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Return to tradition part of forward-thinking plan

Interview - February 29, 2012
Oman has banned trawling and returned to old-fashioned fishing methods. Mr. Said Al Rawahi, General Manager of the Oman Fisheries Company, describes how this move will ensure the sustainability of vital resources, and help make the ‘Made in Oman’ brand synonymous with quality

Oman’s fishing waters are amongst the richest in the world and the government is committed to ensuring the environmental sustainability of the fisheries. Trawlers have been banned and instead traditional Omani fishing is being promoted. How is this approach affecting the industry?

Actually, I was one of the people who voted to ban the trawling, knowing how much damage they cause the environment. At the same time when the government banned the trawlers, they gave enough time for the transition to take place smoothly. They gave companies two years to adjust to the changes before the ban came into effect.

The decision to ban the trawlers gave a push to many companies, like Oman Fisheries Company, to strengthen their links with local fishermen. Today we have 250 boats operating with us, with three fishermen in each boat. In banning trawling, we actually came to depend on ourselves and the support of local communities, particularly fishermen. We have trained the fishermen in how to recognize, take care of and enhance the quality of the catch. Earlier on, we faced a lot of quality control problems and large quantities were rejected. But now we are providing fishermen with the proper boats to store and chill the fish immediately after their catch. We are receiving good quality product so we are happy, and the fishermen are also happy. Overall, it is a win-win situation and the ban has had a positive impact on our relationship with the local fishermen.

Oman Fisheries Company was founded in 1987 by Royal Decree. Could you give us a brief overview of the milestones in the history of the company?
One of the most interesting things about our formation concerns an article that does not allow either individuals or companies to own more than 30,000 shares out of 12.5 million shares, which is less than 0.25%. That is in order to give local fishermen the opportunity to participate as owners of the company. We were the largest public shareholding company up until three years ago. Almost 70% is owned by local fishermen. They are actually the owners of this company, while the government owns the remainder. The good thing about this publicly listed company is that we already distributed more than 200% in dividends. The company’s capital is 12.5 million Omani Rials (OR), but the company’s worth exceeds 18 million OR.

Initially we depended on selling the rights of the quota to foreign companies because at that time, immediately after the formation of the company, we had no experience. We learned from them and started to establish a market for Omani fish. Then gradually we started building our own factories. Now we have five local factories that process the fish, one of which is specialized in producing breaded products.

In addition to that, some investors here in Oman are not fisheries professionals, and when we listed, they invested in a sector which they knew nothing about. They started with the assets, and in order to help those investors and to increase our turnover, we leased nine factories here in Oman. So we own five local factories and lease another nine.

Also, our production was affected in the year of the Indonesian tsunami in 2006. In that period of time, we faced the problem of getting catch from the local market. Then, as our exposure to global markets was increasing, we decided to start expanding overseas. We now have two factories in Yemen, one factory in Saudi Arabia and one in Bahrain, as well as two representative offices for sourcing our product – one in India and one in Vietnam.

So in total we have nine domestic leased plants. Then we have the overseas offices in India and Vietnam which operate under the International Trading Division. They are sourcing the raw material from India and Vietnam and seeking a market for their export.

Even though Oman is a fish-producing nation with almost 170,000 tons per year, about 50% of that production is exported because the prices abroad are more competitive. As a consequence, Oman suffers from occasional fish shortage in the domestic market. In your opinion, what is the best way to meet the demands of the local market?

In Oman, the fisheries sector goes hand-in-hand with the season. In June, July and August we are affected by monsoon rains, and with waves of more than five meters, the fishermen are unable to access fishing grounds. The fishing grounds are limited to areas where they are sheltered. During this period, we are always faced with the problem of price increases – not because of an unavailability of the fish itself, but because Omanis are accustomed to eating fresh fish. Frozen fish is available but people do not want it, they only want fresh fish and in that case, they have to pay a higher price for it. Fishermen are not going to risk their lives in treacherous conditions without receiving a good return.

Another problem we are facing right now as a sector is increased competition from the oil and gas, banking and tourism sectors, which now attract the majority of locals for employment. The younger generations are not interested in fishing as it is a labour intensive industry, so we depend more on the older generations. The market demand is there and so is the stock, but our expansion as a sector is limited due to the limited number of fishermen. This is a human resources problem.

