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By Dr Hamed Bin Said Al-Oufi

The Sultanate of Oman is blessed with great variety of coastal habitats that are home to an even greater diversity of animal and plant life. Oman is one of the most important countries engaged in the Middle East in fishing from time immemorial.

The 3240 km coastline, with a commercial fishing area of 350,000 sq km, has rich fishing grounds, the potential of which is yet to be fully evaluated. Apart from its commercial value, the fishing industry is vital to the maintenance of the community structure and the well being of over 200,000 individuals nationwide.

There is a strong fishing tradition in Oman; a large number of small villages scattered along the coast from which around 28,600 fishermen are directly employed in the fisheries sector, operating around 13250 fishing boats in 2000 compared to only 11,750 fishermen recorded in 1985 (Ministry of Agriculture and Fisheries, 2001).

Fish export business is a significant earner of foreign exchange to the national economy, ranking second after oil exports and first among the non-oil exports. Oman’s fish exports represented around 23.6 per cent of the total Arab fish exports in 2000. The fisheries sector is expected to contribute around 2 per cent to the Gross National Product by 2020 compared to 0.6 per cent recorded in 2000 (Ministry of Development, 2001).

The current average annual catch of around 100,000 tonnes from the Omani seas is quite low when compared to the estimated marine resources of 5 million tonnes. Therefore, industry is impressively large and the growth potential is very promising.

The aim of this paper is to highlight the opportunities and identify challenges in the production and export of Oman’s fisheries products. Data for this study was gathered from personal interviews with key government officials, private institutions and local exporters. Secondary sources, such as Government reports, statistical records, past studies and publications, were used as well.

Oman’s fish export — an analytical review
In terms of foreign exchange earning, Oman’s fish exports fluctuated around 30,000 tonnes valued at RO 19 million between 1989 and 1994. The year 1995 witnessed a significant increase in the quantity of fish exports, reaching 59.2 thousand tonnes, which was 33 per cent above the 1994 level. In 1996 it was 34.9 per cent below the 1995 level and a further 5.4 per cent reduction was observed in 1997. In 2000 fish export touched 49 per cent below 1995 level.

This was due to the restrictions imposed by the European Union on fish imports that do not comply with the EU standards. Decline in landings by the traditional sector during the same period is another factor. Nevertheless, in 2000, 46409 tonnes of fish were exported valued at RO 37 million representing around 23.6 per cent of the total Arab fish exports. During the same year, Omani fish was exported to 60 countries as compared to 34 countries in 1996.

Fish exports can be categorised as fresh (iced), frozen, dried and salted. Out of the total exports in 2000, 32449 tonnes (70 per cent) valued at RO 22 million were exported in fresh form mainly to neighbouring markets in UAE, followed by frozen products representing 28 per cent of the total. According to a marketing specialist in the Ministry of Agriculture and Fisheries, the UAE markets are considered as an extension to the local markets as fish fetches similar prices offered in local markets. Individual traders, who operate trucks equipped with insulated fish boxes or refrigeration units, transport most of the exports directly to the UAE markets. This is borne by the fact that export to UAE market has grown by 127 per cent from 1996 to 2000 — a growth of 32 per cent per year.

However, frozen products export declined by 46 per cent in 2000 as against the targeted growth of 18 per cent over 1998 levels. In terms of value, frozen fish export declined from RO 22.2 million ($52.7 million) in 1997 to RO 12.2 million ($31.7 million) in 1999. Significant drop in exports to Korea, France, Japan and Thailand has largely contributed to this fall.

The original target set for frozen fish exports for the year 2005 was 52 million (USD 135.3 million); a growth rate of 27 per cent was targeted (Business Consulting Group, 2000). Many exporters and key figures in the sector feel that this target is difficult to achieve in view of quality issues. They also feel it is essential to realistically assess the extent of landings from Omani seas. Based on the figures available for the last four years, frozen fish exports are estimated to grow by 15 per cent per year from RO 12.2 million in 1999 to RO 28.2 million in 2005.

The GCC has been the main market representing 72 per cent and 64 per cent of the total quantity and value of Omani fish exports respectively. The Asian markets ranked second in terms of quantity (13 per cent) and value (14 per cent). The EU markets occupy third place importing around 8 per cent of the total quantity exported which represent 12 per cent of the total value of fish exports in 2000..

