Presentation made to a public audience,

1. Food Security in Oman
Position and Prospects
Hemesiri Kotagama
Department of Natural Resource Economics
College of Agricultural and Marine Sciences
Sultan Qaboos University
Hemesiri Kotagama

2. CONTENT
Global position on food security
Oman’s position on food security
Oman’s prospects to achieve food
security
– Wheat
– Fish
– Role of Government
Hemesiri Kotagama

3. GLOBAL POSITION ON FOOD
SECURITY: PAST
 Malthusian Theory (1798)
– Exponential growth of population and arithmetic
growth of food production will leads to a dooms day.
– Never happened in mass scale, although there had
been food crisis's during short periods in some areas.
– Last experienced was during early to mid 1970s.
– Crisis was short lived due to benefits of the green
revolution.
Hemesiri Kotagama

4. GLOBAL POSITION ON FOOD
SECURITY:PAST AND PRESENT EXPECTATION
Definition of food security (UN/ FAO)
– Food security exists when all people, at all
time, have physical, social and economic
access to sufficient, safe and nutritious food
which meets their dietary needs and food
preferences for an active and healthy life.
Millennium Development Goal (UN)
– Halve between 1990 and 2015 the proportion
of people who suffer from hunger.
Hemesiri Kotagama

5. GLOBAL POSITION ON FOOD
SECURITY: PRESENT REALITY
 Since 2007
– “silent tsunami of hunger is sweeping the world.”
 Within 2 years
– Food prices rose by 83%.
– Wheat and rice prices have nearly tripled (300%).
 1% increase in food price reduces the calorie
intake by 0.5% among the poor.
 Rising food prices have pushed 100 m people
below poverty line.
 Poor countries were double punched by rising
food and petroleum prices.
Hemesiri Kotagama

6. GLOBAL POSITION ON FOOD
SECURITY: Economic Reasons
 Price is determined by the interaction of demand
and supply.
 Demand based reasons.
– Economic boom in developing countries (India and
China)
 37% of world population in India and China
 Increased income (more than 600 million new
middle class)
 Leading to increased demand for food and meat
– Corn and wheat diverted to feed from food
– Food conversion ratio (700 cal of animal feed
produces 100 cal in beef, 7:1)
Hemesiri Kotagama

7. GLOBAL POSITION ON FOOD
SECURITY: Economic Reasons Cont.
 Threat of climate change and high petroleum prices induces agro-fuel
(ethanol) production.
 In the past demand for grain was driven by largely population growth and
demand for grain for animal products (about 21 m tons a year).
 President Bush signed the “Energy Independence and Security Act” on
19th
December 2007, which mandates 36 billion gallons of bio fuel to be
produced yearly by 2022.
 By 2008 demand for grain for bio fuel is 114 m tons (28% of the projected
harvest).
 By 2020 US and EU demand for grain for ethanol production will be 400 m
tons a year.
 US estimate is that the impact of bio fuel production as 3% increase in
food prices but WB estimate is 75%.
 China aims at producing 15 billion litres of bio fuel by 2020. To produce 1
litre of ethanol from maize 2400 litres of water is required.
 Corn requirement to fill a tank of a car with 18.5 gallon capacity could feed
a human being for 270 days.
Hemesiri Kotagama

8. GLOBAL POSITION ON FOOD
SECURITY: Economic Reasons Cont.
Market Speculation for Food
– Investments in grain and livestock
futures has more than doubled to about
$65 Billion from $ 25 Billion in
November 2007.
– More than half the value of corn, soya
and wheat of US (the largest exporter)
has already been bought.
Hemesiri Kotagama

9. GLOBAL POSITION ON FOOD
SECURITY: Economic Reasons Cont.
Supply Based Reasons
Rise in oil prices increasing the cost
of production of food and transport.
– Modern farming is energy intensive
– Price of fertilizer increased much faster
than food prices (2007-2008)
Hemesiri Kotagama

10. GLOBAL POSITION ON FOOD
SECURITY: Economic Reasons Cont.
Climate Factors
Drought in major grain producing
areas
– Australia, second largest exporter of
wheat
Hemesiri Kotagama

11. GLOBAL POSITION ON FOOD
SECURITY: Economic Reasons Cont.
Complacency
– Ignoring investments in agricultural
education, research and technological
adoption.
 Investment in agricultural research in developing
countries is only 0.6% of GDP richer countries it is
5% of GDP.
Removing government intervention
and allowing the market to provide
food
– Structural adjustment/ PrivatizationHemesiri Kotagama