The government is committed to creating job opportunities for the fast growing population. What can be done to boost the profile of the fisheries sector and make it more appealing for young Omanis looking for employment?

We are currently running trials to mechanize the fishing process. For example, instead of throwing the nets and hauling them by hand, we are testing the use of machines. The catch is usually less because in fishing, a human being is much more efficient than a machine, but this way we reduce the difficulty of the job. The government has opened two institutes to train local fishermen to use this new modern technology, which is another initiative.

Also there is a difference in price of fish locally compared to exports. In Oman we faced the problem of not having a central market for the sale of fish. We have retail markets, but fishermen do not want to wait for the retail markets. The government has already started building a new central market in Barka, which should open by the middle of this year. It will actually be next to our warehouse and it is going to benefit the fishermen greatly.

Can you elaborate on the technology and processes you are using at Oman Fisheries Company?

We are using the standard technology, but we are not compromising on quality, that is the secret to the success of the Oman Fisheries Company. In the fleet and on the boats themselves, we are trying to use automated baiting machines and automated long line machines. We are cooperating with Denmark in acquiring this technology.

We use ordinary freezing methods, which utilize either blast freezers or plate freezers, in our factories. But we are trying our best to diversify our methods from ordinary ways of freezing to selling the fish fresh because the margins are good.

The good thing about the current development in Oman and the Omani airports is that connections are much easier now. Previously, we had a big problem with exporting fresh. Right now, we are exporting an average of five tons a day to Europe.

Your products include top quality fresh fish at the higher end of the market as well as a wide variety of frozen and breaded fish products. Could you give us a breakdown of your market? What products are growing in demand both home and abroad?

We produce around 25,000 metric tons of fish per annum. Out of that, around 24% is fresh fish, about 70% is frozen and about 6% are breaded products.

The fresh fish goes mainly to the local and European markets. Italy, France and Spain are the main importers of Oman Fisheries Company.

In the frozen sector (70% of the total production) around 80% goes to China and the Far East. That is because of the specialty of the species themselves, which includes small types of fish which have no other market than China. For example, the Chinese have given the highest price for cuttlefish in the last three years. Europe also gives us a good price but no one can compete with China, so they are the major importer. The remaining 20% of frozen fish goes to Europe, the US and Africa. But this depends very much on the species themselves and their availability during the year. African countries usually take the small, low priced fish. We are mainly exporting the high value species such as lobster, jumbo shrimp, and other species like amberjack and grouper to the US.

Unfortunately, there is a drawback for us in the US as the US market demands continuity. We depend on seasonality and therefore we are unable to fulfil this requirement for the time being. But with the government’s current push to develop fish farming, I think we will be able to overcome this challenge and increase our presence in the US market.

Breaded fish goes mainly to the Middle East and North Africa (MENA) region, primarily Egypt, Syria, Lebanon, Jordan, and Libya. We are now facing some problems in Libya and Syria due to the developments that are taking place in those countries. The Iraq market has started opening up too recently. Those are the main markets we are concentrated on because you need to add flavours for the breaded products. Arab flavours are a bit different from the palate in other nations, such as Europe. So we prefer to concentrate on a local flavour and market it in the MENA region.

As a vertically integrated company, you also operate your own fleet of trucks to distribute stock to various outlets.

Up until 2006 we were not allowed to sell locally, mainly because they wanted to give the local fishmongers a chance to develop their own livelihood without large scale competition. Since Oman Fisheries is a big company, it was considered unfair competition for the locals if we were to enter the local market. After seeing that there were not many fish shops available in the country, and that the majority of fish are exported, the government requested that our products become available in the local market.

We actually started by distributing our freezers in the region with our fleet of trucks filling those freezers with the frozen materials. But, the aim was that we would be able to change the consumption habits of local customers from fresh to frozen fish. Unfortunately, we have not succeeded very well with this, except in very small areas. Now we have decided to open our own shops. We currently have four shops and an additional eight shops will be opened by August.

What are your ambitions for the future of Oman Fisheries Company?

We have a strategic plan for the company, which all of our employees are working very hard to accomplish. By the 2014/15 financial year we aim to have a share of 30% total Omani production and this will increase our turnover to 40 million RO, to handle 48,000 metric tons, and to generate around 3.8 million RO in net profit. We aim to be the number one fisheries company in the region by 2015 in terms of sales.