Causes for downward trend
The quality of seafood is the key to a successful penetration of export markets especially the more lucrative markets in Europe, Japan and North America. These markets imposed strict regulations in fish trade. Since 1997 Oman, like other developing countries, has experienced some difficulties with exports to the EU because of the lack of appropriate quality control measures.

A shift by the EU nations to preventive systematic approach provided by the Hazard Analysis Critical Control Point (HACCP) concept, (which was included in the EU Council Directive 91/493/EEC) became one of the main technical characteristics of the new inspection and quality control procedures.

The response of the fish industry to meet the European requirements was not timely and the ban went into effect in July 1998. This has caused severe downward trend in local export reflected by poor export performance. The compliance process, to meet the European standards, has resulted in costly and time-consuming macro and company-level specific actions.

In addition, the demand for environmental standards is also increasing in developed countries. (Given that fish is a highly traded product, stringent environment regulations could prove difficult to comply with for many developing countries and constitute a technical barrier to trade. However, in the case of Oman, on-site interviews indicated that no complains or disputes have emerged as a consequence of an environment regulations imposed by Omani importing partners aside from the EU ban on quality standards.)

Omani fishing companies have not pursued diversifying their export markets other than GCC and the EU markets. They seem unwilling to take the risk associated with exploring new markets.

Opportunities and Challenges for Omani Exporters
As already mentioned in the beginning of this article, the current average annual catch of around 100,000 tonnes from the Omani seas is quite low, compared to the estimated marine resources of 5 million tonnes. Therefore, Oman’s fishing industry is impressively large and the growth potential is very promising.

However, as competition in export markets is getting intense, penetrating new markets will become crucial for survival (Chang, 2001). It would be worthwhile in the long run for Omani exporters to be more aggressive in exploring the Asian markets as well as the African markets in view of their size and potential.

To compete effectively with other food exporting countries and maximise foreign exchange earnings, a country like Oman, for example, must ensure that its food products are not only demonstrably safe, but of sufficiently high quality to be acceptable and competitive . Consumers in different markets have different patterns, trends and preferences, and consequently, local exporters have to be aware of such characteristics.

In 1998, Oman officially announced quality management regulations (Ministry of Agriculture and Fisheries Decision No. 136/98) on exported seafood products to meet the increasingly strict international standards on food safety. Available evidence suggests that the government’s efforts to enact a quality assurance system for the fish processing companies proved successful, with result, the EU lifted the ban within a year i.e. in October 1999. Through collective efforts by the government and the industry, 25 processing plants (50 per cent of existing processing plants) were upgraded to meet the international standards by the end of 2002.

The EU consumption of fishery products is considerably high, and their current fishery production is not sufficient to meet this large demand due to over-fishing and the implementation of the European Fisheries Common Policies, which restrict catches in order to preserve European fish stocks. Consequently, the EU depends heavily on imports and it is expected that the quantity of fish products imported by Europe will continue to increase.

Among all markets, the EU sets some of the highest demands in terms of product quality assurance. The legislative requirements established in a series of harmonised regulations in force in the EU since early 1990, are based on directives 91/493/EEC and 91/492/EEC (CBI, OSEC and PROTRADE, 1998). The directive 91/492/EEC imposes strict recommendations on building, construction, equipment, purification tanks and storage of products, whilst directive 91/493/EEC introduced the requirement for quality assurance to be based on the HACCP system, which imposed a shift from traditional end-product inspection and certification to a preventive assurance approach.

This means that the control should take place in the exporting countries instead of at point of entry to the EU. As a consequence of the implementation of the EU Directives, exporting countries must submit complete legislations to the Commission concerning the export of seafood products, as well as complete report on the functioning of its controlling authority and the infrastructure in place.

The Commission sends delegations to visit the exporting country to verify its compliance with the EU standards. A permit may be issued and an official controlling body in the exporting country will be recognised if the control procedures meet the required standards.

