Abu Dhabi cultivating a sustainable agriculture industry

As a rising population continues to put upward pressure on demand for food, Abu Dhabi’s authorities are pursuing various initiatives to promote domestic production, both as a means of economic diversification and to further bolster food security, with various bodies responsible for the agricultural sector being established over the last 10 years.

Although innovative solutions have increasingly started to come on-line in Abu Dhabi, particularly regarding water, the emirate’s desert climate presents significant barriers to large-scale agricultural expansion. As such, the bulk of the emirate’s foodstuffs continue to be sourced from abroad, with various strategic investments in recent years focused on diversifying Abu Dhabi’s international supply streams. Meanwhile, at home, investments in stockholding capacity are aiming to mitigate the short-term impact of potential disruptions to international supply, and a fast-growing agri-food and food-processing segment looks set to position the emirate as a leading regional player.

Contribution

According to the “Statistical Yearbook of Abu Dhabi 2016” from Statistics Centre - Abu Dhabi (SCAD), the value of the emirate’s agriculture, forestry and fisheries sector stood at Dh6.02bn ($1.6bn) in 2014, the most recent year reported, equivalent to 0.6% of the emirate’s GDP. This figure represents an increase of 4.1% over 2013 at current prices. The sector’s 2015 gross fixed capital formation at current prices was Dh706m ($192.2m), or 0.4% of the emirate’s total, representing a 6.3% increase over 2014, per SCAD figures.

Fruits, Vegetables & Field Crops

In 2015 Abu Dhabi’s 24,018 plant holdings together accounted for a total agricultural area of 749,869 dunums (a dunum is roughly 0.1 ha). Al Ain is home to most of these holdings, with approximately 60% located in the region, followed by 28% in Al Dhafra and 12% in the Abu Dhabi region. The average size of plant holdings in Al Ain is roughly 35 dunums, with the majority (9268) of its 11,921 plant holdings sized between 30 and 39 dunums.

In terms of cultivated land, fruit trees are the most dominant, with a total of 272,322 dunums dedicated to them in 2015, followed by 48,177 dunums for field crops and 19,355 dunums for vegetables. Excluding date trees, which account for the majority of all fruit trees in the emirate, there were a total of 132,227 fruit trees in Abu Dhabi in 2015. Mango trees accounted for 15,840 of these; apple trees, 15,402; and orange trees, 7561.

According to figures from the Abu Dhabi Food Control Authority (ADFCA), the number of greenhouses in the emirate has grown rapidly in the last three years. The figure of productive greenhouses grew at a relatively modest pace between 2011 and 2013, rising from 5633 to 8817 over the two-year period. Over the following two years, however, the number jumped, almost doubling from 8817 in 2013 to 16,715 by 2015. This rapid growth can be attributed to concerted efforts aimed at boosting the consumption of locally produced goods. The majority of the emirate’s greenhouses are located in Al Ain. The region is home to 62.2% of all greenhouses, while Al Dhafra hosts 25.2% and the Abu Dhabi region is home to the remaining 12.6%.

The emirate produced a combined 71,012 tonnes of vegetables over the course of 2015, down from 80,385 tonnes in 2014. Cucumber was the most popular crop by production volume, with total output of 22,776 tonnes; this was followed by tomatoes at 17,237 tonnes and cabbage at 7539 tonnes.

Dates

Dates are Abu Dhabi’s most important agricultural product by far, with figures from ADFCA indicating that almost 99% of the total land allocated to fruit trees in the emirate is dedicated to date palms. In 2015 Abu Dhabi produced 93,075 tonnes of dates, and although this figure was down slightly from 93,592 tonnes in 2014, the longer-term trend has been one of rising production, with output up from 80,461 tonnes in 2012. In line with the rest of the emirate’s agricultural activity, the bulk of Abu Dhabi’s dates are grown in Al Ain, with 53,839 tonnes produced in the region compared to 31,133 in Al Dhafra and 8103 in the Abu Dhabi region. The total value of dates produced across the emirate in 2015 was Dh579.3m ($157.7m), equivalent to roughly 9.6% of the total output value of the agriculture, forestry and fisheries sector for the year.