Fish farming started around the world in the 1970s and today, 30% of global fish production comes from fish farming. It is quite new in Oman, but there is a huge potential for growth. How do you see the future of fish farming in Oman?

Fish farming is an excellent opportunity for overseas investors to explore in Oman. Our advantage is that we do not have heavy industries so our pollution levels are extremely low. If we wait for Omani companies to start fish farming, it will take a longer time. The business mentality here in Oman is still about achieving quick profits, but in fish farming it takes time. The earliest returns will not be seen for 18-24 months, so it is a long term investment. That is why the government needs to attract investors and really promote Oman as an attractive destination for fish farming. We need know-how to prove that this kind of project can succeed in Oman.

We conducted a pilot project for fish farming at Oman Fisheries Company, which proved to be very, very attractive. We found sea breams from the Mediterranean and brought the young juvenile fish from Greece. We actually managed to grow them in just 15 months, while in the Mediterranean it takes 18-24 months, so Oman’s conversion ratio was better.

But from our pilot project we found that we have two main areas of difficulty. Firstly, we do not have hatcheries here to provide the juvenile fish, so they have to be imported. During the transportation you naturally lose some of the fish, and of course they have to be transported in water, which is a very high cost procedure. We feel that it would be very important to develop hatcheries here in Oman, but no investor will put their money upfront into a hatchery unless they have a market secured. So it is a bit of a ‘chicken and egg’ problem of what comes first. I feel that if the government can initiate a hatchery, it will help to attract investors.

Secondly, there is an issue with the feed, which needs to be imported. For our pilot project we had to import it from Netherlands because it is not available here. But the feed matter can easily be overcome and produced by factories in Oman if the projects are here.

You regularly attend international seafood exhibitions to keep up to date with the latest trends in the industry and to market your products. How big is the interest in sourcing seafood products from Oman? What response do you get to the ‘Made in Oman’ brand?

Unfortunately, the branding is mostly associated with the frozen material. The fresh material loses its identity once it enters the market. Of course the vendors know it, but the only place a consumer can see ‘Made in Oman’ is on frozen materials.

I remember the first time I attended a Seafood Show in Boston in 1994, two things struck me. The first was that they served Omani lobster in Boston, but they did not know where Oman was on the map. The second thing was that I entered a restaurant and saw Zanzibar roast shrimp, with an atlas of where it was located. It showed the first ambassador who came from Zanzibar to the US. But he was actually an Omani, Zanzibar being our second capital and part of our Empire at that time. But the link to Oman was never mentioned.

Distributors respect the quality of Oman seafood products, which is in high demand when compared to the Indian subcontinent or Brazil. They export similar products, but we are usually given preference. The only obstacle for us in the US market is the continuity dilemma, due to natural causes during monsoon season when we have to stop fishing. Touch wood - I used to think of it as a natural protector for our fish to allow them to reproduce during those months.

Last year at the Boston Seafood Show, you received orders worth 150,000 USD, and orders to the tune of 500,000 USD are being negotiated with the US and Canadian buyers. How happy are you with the results from Boston?

Unfortunately we are unable to fulfill the need in the US due to the aforementioned issues. The only thing that may allow us to deliver is fish farming. If you are successful and in demand in the US market you do not need to depend on any other markets. Yes, the US has some financial problems, but it is still the number one global market. China is number two, but they still cannot reach two-thirds of the business of the US. The US may be suffering right now, but it is still a huge market.

The Free Trade Agreement (FTA) we have with the US is also a good advantage that helps us a lot, considering the quantity that we are exporting. Right now we are trying to introduce, with the aid of the FTA, our breaded product to the US with the same flavour, because there are so many people from the MENA region living in the US. We are promoting these products and hope it will take off.

What do you feel is important for the Americans to know about Oman today?

First of all, many people do not know that there is a country in the Arab region that has maintained its traditional culture, but is still very friendly to foreigners. It is also important to know that Oman is a country with a very transparent and well-regulated legal system. It is an attractive destination for investors as it provides a business-friendly environment for secure investments.

At the same time, Oman is a very beautiful country and we have the sea, beaches, deserts, and mountains. There are many attractions for people who wish to visit Oman. We welcome all our visitors, and once they come to Oman they will witness our traditional hospitality.