

Livestock & Animal Products

The emirate’s livestock population stood at 3.38m in 2013, up from 2.9m in 2012, according to SCAD, citing figures from the Abu Dhabi Food Control Authority (ADFCA). Sheep and goats accounted for most of these, with 2.99m. Al Ain again led the way in the segment, with 61% of all livestock. The total value of meat produced was Dh903m ($245.8m) in 2013, up from Dh805m ($219.1m) the previous year.

Commercial farms in the emirate produced 248.3m table eggs, up from 203m in 2012 and nearly double the 2010 figure of 127m, as well as 87,386 tonnes of cow’s milk, up from 80,540 tonnes in 2012. The emirate is home to the largest dairy in the UAE, Al Ain Dairy, in which the government has a 50% stake through the Abu Dhabi Fund for Development.

Poultry farming, which is currently concentrated in Al Ain, is also a growing segment. “There has been a lot of investment in establishing poultry houses in the emirate and farmers here now have a good knowledge of the industry,” Nasser Al Junaibi, the ADFSC’s chief financial officer, told OBG.

An example of such investment in the segment came in the form of the announcement in November 2014 by Dubai-based poultry company Al Rawdah (formerly known as the Emirates National Poultry Company), which operates the largest poultry farm in the country and claims a 35% market share nationally, of plans to establish a 500-ha farm in Liwa in Abu Dhabi, at a cost of approximately $46m. The company will use the facility in part to train small farmers on how to rear poultry to its standards.

Expansion of the country’s poultry industry is also likely to have positive knock-on effects across the wider sector. “Agribusiness – and more specifically, demand for animal feed – is expected to increase throughout the UAE, primarily due to the expansion of the local poultry industry and expanding animal feed presence among local farms and municipal outlets,” Hamzah told OBG.

Fisheries

According to SCAD figures, citing the EAD, the value of the 2013 catch was Dh84.8m ($23m), an increase from Dh80.8m ($22m) in 2012. The largest category of catch by fish family was scombriae (which includes mackerel and tuna among other species), with 1015 tonnes in 2013. About 737m tonnes of fish were caught in December 2013, up from 652m tonnes in the same month a year earlier and from 481m tonnes in December 2011.

The EAD in November 2014 approved a new survey of fish stocks in the emirate’s waters, which will start at the beginning of 2015. It is the first since 2003. “Since the last survey there have been many changes in terms of how the fisheries sector is managed. For example, caps have been imposed on the number of fishing gear and commercial licences, and we decided that now is the right time to do another assessment, in order to evaluate the influence of these regulations on fish stocks,” Shaikha Salem Al Dhaheri, executive director for terrestrial and marine biodiversity sector at the EAD, told OBG.

Regional and national trends suggest that the picture is unlikely to be positive; fish stocks in the Gulf region have been depleting rapidly, by around 88% between 1975 and 2011, according to the federal minister of environment. Furthermore, over the nine years to 2011 fish stocks fell by an estimated two-thirds off the eastern coast of the UAE.

At a federal level, the authorities have introduced a number of measures to address the issue, including capping the number of fishing boats in the country at 6700. In January 2014 restrictions were introduced on the use of traditional fishing cages (which can also damage coral reefs). This followed the introduction the previous August of seasonal bans on the use of various types of nets. However, according to research conducted by the EAD, around 55% of boats fishing off the coast come from outside Abu Dhabi and do not adhere to local restrictions.

Aquaculture

The ADFSC is encouraging the development of aquaculture – in particular in Al Gharbia – as an alternative to fishing, given concerns over the rapid depletion of fish stocks in the open seas.

Al Dhaheri told OBG that the EAD is additionally advising the government on its policy for the industry as well as working with farms themselves. “We are helping to share best practices with aquaculture businesses, such as advising them on the most sustainable feeds and species,” she said, adding that the agency is also encouraging fish farms to focus on species that are declining in natural stocks, such as the orange-spotted grouper (known locally as hammour), which is a popular regional speciality.

November 2013 saw the opening by Emirates AquaTech of a 56,000-sq-metre, 35-tonnes-per-annum (tpa) caviar farm in the Musaffah area near Abu Dhabi City, which it says is the largest and most technologically advanced farm of its kind in the world. The facility also has the capacity to produce 700 tpa of sturgeon meat.

It could see demand increase with the recent approval of the company’s YASA Caviar and sturgeon products for import by the US Food and Drug Administration. As the first and only caviar brand in the region, it could go a long ways towards promoting the UAE’s nascent industry.