Abu Dhabi’s date segment is dominated by state-owned Al Foah, which buys dates from more than 18,000 farmers across the UAE and markets the produce both domestically and to 48 markets abroad, with exports accounting for 90% of sales. The company has agents in several major markets around the world, including Jordan, Morocco, Saudi Arabia and Malaysia, with five separate brands targeting different consumer market segments. The firm processes dates at its factories in Al Saad and Al Marfa, which have respective capacities of 90,000 and 50,000 tonnes per annum (tpa). Al Foah places a special emphasis on supporting local farmers. By December 2016 the company had disbursed over Dh460m ($125.2m) to the farmers it partners with.

Livestock & Animal Products

According to ADFCA, the emirate was home to 3.5m livestock in 2015. Sheep and goats comprised the majority of animals, accounting for 88% of the total, followed by camels at 11% and cattle with 1% (although this figure only accounts for cattle in traditional holdings). Al Ain is home to 63.1% of all livestock in the emirate, with 20% located in the Abu Dhabi region and the remaining 17% in Al Dhafra.

In 2015 the emirate had a total of 31 commercial farms, including 13 cattle farms and nine chicken broiler farms. The combined value of meat production was Dh770.3m ($209.7m), down from Dh840.2m ($228.8m) in 2014. In total, commercial farms produced 22,632 tonnes of chicken meat in 2015, up slightly from 22,257 tonnes in 2014. The production of eggs rose significantly over the course of the year, from 309.4m in 2014 to 356.3m in 2015. Commercial milk output also climbed over the period, from 95,727 tonnes in 2014 to 102,783 in 2015.

Al Ain Dairy represents the emirate’s oldest commercial dairy farm, and is one of the three largest in the UAE. Established in 1981, the company now employs 1700 people, and its facility in Al Ain houses roughly 6500 livestock. Plans for a new Dh400m ($108.9m) farm in Al Ain were announced in 2015, with the planned facility set to house an additional 6000 cows, effectively doubling its current capacity.

Fisheries & Aquaculture

Dh128.3m ($34.9m) worth of fish, equating to 5235 tonnes, were caught in the emirate’s waters in 2015. These figures were up almost 1000 tonnes from 2014, when 4291 tonnes of fish worth Dh105.6m ($28.8m) were caught. The scrombridae family, which includes mackerel and tuna, accounted for the largest proportion of fish caught by both value and volume, representing 37.5% and 34.4% of the total, respectively.

TRADE: The total value of Abu Dhabi’s imported agricultural goods was Dh8.7bn ($2.4bn) in 2015, down slightly on 2014’s figure of Dh9bn ($2.5bn). Live animals and live animal products, along with vegetable products, comprised the majority of imports, with the value of live animals and live animal products reaching Dh2.8bn ($762.3m), and vegetables totalling Dh2.9bn ($789.6m) in 2015.

The total value of Abu Dhabi’s exported agricultural goods was Dh1.7bn ($462.8m) in 2015, a significant increase on the Dh750m ($204.2m) recorded for 2014. The largest growth segment was live animals and live animal products, which saw the value of its exports jump by more than 400% – from Dh186m ($50.6m) in 2014 to Dh804m ($218.9m) in 2015. This spike can be attributed to the marked increase in global demand for goat meat, particularly from South-east Asia and the Middle East, which resulted in goat meat prices reaching record highs over the course of 2015 and 2016. Fortunately for Abu Dhabi, sheep and goats account for the vast majority of the emirate’s livestock.

The total value of exported foodstuffs, beverages, spirits and tobacco from the emirate more than doubled in 2015, reaching Dh587m ($159.8m) over Dh217m ($59m) in 2014. The value of exported vegetable products was Dh67m ($18.2m), up from Dh57m ($15.5m) in 2014, while the total value of exported animal or vegetable fats, oils and waxes was down slightly over the year, dipping from Dh204m ($55.5m) in 2014 to Dh175m ($47.6m) in 2015.

Challenging Environment

The spike in food prices around the world in 2007-08 proved to be a turning point for agriculture sectors across the Middle East, as shortages of basic commodities put pressure on governments to re-evaluate their food security strategies. The issue has become even more pressing due to growing demand among the region’s rapidly expanding populations. Speaking to media in 2015, Sultan bin Saeed Al Mansoori, the UAE’s minister of economy, said he expected total expenditure on food to quadruple to $400bn by 2025.

In June 2016 the emirate unveiled the Abu Dhabi Plan, a roadmap aimed at preparing and guiding the emirate to a post-oil future, with one of the plan’s 25 goals emphasising the need for food security and ensuring a sustainable agricultural sector. Although domestic production is on the rise thanks to various innovative efforts under way, production remains constrained by the region’s arid desert climate. High maximum temperatures limit yields for many crops, rainfall is well below the level required for rain-fed cereal production and renewable freshwater sources are among the lowest globally. Moreover, some 95% of land in the Gulf is subject to some form of desertification, a factor likely to be compounded by climate change in the coming decades.