Another challenging task for Oman and the local fish industry is to meet the requirements stemming from the application of WTO Sanitary and Phytosanitary measures (SPS). The SPS agreement requires the use of international standards and recognises the right for WTO members to set their SPS standards well above the international standards based on their own risk assessment, provided that they are scientifically based and non discriminatory (Article 3- Agreement on SPS). Such measures may constitute a technical barrier to trade and limit market access to developing countries, which encounter difficulties to comply with importing countries’ high-level standards.

The compliance process most often requires substantial investments in establishing national regulatory bodies , inspection, testing and certification procedures, training, equipment, methods of production and technical assistance. To meet the international standards in fish quality, Omani fishermen are encouraged to improve the quality of their landings through government programs. Little progress has been achieved in this regard due to the small size of fishing boats, which limit their ability to carry ice.

Consumers in developed countries are also concerned about the sustainability of fish stocks and the incidental catch of turtles in the shrimp fishery, dolphins in the tuna purse seine and drift nets and birds in the longline fishery. The US imposed a ban on import from certain countries that do not address environmental issues in their fisheries legislations. Of great concern to the US is the catch of turtles in shrimp trawl and dolphins in the tuna fishery. Some local exporters that target developed countries’ markets have introduced eco-labelling for their products.

The decrease in the landings of some commercial fish species has also caused serious difficulties to local exporters in securing raw materials of fish for the export market. It is safe to assume that some coastal fisheries stocks are exploited to their maximum sustainable yield and improvement in the landings from existing fishing grounds may not be possible.

As a result, fish exporters have suffered from an insufficient supply of raw material of fish processing and export. Many processors claim that there has been an insufficient supply of fish to their processing plants and consequently, fish prices in the landing site increased sharply especially for high value species.

Higher prices for raw materials coupled with high custom duty for Omani fish in EU markets reduce companies’ competitiveness in these high value markets. Efforts need to be directed at exploiting new fishing grounds especially deep-sea fish resources, though huge investment would be needed to modernise the existing fishing fleet.

Another serious hurdle faced by exporters from developing countries is the different standards being imposed by importing countries to ensure products meet their domestic requirements. The differences between the legislation, organization and function of inspection services are among the most important practical difficulties faced by developing countries in complying with the requirements imposed by importing countries.

The certification requirements of different countries cause inconvenience to both the exporter and the responsible government regulatory agency. There are a number of different forms and languages, which often result in confusion.

Conclusions
Local exporters seem very weak to face the challenge due to shortage of raw material at home and strict trade legislations from abroad. The Government, through its different institutions such as the Omani Center for Investment Promotion and Export Development (OCIPED), can play a pivotal role in strengthening fish exports by exploring new markets such as Asia and Africa.

Information on overseas markets are not available to individual exporters, therefore, the government needs to provide assistance for individual companies to secure the marketing information as a public service. Fresh fish exports (low value added fish products) to Dubai markets need a quick attention from the Government by introducing appropriate measures in response to the aggressiveness of Dubai markets.

The value of such an important product could be tripled if converted into value added products and exported to the more lucrative markets in Japan, EU and the United States. In his study of Omani fish export, Chang proposed a system of quota on fresh fish exported across the border (Chang, 2001). Total quantities of fresh fish export annually could be limited by major species. This will ultimately result in local exporters having enough raw materials for their plants.

It appears that local exporters are not aggressive enough to overcome the challenges imposed by the rapid globalisation of fish trade and new environmental and health legislations. As international competition is getting intense, it is not in the interest of local producers to wait for the improvement of situation.

Neighbouring markets such as Dubai may take advantage of Oman’s situation and develop their fish processing industry very rapidly, leaving Oman as a mere supplier of raw materials, thus gaining very small return for its marine resources.

For Oman to be an important exporter of fish products, an ambitious capital investment needs to be directed towards fisheries sector in order to strengthen fishermen’s ability to increase their landings and maintain the quality of the landings. It is clear that the average annual catch of around 100,000 tonnes from Omani seas is quite low relative to the estimated marine resources of 5 million tonnes. However, this needs to be backed up with strict fisheries legislations to ensure the sustainability of the fisheries.

* Dr Hamed Bin Said Al-Oufi is the Assistant Professor and Assistant Dean for PGS&R
Department of Marine Science and Fisheries, College of Agricultural and Marine Sciences,
Sultan Qaboos University

Oman Observer 31st December 2003