Developing storage facilities
Like other countries in the Gulf region, the Sultanate has to import most of its foodstuffs due to climatic conditions and land-use restrictions. It is working to enhance food security by increasing cultivation and buffer food grain stocks, with extensive storage facilities being developed at Sohar and elsewhere. With a planned capacity of 700,000 tons in its initial stage, and 1m tons in the second phase of the project, the refinery will supply the local market and support the growth of the processed foods sector. In addition to private sector investment, the government is also offering support to the industry via funding announced in its budget. Plans to develop a USD260m plant in a joint venture with poultry products firm A'Saffa Foods is part of a major initiative to give Oman near self-sufficiency in poultry products. Oman Food Investment Holding - a new state enterprise overseeing agri-business investments - will lead the project, in which A'Saffa has agreed to take a 20 percent stake.
Spin-offs for packaging sector
Underpinning the expansion of Oman's food processing sector will be the construction of a USD170m agricultural handling terminal at Sohar. Work on the terminal was scheduled to begin on March 2015, and when completed it will be able to handle 700,000 tons of grain and 1.5m tons of raw sugar imports annually. Packaging is another sector lined up to benefit from the expansion of food processing industries. "Our aim is to attract new investment in food and food processing industries and create a cluster than can feed the region," said Edwin Lammers, Sohar Port & Freezone's executive commercial manager. "Grain silos and a sugar refinery are already in the pipeline, and as this sector grows, the opportunities for packaging companies to serve multinational businesses will grow," he added. Investments are already in the pipeline to meet the extra demand for packaging following the planned addition of food processing projects in and around Sohar. Among those, Ompet, a joint venture between the Oman Oil Company and LG International, plans to open a USD600m beverage packaging factory in the Sohar Port & Freezone in 2016, turning out 250,000 tons of plastic bottles a year at full capacity. One of the major aims behind the project is to reduce the import requirements of Polyethylene terephthalate (PET) products in Oman and the region more generally. It will also leverage Oman's low-cost energy resources to reduce the cost of pre-packaged food imports. Other developments utilizing the output from the petrochemical plants in the region will see packaging materials capacity rise to 1.5m tons annually, according to port data.
Investing in logistics support
The focus on agri-industry is expected to have positive knock-on effect for other industries, including the domestic transport and logistics sector, which will benefit from increased freight traffic between Sohar and processing centers to other markets. The planned construction of a national rail network, scheduled to be completed before the end of the decade, will alleviate the pressure on road transport facilities. Work was set to begin in 2015 to build the first stage of the multibillion-dollar network, a 207km line between Sohar and Buraimi on the border with the UAE. The line will link to the wider regional network, facilitating imports of materials and exports of processed foodstuffs and other goods between the GCC members. Further sections of the 2235 km rail grid will eventually span the length of the Sultanate, connecting Oman's most populated areas, the ports and industrial centers.