As a result, the UAE remains largely reliant on food imports, with the country gathering some 85% of its food requirements from abroad. Although the risk of price spikes in such an arrangement is a concern for the UAE, the country’s hydrocarbons wealth and ample reserves mean it is well positioned to absorb short-term price volatility. Arguably more worrying is the threat of supply shortages in the event of disruptions to its key trading routes.

Government Support

To navigate these manifold challenges, various bodies responsible for different segments of the agricultural sector have been established at the emirate level in Abu Dhabi, with some of these efforts also feeding into federal-level policies. Founded in 2005, ADFCA has since seen its oversight expand significantly; today, the authority is responsible for developing policies that underpin the Abu Dhabi government’s overarching objective of achieving food security. In line with this, the authority has launched a strategic plan for 2016-20 to work alongside the Abu Dhabi Plan on various objectives: to develop the emirate’s agricultural sector in a way that ensures the delivery of safe food to the public; to promote the effective and efficient use of the emirate’s scarce water resources; and to develop strategies in partnership with the private sector that work to head off major disruptions to the flow of agricultural products into the emirate.

Between 2015 and 2020 the authority aims to implement 22 strategic projects with an estimated combined value of Dh1.5bn ($408.4m). ADFCA also contributes on a federal level and has been working closely with the UAE’s Ministry of Climate Change and Environment to create a UAE-wide strategy to help provide direction on the future development of the nation’s agricultural sector.

Securing Supply

The Food Security Centre - Abu Dhabi (FSCAD) was established under ADFCA in 2010 by the Abu Dhabi Executive Council with the vision of enabling all residents of the emirate to have access to healthy, nutritious and safe food under all circumstances, including food shortage emergencies and crises. As such, FSCAD’s mandate revolves around three main points: availability, affordability and accessibility. The UAE currently manages enough strategic food reserves for the population for about three months. To effectively do this, various considerations including population size and the habits of the more than 200 nationalities that live in the emirate are taken into account. Given that food security encompasses many sectors in addition to agriculture – particularly infrastructure and storage capabilities – FSCAD’s board is made up of individuals from multiple professional backgrounds.

The catalyst for the formation of FSCAD came in 2007. “It was then that the government realised that animal feed for livestock, which now numbers 3.5m head in Abu Dhabi alone, was becoming too costly to produce locally,” Khalifa Al Ali, managing director of FSCAD, told OBG. To tackle these challenges, the authorities, in partnership with the private sector, began making strategic international investments in the global agricultural supply chain.

As a result, a major part of both the emirate’s and the wider UAE’s food security has come to be defined by investments abroad. The Land Matrix, a global, independent land monitoring initiative, calculates that the UAE has acquired three times its own agricultural land area since 2000.

Private Partners

One of the key pillars of ADFCA’s strategic plan involves the assurance of a sustainable supply of safe food to Abu Dhabi. As such, further broadening the participation of the private sector in the emirate’s food security is considered a fundamental enabler, in addition to the continuous improvement of relevant policies. “The major push is on bringing private local companies into the food security mix by leveraging their expertise and the emirate’s existing infrastructure and good doing business indicators,” Rashid Mohammed Khalfan Al Shariqi, director-general of ADFCA, told OBG. In line with these goals, ADFCA has signed contracts with various Abu Dhabi-based firms in recent years, including Jenaan Investment and Al Dahra Holding.

Jenaan Investment has a long-term contract with the Abu Dhabi government to supply fodder for farmers in the emirate. The company’s biggest holdings are in Sudan, where it has 45,700 ha of continuous land – 6000 ha of which is currently under irrigation – with further operations in Saudi Arabia, Ethiopia, Egypt, Spain and the US. Maintaining a diversified portfolio is key, Mohammed Al Falasi, president of the Investment and Business Group of Jenaan Investment, told OBG. “When talking about food security, it is important not to depend on a single source. Agriculture is an extremely risky business anywhere in the world, illustrated by the fact that even the US still subsidises it.”