“Abu Dhabi has all the necessary ingredients to become a hub to provide not only local and regional markets, but also the international one, with processed food, whether simple products or more specialised ones such as caviar. Thanks to a number of advantages, the emirate has the potential to be very competitive in the global market,” Ahmed Mohamed Al Dhaheri, the managing director of Emirates AquaTech, told OBG.

Asmak International, an Abu Dhabi-headquartered firm that is active in Bahrain and Saudi Arabia as well as the UAE, is also a major local player in the segment. Its operations in the emirate include a 600-tpa fish farm in Al Abjan producing sea bream, hammour and other fish, and it is also building a 4000-tpa salmon farm and an offshore sea bream and hammour farm (see analysis).

Another prominent player in the sector is Al Jaraf Fisheries, which operates a shrimp farm comprising 53 ponds with a combined 64 ha of water spread on Barmid Island, close to Abu Dhabi City, and another with 24 ha of water spread in Al Bahia.

Key Institutions

The ADFCA previously operated under the aegis of the Municipality of Abu Dhabi, but it was made an autonomous government food safety agency covering the whole of the emirate in 2005. Its mandate was further expanded to include agriculture in 2007, and it currently oversees the entire food chain, or as the organisation puts it, “from farm to fork”. The institution is responsible for ensuring three outcomes: food safety, the security of the emirate’s food supply and the ecological sustainability of agriculture. Additionally, it addresses other related issues, such as protecting animal and plant health. In 2012 the authority published a comprehensive agriculture and food safety policy, key elements of which include improving the sustainability of agriculture in the emirate and ensuring natural resources are managed in a sustainable manner.

Support For Farmers

In 2009, four years after the establishment of the ADFCA, the Abu Dhabi government, working with Australian company GRM International, established another body focused on agriculture, namely the ADFSC. Set up in 2009, the ADFSC aims to develop a sustainable agricultural industry and provides the emirate’s farms with educational and extension services, advice and technical services, and the sale of inputs via its network of 39 offices. In addition, the centre also works to help farms in the emirate achieve Global GAP certification, which demonstrates that they adhere to good agricultural practices in areas such as food safety and environmental impact. Al Junaibi told OBG that approximately 110 farms in the emirate had acquired such certification to date.

“We sponsored the first 100 farms to do so; however, now farms are seeking out certification by themselves,” he said. Speaking in October 2014, Al Junaibi of the ADFSC told OBG that it would soon start work on establishing an organic agricultural programme. In December 2013 the centre also announced the establishment of a Dh100m ($27.2m) fund aimed at providing support to farmers in the region and to “finance the use of modern farming techniques, including hydroponics in greenhouses”. The fund will provide interest-free loans covering half of the cost of agricultural projects, for which the farmer will be expected to provide the other half.

The ADFSC also markets farmers’ products and provides related services such as marketing. In total it has contracts to market the produce of around 1200 farms in the emirate, much of it under its own brand, Local Harvest. The centre guarantees a minimum price to farmers who sell crops through its markets and collects a commission when a crop’s market price is above the minimum.

This allows Local Harvest to subsidise sales when the market price is below the minimum. “The system allows for farmers to approach the crop cycle with confidence,” said Al Junaibi. In another marketing initiative the centre also collaborated in the renovation and relaunch of 23 farm product marketing centres, now known as Souq ADFSC.

Food Processing

Other efforts are also under way to help bring agricultural goods to market. Food products and processing is one of the industry clusters at Khalifa Industrial Zone Abu Dhabi, enabling firms to take advantage of the ability to easily import raw materials via the nearby Khalifa Port to supply the rapidly growing domestic and regional food market, as well as to export home-grown and processed goods. The first major facility to open in the cluster was a Dh588m ($160m) processing plant built by Brazilian firm BRF, which was inaugurated in November 2014 and is the company’s largest facility outside of South America. It employs 350 people and is responsible for the Sadia brand of frozen foods in the Middle East, producing hamburgers, pizzas and breaded products, amongst other goods.

Capacity will reach 70,000 tpa of food products by 2017, when the firm said it could employ as many as 1400 people. The facility is not BRF’s only investment in Abu Dhabi; in April 2014 it acquired an additional stake in local food distribution and marketing company Federal Foods for $27.8m, giving it an unspecified but controlling share (it bought 49% for $37.1m the previous January).

Other projects planned for the cluster include a Dh1.5bn ($408m) processing facility to be built by local firm National Food Products Company, as well as a ready-meals factory to be constructed by Emirati firm Saif Al Khalili. In February 2014 local agribusiness firm Al Dahra also announced plans to build a basmati rice-processing plant in Khalifa Industrial Zone Abu Dhabi by 2015, at a cost of around Dh150m ($40.8m). The facility will have a processing capacity of 100,000 tpa, with half of the plant’s output to be sold domestically.

