Food consumption in Oman to grow at 4.5 per cent to 3.9m tonnes in 2021

Food consumption in Oman is likely to grow at a compounded annual growth rate (CAGR) of 4.5 per cent to 3.9 million tonnes in 2021 from an estimated 3.1 million tonnes in 2016. This growth is attributable to a 3.1 per cent and 2.4 per cent annualised increase in population and real gross domestic product, respectively during the period, according to the GCC Food Industry report published by Alpen Capital.

Further, demand is likely to be supported by tourist arrivals that are anticipated to increase on the back of the government‘s plan to strengthen the tourism sector through development of tourist spots and by encouraging private investments. 

Dairy consumption is likely to witness the fastest growth at 6.1 per cent between 2016 and 2021, followed closely by cereals consumption at 5.4 per cent. While the consumption of cereals is set to rise due to its prominence in the daily meal, that of dairy is driven by increasing awareness about the associated health benefits. To meet the growing local demand for dairy, Mazoon Dairy Co. is expected to soon commence operation of a $260 million dairy project, substantially reducing the country‘s import dependency. Consumption of fish is also likely to increase in the country going forward, contributing to the 5.2 per cent annualised consumption growth in the others category.

Food security

Oman has remained active in strengthening its food security by increasing domestic production, as part of its plan to raise the agricultural contribution to 3.1 per cent of the GDP by 2020 from 1.6 per cent in 2015. The government is developing four mega projects to boost self-sufficiency of red meat, dairy and poultry. These projects, undertaken by state-owned Oman Food Investment Holding with an investment of OMR270 million are likely to commence production over the next three years.

The government is also supporting the local fisheries sector through an investment of $1.6 billion under the National Fisheries Development Strategy 2013-2020. The strategy aims at increasing fisheries production from over 200,000 tonnes in 2014 to 480,000 tonnes by 2020 and creating 20,000 jobs. As part of the plan, the government will build a Fisheries Industrial Zone in Al Duqm SEZ, encompassing 60 processing facilities, cooling and freezing stores, and ship maintenance and repair workshops.

The report presents the state of the food industry, while covering demand-supply dynamics across various food categories in the GCC nations. The report also covers the recent trends, growth drivers, and challenges in the industry, along with the sector outlook until 2021. The report profiles some of the prominent food companies in the region, while highlighting their financial and valuation metrics.

“We expect the GCC food industry to grow at a sustainable pace. This growth is primarily attributable to factors such as growing population, higher per capita income, and a vibrant tourism market, changing dietary habits and preferences, and increasing penetration of organised retail. Government as well as private sector investments are being channelled towards augmenting the domestic food production capacity and supply, even as securing food sources in other resource-rich countries remains a key priority,” said Sameena Ahmad, Managing Director, Alpen Capital (ME) Limited.

“Despite significant headwinds due to fall in oil prices, drop in infrastructure projects, job losses and attendant retail spend, the GCC food industry is forecasted to grow in the coming years. Food security remains a key priority for the GCC countries as the reliance on heavy imports continue owing to limited arable land, hot and arid climate, and fresh water shortage. We see several government initiatives aimed not only at enhancing domestic productivity, but also at investing in farmlands overseas to mitigate the risk. Despite this key challenge, the sector remains on the radar of investors who are looking at opportunities to enter the region or a specific country in the GCC to take advantage of what the sector has to offer. This has not only attracted new players to the market but also led to significant consolidation in the segment and we expect this trend to continue,” added Mahboob Murshed, Managing Director, Alpen Capital (ME) Limited.

Industry outlook

According to Alpen Capital, food consumption in the GCC is expected to expand at a CAGR of 4.2 per cent from an estimated 48.1 million tonnes in 2016 to 59.2 million tonnes in 2021. This growth is primarily attributable to increase in the consumer base coupled with a higher per capita income, as the GCC economies stage a sustained economic recovery from the recent downturn.

Respective share of most of the food categories in the overall consumption are anticipated to remain broadly unchanged through 2021 with cereals as the most consumed food category in the region.

Saudi Arabia and the UAE are likely to remain the major food consumption centres during the forecast period. The country-wise share in total GCC food consumption is anticipated to remain largely unchanged until 2021.

Source :Times Of Oman