Business Opportuntites in Qatar - Agriculture and Aquaculture
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I BUSINESS OPPORTUNTITES IN QATAR - AGRICULTURE AND AQUACULTURE. Dr. Per Christer Lund, Innovation Norway Dubai EXECUTIVE SUMMARY Qatar is well known as a small but wealthy oil nations in the Middle East. Its economy is built around its vast oil and especially natural gas resources and up until recently have heavily depended on the other gulf states for it’s supply of consumer goods, food etc. 80% of it’s trade went though Saudi Arabia and the Emirates up until 2017. It was known as a rather difficult and costly country to establish business for foreigners, and aside from Jotun, Hydro Aluminium, DNV GL and some upstream petroleum service companies the Norwegian presence is limited. In 2017 Saudi, UAE, Kuwait (and Egypt) launched an economic and political blockade of Qatar, forcing the country to rethink its policy regarding its own economy structure and attractiveness for foreign company establishment and investment. The government has over the last two years started a number of initiatives to diversify it’s economy; increase self-sufficiency on food sector and establishing free-zones and other regulatory schemes to attract foreign investment. In 2018, the Qatar Free Zone Authority (QFZA) was established to oversee and regulate the new free zones in Qatar, offering opportunities and benefits for businesses seeking to enter the Qatar markets. According to QFZA, Qatar is on its way to compete with e.g. Dubai as one of the most attractive markets in Middle East. Refer to appendix for more details. Innovation Norway Middle East (IN) is cooperating with QFZA to identify and promote business areas where Norwegian companies may have advantages. Note that we are not addressing the “obvious” oil and gas market in Innovation Norway Middle East, #2109 Damac Executive Heights, Barsha Heights (Tecom), Dubai, UAE Email: [email protected] Phone: +971 54 53 888 01 www.innovationnorway.no I this report. Innovation Norway and Norwegian Energy Partner (NORWEP) is running a separate promotion initiative for this sector. This report is specifically addressing the two latter segments: food and waste/water management. AGRI- AND AQUACULTURE MARKET Due to the climatic and geographical conditions, Qatar agriculture and seafood industries are very small – less than 0.2% of GDP (about 300MUS$/year) and would under “normal conditions” been relatively uninteresting for Norwegian companies. The economic blockade of 2017 has, however, changed the situation. Before the blockade, Qatar imported most of its food from Saudi and UAE. In a push to increase food security, the government injected 25MEURO into the agriculture industry and managed within two years to reach self- sufficiency in dairy products and fresh poultry; triple number of farms and significantly increase production of vegetables. The government has also started initiatives to make Qatar self-sufficient on seafood. Today fisheries production and some limited aquaculture stands at 15,000 – 16,000 tons, while the national demand is around 21,000 tons. The gap of 6,000 tons will be covered by new aquaculture facilities, mainly local species (hamour) and tilapia. The significant increase in farm production is largely due to high-tech solutions for vertical farming, advanced greenhouse solutions, hydroponic farming and water/energy-effective solutions. OPPORTUNITIES FOR NORWEGIAN COMPANIES: The Qatari agriculture and aquaculture markets are small compared to e.g. Saudi, Iran and to less extent UAE and Oman. The market value for agriculture is 300 MUS$ and total demand for seafood is only about 21,000 tons/annum. However, the 2017 blockade of Qatar have motivated the government to boost the countries food production capabilities using high-tech, state-of-the art technologies and methods, of which this very rich country can afford. At the same time, the Qatari government is pushing for diversification of its oil&gas-centric economy and are actively promoting investors and foreign companies to establish in the country. This should open relevant opportunities for Norgwegian companies with advanced solutions in the food production industries: - Advanced technologies for agriculture and horticulture: o greenhouse and vertical farming; o energy, water and fertilizer efficiency o effective food processing o recycling and reuse of food waste - Aquaculture: o Efficient cage based aquaculture (rather limited market) o RAS / land-based systems o Seafood processing o Feed production, feed efficiency. - General waste and water management Innovation Norway Middle East, #2109 Damac Executive Heights, Barsha Heights (Tecom), Dubai, UAE Email: [email protected] Phone: +971 54 53 888 01 www.innovationnorway.no I HISTORY AND BACKGROUND Source: http://emerging-markets-research.hktdc.com/business-news/article/Middle-East/Qatar-Market-Profile/mp/en/1/1X000000/1X06O28M.htm Ruled by the Al Thani family since the mid-1800s, Qatar within the last 60 years transformed itself from a poor British protectorate