Al Dahra is an important player in the wider local agricultural sector, operating fruit and vegetable farms in Al Ain and a dairy with 3300 milking cows. In addition, the company also invests abroad to help ensure Abu Dhabi’s food security and is now active in 16 countries around the world. “There is a strong mandate from the government which encourages investment by companies such as ours into agricultural land abroad to provide greater food security to the emirate,” Houssam Mahmoud, president of human food and strategic initiatives of Al Dahra Agriculture, told OBG. The firm has invested in silo storage space within the UAE, as well as agricultural land overseas, and is putting particular emphasis on staples such as rice, corn, alfalfa, wheat and other grains. Al Dahra aims to import raw materials, process them and then sell the final products to the local market, as well as export to the wider region. Al Dahra is currently working on a range of projects, including wheat farming in Egypt, among other developments. “Our investment of the mid-term will focus on countries in and around the Black Sea, Romania and Serbia, due to their proximity to the UAE, land prices, the abundance of water and the fact they are a net exporter of grains,” Mahmoud told OBG.

Another major player in the agribusiness sector in Abu Dhabi is Agthia, which was founded in 2004 and in which the emirate’s government holds a controlling a 51% stake via Senaat; the firm is also listed on the Abu Dhabi Securities Exchange. Agthia produces a range of food and agribusiness products, including flour, of which it has 315,000 tpa of production capacity in the UAE; animal feed, with 548,000 tpa capacity; fresh dairy products, 16,000 tpa capacity; Capri Sun-branded juice, with output of 3.4m cases a year; and bottled water, with 52m cases a year and 8m five-gallon bottles a year.

In addition to its operations in the UAE the company also produces pure spring bottled water in Turkey and tomato paste, chilli paste, fruit pulp and frozen vegetables in Egypt.

The company has been investing in a range of expansion projects in 2014, including a $7m upgrade of its flour mill that raised production capacity by 50,000 tpa early in the year and an investment of $25m in the second quarter in a new high-speed bottling line that increased production capacity at its bottled water plant in Al Ain by 25m cases.

Food Safety

Abu Dhabi passed its first law on food handling, known as the Food Law, in 2008; according to Maryem Hareb, executive director of policy and regulation at the ADFCA, this was the first such law in the Gulf region. The federal Cabinet passed a country-wide food safety law in March 2014, and according to local press reports the legislation was due to be debated by the federal national council in the beginning of February 2015.

The ADFCA has established a risk-based inspection system for food establishments such as restaurants, factories and grocers, with the frequency of inspections dependent on the assessed level of risk; a similar risk-based system has also been put in place for the inspection of food imports.

The authority has also developed a food safety management system, known as Salamat Zadna ( Arabic for “safety of our food”), for small food establishments, of which there are around 2500 in the emirate. The initiative was launched in 2013 and is gradually being rolled out.

“Large establishments such as major hotels have the capabilities to establish their own food management systems, but many smaller establishments such as traditional restaurants and labour camps are unable to do so,” Hareb told OBG, to explain the rationale for the initiative, which includes visits to food establishments by advisors, as well as pictorial instructions for good food practices to be displayed in handling areas. The latter are aimed at overcoming the challenges of linguistic diversity and illiteracy among workers in the sector.

In 2013 the agency also launched a mandatory food safety programme for food handlers, focusing on the key areas of cross-contamination, cooking, cleaning and chilling. “We are looking to create a culture of food safety,” Hareb said. “It can be challenging, but the situation has improved substantially since we launched the initiative in 2013 and violation rates are low.” These regulations, along with the UAE’s participation in supranational regulatory bodies, have helped keep operations in line with international best practices.

“Besides its excellent infrastructure and competitive financing environment, the UAE is well integrated into the global economy, as an active member of the WTO and a founding member of the GCC,” Rashed Mohamed Al Shariqi, ADFCA’s director-general, told OBG. “All of these factors have encouraged increased investment in agriculture projects to effectively guarantee food security, as well as promote ambitious, standardised food safety regulations.”

Outlook

Agriculture is set to remain a small but nonetheless important segment of the Abu Dhabi economy given its outsized contribution to employment and potential to support the country’s wider efforts at greater economic diversification, as well as its significance to a number of key environmental issues like water use.

Segments such as aquaculture appear poised for substantial growth, as food processing and agribusiness activity in Khalifa Industrial Zone Abu Dhabi’s food cluster attracts investment and the date-processing industry matures. The emirate’s focus in the coming years is likely to remain on boosting the sustainability of the sector, while at the same time also increasing its contribution to overall food security.