Al Dahra Holding, meanwhile, manages an international land portfolio of around 81,000 ha across more than 20 countries. In 2013 the company invested $400m to buy eight Serbian agricultural firms to grow food and fodder for export. This approach, investing directly in the supply chain, is increasingly being favoured over simply buying land in developing countries. “Many developing markets involve complex supply chains and require everything to be built from scratch, without the assistance of any third parties,” said Al Falasi. “It involves a lot of planning with local governments, who aren’t well practiced in regulation and incentives around foreign direct investment.”

Stockpiling

Another principle element of the emirate’s food security strategy involves stockpiling food at home to mitigate the effects of short-term dips in supply. The UAE has invested billions of dollars at the federal level in recent years to build grain silos in Abu Dhabi and Fujairah, while large financial investments have also gone towards advanced warehousing and transportation infrastructure.

As with strategic investments abroad, Abu Dhabi-based companies are playing an important role in these efforts. Al Dahra Holding and food manufacturer Agthia are some entities working with federal authorities to ensure strategic food reserves are available at various locations inside the UAE. In June 2016 Agthia announced plans to expand its facilities at Abu Dhabi’s Zayed Port, which should boost its grain storage capacity to 1.5m tpa.

Partnering with the private sector has allowed the authorities to tap into the expertise needed to effectively manage large reserves, while also allowing the government to share the significant costs associated with the process. According to the “Regional Overview of Food Insecurity in the Near East and North Africa 2015” report published by the UN Food and Agriculture Organisation, the average cost of maintaining strategic food stocks is $2.15 per tonne every month.

Abu Dhabi Farmers’ Services Centre

Established in 2009 in cooperation with the Australian firm GRM International, the Abu Dhabi Farmers’ Services Centre (ADFSC) represents another key actor in the emirate’s agricultural landscape, and plays a central role supporting local farmers in the face of technical challenges presented by Abu Dhabi’s desert environment. Basic foods can be produced in open fields from September to June, but the summer months’ production then moves to greenhouses. Rather than expanding hectarage, the emphasis is on adopting new agricultural technologies that improve yields and help manage limited water resources, according to ADFCA.

ADFSC provides technical training and advice to local farmers as it works to boost production of locally grown food, with these efforts paying significant dividends in recent years. Total fruit and vegetable products supplied to ADFSC reached 71,013 tonnes in 2015, up from 47,749 tonnes in 2013. The jump was even more significant in value terms, with the total value of fruit and vegetables supplied to the centre more than doubling over the same period, reaching Dh178m ($48.5m) in 2015, compared to Dh78m ($21.2m) in 2013.

ADFSC is also responsible for providing certification for Global Good Agricultural Practices to farms in Abu Dhabi. The certification is an international initiative that aims to provide consistent and transparent agricultural standards across the world, and also indicates that vegetables are free from pesticide residue. As of late 2015 approximately 190 farms in the emirate were certified, according to the centre, with a total of 8000 certified farms targeted by 2020. Additionally, ADFSC acts as an umbrella organisation for farmers in the emirate. Farmers are given minimum price guarantees for their produce, thereby protecting them from fluctuations in market prices and helping them secure a minimum guaranteed income, while also enabling ADFSC to sell the produce to large local retailers in bulk.

Buying Local

Local Harvest, the commercial arm of ADFSC, is responsible for marketing and selling locally produced goods, with various efforts aimed at boosting their consumption. One programme, the “Go Local” campaign, carried out in partnership with the Abu Dhabi Tourism & Culture Authority, has paid significant dividends in recent years.

A survey commissioned by ADFSC in 2014 found that 88% of respondents bought locally produced vegetables, compared to 73% in 2011. Of the combined 1.05m tonnes of fruit and vegetables consumed in the emirate in 2013, 16% was produced locally. In volume terms, locally produced fruit and vegetables grew at a compound annual growth rate (CAGR) of 28.4% between 2010 and 2013, compared to a 7.9% CAGR for total market volume over the same period. In value terms, meanwhile, the growth was even stronger, with the value of the market for domestically produced fruit and vegetables expanding at a CAGR of 43.4% between 2010 and 2013, compared to an 8.3% value expansion for the total market over the same period. The overall market share of local meat and livestock was estimated at 49% in 2014, although this only took fresh meat into account. Among the meat and livestock products measured, chicken and eggs constituted the highest shares of local production relative to total market volume, at 75% and 54%, respectively.