noted mainly for pearling into an independent state with significant oil and natural gas revenues. Innovation Norway Middle East, #2109 Damac Executive Heights, Barsha Heights (Tecom), Dubai, UAE Email: [email protected] Phone: +971 54 53 888 01 www.innovationnorway.no I Following decades of siphoning off petroleum revenues by Qataris emirs permanently residing in Europe, Emir Hamad bin Khalifa Al Thani overthrow his father in a bloodless coup in 1995 and started transforming the state into its modern state as one of the economically most successful countries in the world. Although small in size, Qatar has taken a prominent role amongst the GCC states and in Middle East, serving as meditator for regional conflicts; establishing the pan-Arab news network Al-Jazeera and by 2007 obtaining the highest GDP per capita in the world. However, over the last decade Qatar’s relationships with its neighbors have been under stress. From 2011 Qatar supported regional “Arabian Spring” revolutions, stressing the relations with Bahrain, Saudi Arabia and UAE. Although the current Emir Tamim bin Hamad Al Thani worked to warm the relations, in 2017 the triplet plus Egypt cut diplomatic and economic ties with Qatar in June 2017. The main reasons include Qatar’s continued ties with Iran; its support for the Muslim Brotherhood; and the continued operation of Al-Jazeera. Please refer to appendix for illustration of the 13 demands presented by the blockading quartet to Qatar. QATARS ECOMOMY Qatar is endowed with rich oil and gas deposits among other natural resources, making it among the world’s richest economies. Up to 70% of government income is generated from oil and gas sales. Qatar is working to reduce its reliance on oil and gas. In the past few years, it has developed other industries such as ammonia, tourism, finance, hydrocarbons, fertilizers, petrochemicals, steel industry, cement, and commercial ship repair. See appendix for overview of export and import products and partners. The economic blockade from 2017 was expected to have serious negative impact on Qatar’s economy, given that one-sixth of import was from Saudi and UAE and that Qatari banks relied on lending from GCC peers. However, two years after the boycott, the implications of the economy have been far less severe than expected. The fiscal, external and banking sectors has fully recovered supported by government financial interventions in banking and other industries. Qatar’s economy grew 2.1% in 2017; 2.5% in 2018 and expect to grow 2.8% in 2019 according to IMF. Although the oil and gas industry has not been influenced much, tourism and real estate sectors has taken hits. The boycott has forced Qatar to be more self-reliant on many products, especially the food production, and also been a boost for the long-term strategy of diversifying Qatar’s economy from a gas-centric economy – the “Qatar First (2011-2016) and Second (2018-2022) National Development Strategies”. The boycott has furthermore motivated the government to easy regulations and constraints for attracting foreign investment and foreign company establishment. The 2018 whitepaper from Deptwire named “Qatar: A year on from the boycott” gives an excellent analysis. http://www.debtwire.com/pdf/Qatar-SpecialFeature.pdf Innovation Norway Middle East, #2109 Damac Executive Heights, Barsha Heights (Tecom), Dubai, UAE Email: [email protected] Phone: +971 54 53 888 01 www.innovationnorway.no I BIO-ECONOMY SECTOR – AGRI- AND AQUACULTURE Qatar, like the five other wealthy Gulf states, imports up to 90 percent of its food requirements. It has a population of about 1.7 million people, an estimated 20 percent of them Qatari citizens and most of the remainder foreign workers. All domestic production gets consumed in the local market. Qatar has been investing in large areas of farmland overseas to ensure access to food supplies. The agricultural arm of Qatar’s sovereign wealth fund, Hassad Food, has bought land in Sudan and Australia, and has announced plans to spend hundreds of millions of dollars on agricultural projects in countries including Kenya, Brazil, Argentina, Turkey and Ukraine. AGRICULTURE: Agriculture in Qatar is inherently limited in scope due to the harsh climate and lack of arable land. In spite of this, small-scale farming, nomadic herding, and fishing were the predominant means of subsistence in the region prior to the 20th century. Sea-based activities such as pearling and fishing served as the primary sources of income for Qataris until the commencement of oil drilling in 1939. Despite the country’s arid climate and desert landscape, modern farming techniques have enabled the country to produce agricultural products commercially. Qatar s agriculture industry represents only 0,18% of the GDP, and only 6% (670 km3) of the land in Qatar is arable or suitable for use as pastureland, these less than 100km3 is currently used for farming. Crops include mostly date palms, while vegetable such as carrots, potatoes, onions and fodder beets are also some of the most important crops produced by Qatari farms.