12. WORLD CONCENSUS
 “Food issue not only concerns the economy and
people’s well-being of each country but also
bears on the development and security of the
whole world”.
 Chinese President, Addressing the G8 Leaders in Tokyo
9th
July 2008.
 Hope
– China feeds 20% of the world’s population
with 9% of world’s arable land.
– China has met 95% of its food demand and
exported 8 m tons of grain annually.
Hemesiri Kotagama

13. GLOBAL POSITION ON FOOD
SECURITY: Is it real?
 Reutlinger et al. (1986)
– “The world has ample food. The growth of global food
production has been faster than the unprecedented
growth of the past years. … millions of poor people do
not share this abundance. They suffer from a lack of
food security caused mainly by a lack of purchasing
power”.
 Leathers and Foster (2004)
– “… the world food problem has grown less severe, but
is still a long way from solution”.
 It may not be real, we may have the
resilience to overcome temporary
difficulties.
 However, it is a ‘wake-up’ call. Hemesiri Kotagama

14. OMAN’S POSITION: PAST AND TREND
Oman up to 1970’s with low
population (0.65 m) and subsistence
farming has been nearly self-
sufficient in food.
– Past (1970) cultivated wheat extent was
1700 ha and produced 3000 M Tonnes,
imports was 0 US $.
– Now (2006) the cultivated wheat extent
is 500 ha and produced 775 M Tonnes,
the import is 294 thousand US $.Hemesiri Kotagama

15. Hemesiri Kotagama

16. Hemesiri Kotagama

17. OMAN’S REPORT TO WORLD FOOD
SUMMIT 2006
 Food security 2005 (% domestically
produced)
– Milk 29%
– Red meat 34%
– Poultry eggs 53%
– Poultry meat 35%
– Fish 134%
– Dates 108%
– Total fruits 70%
– Total vegetables 56% Hemesiri Kotagama

18. OMANS POSITION: PRESENT
Annual inflation in Oman in the past
18 years was 1% or less.
Inflation this year 10%.
Food prices have increased by
– 17-20%.
Hemesiri Kotagama

19. OMAN’S SHORT TERM RESPONSE
Secured 200,000 tonnes of rice,
sufficient to feed the population for
2 years. (Observer, 4th
May 2008)
State workers salaries were
increased by 43%.
Hemesiri Kotagama

20. OMAN’S PROSPECTS: WHEAT
Hemesiri Kotagama

21. OMAN’S PROSPECTS: WHEAT
Hemesiri Kotagama

22. OMAN’S PROSPECTS: WHEAT
World Average 2.75 MT/Ha Oman Average 3.16 MT/Ha
Hemesiri Kotagama

23. OMAN’S PROSPECTS: WHEAT
 Oman has traditionally grown wheat and the climate
is conducive for wheat production.
 At present Oman is in a position to import its wheat
requirement. Although wheat prices have increased
recently, the increase in oil prices may compensate
increases in wheat price.
 Reliance on imported wheat alone may put Oman at
risk in the event of wheat embargoes.
 Considering the limited supply of suitable land and
water for agriculture, major shifts in land and water
use away from crops cultivated at present will be
required to produce significant amounts of wheat.
 Therefore, Oman may aim for and achieve partial
wheat sovereignty.
Hemesiri Kotagama

24. OMAN’S PROSPECTS: FISH
The decreased availability of fish in domestic markets is
despite increased population and income in Oman.
0
20
40
60
80
100
120
140
160
2000 2001 2002 2003 2004
Fish landed Total exports Local use
000Ton
29%
-12%
83%
Hemesiri Kotagama

25. OMAN’S PROSPECTS: FISH
It was hypothesized that the
transport function of Omani fish
markets is inefficient.
– The transport function is favoring export
markets instead of domestic markets.
A “Transport Model” based on linear
programming was developed for the
analysis.
Hemesiri Kotagama

26. Sohar
Masirah
Mahoot
JBBA
Dubai
Ibri
Nizwa
Seeb
Hemesiri Kotagama

27. Observed and Optimal Prices: Kingfish
Hemesiri Kotagama

28. OMAN’S PROSPECTS: FISH
Oman’s fish market if efficient, yet
favouring exports over domestic
markets.
The big “trade-off” : Efficiency vs.
Equity.
Less fish in domestic markets will
impact food balance and security,
particularly in the interior areas.
Hemesiri Kotagama

29. OMAN’S PROSPECTS:
ROLE OF GOVERNMENT
 Given resource scarcity and increased
population and income;
– Oman will have to depend on world market for
food.
 Government has a role to reduce the risks of
high prices and export restrictions etc.
– Maintain justifiable planned buffer stocks and not ‘panic buy’.
– Establish a unit to monitor and guide food imports by private
sector (Economists).
– Diversify food import sources.
– Encourage investments on agriculture (education, research
and production) in Oman and in foreign nations (Food
Diplomacy). Hemesiri Kotagama