Water Use

Desalinated water comprises around 37% of the UAE’s total supply and is largely used for domestic consumption. Groundwater and recycled water, meanwhile, account for 51% and 12%, respectively, with the vast majority diverted to irrigation and landscaping purposes. However, long-term reliance on quickly depleting groundwater reserves is unsustainable for the UAE – the most water scarce of all GCC nations – from both an environmental and economic standpoint. Indeed, according to a UN study, water dedicated to industry in the UAE produces more than 1000 times the economic value of water dedicated to agriculture.

Meanwhile, a study carried out by the Environment Agency - Abu Dhabi (EAD) found that irrigating the emirate’s plants, gardens and farms would exhaust Abu Dhabi’s groundwater reservoirs within the next 50 years, as current abstraction rates are outpacing production by a factor of more than 20. According to ADFSC, Abu Dhabi’s agriculture, forestry and park sectors together account for around 72% of all water consumption in the emirate. In response, the authorities have introduced various measures aimed at curbing groundwater usage. The 2010 abolition of subsidies for the production of Rhodes grass, which is used as animal feed, is an example. At the time it accounted for 59% of the emirate’s water use. In early 2016 the EAD unveiled a three-phase project for a sustainable groundwater conservation plan for the emirate. The initiative – which will gather information and map all wells used for the irrigation of farms, forests, parks and gardens – will be carried out over a 30-month period in collaboration with other bodies, including ADFCA and ADFSC.

The implementation of pioneering technologies on the emirate’s farms is also helping to decrease consumption rates, while other efforts are focused on diverting a larger proportion of treated wastewater to agriculture. Currently, 60% of treated sewage generated in Abu Dhabi is reused each year, with the remainder discharged into the sea, according to Mohammed Dawoud, water resources manager at the EAD. By 2018 the emirate hopes that 100% of treated wastewater will be re-used (see analysis).

Agri-Business & Food Processing

In addition to its investments abroad and its stockpiling at home, developing Abu Dhabi as a regional centre for agri-business and food – thereby bringing major food-processing facilities within the UAE’s borders – is another avenue being pursued by authorities to ensure a reliable food supply for the country.

The UN has identified the UAE as a key regional food hub, with the food cluster at the Khalifa Industrial Zone (KIZAD) in Abu Dhabi attracting many big international food players in recent years. Brazilian firm BRF was the first major facility to open in the zone in December 2014, with its $160m, 160,000-sq-metre factory producing 72,000 tonnes of meat products per annum. In December 2016 Al Dahra Holding announced the launch of a Dh140m ($38.1m) rice-processing plant, also to be located in KIZAD. The development, which will include 40 silos with a capacity of 750 tonnes each, will be capable of processing up to 120,000 tonnes of rice per year.

Abu Dhabi-based Agthia, which is 51% owned by the government through the industrial investment holding company, Senaat, represents one of the biggest local agri-food and food-processing players. Agthia is also the largest local supplier of bottled water; its Al Ain and Alpin brands hold approximately 25% of the UAE’s market share. In June 2016 Agthia signed a 25-year agreement with Abu Dhabi Ports aimed at expanding the group’s Grand Mills Flour and animal feed facilities at Zayed Port. The expansion will take place on an 85,700-sq-metre plot of land and will include dedicated grain silos, logistics warehousing and on-site bagging facilities. The development is expected to increase Agthia’s grain storage capacity from 930,000 to 1.5m tpa.

Another leading food producer in the UAE, National Food Product Company (NFPC), plans to construct a facility in the zone. Announced in February 2017, the 752,000-sq-metre plant, which will manufacture most NFPC brands, will include energy-and water-saving features, and is expected to start operations in early 2018. The first phase is set to comprise a facility housing its water-bottling, juice and dairy operations, while the second will include a fully automated packaging factory, a recycling plant and a cold store with a 150,000-tonne capacity.

Outlook

Despite being faced with challenges associated with its desert environment, Abu Dhabi’s agricultural sector continues to benefit from an array of government-led initiatives. By providing an active support network for its farmers in the form of ADFSC, the emirate has managed to boost domestic supply in recent years, while efforts to better integrate into global supply chains mean both Abu Dhabi and the wider UAE are significantly less exposed to the risks of global supply shortages today than 10 years ago. Indeed, in the 2016 Global Food Security Index, which ranks 12 food security-related issues, 10 were classified as strengths for the UAE. Of those 10 categories, the country earned the maximum possible score in three areas: the proportion of the population under the global poverty line, the presence of food safety net programmes and access to financing for farmers. Furthermore, KIZAD is set to continue attracting investment from regional and global players, supporting Abu Dhabi’s burgeoning reputation as a regional food re-export hub.