Oct. 7, 2020
When one thinks of Oman, dairy farming might not be the first thing to come to mind. However, with Mazoon Dairy Company, Oman's flagship dairy company established in 2015 with joint funds from Oman Food Investments Company and government and pension funds, Oman hopes to change this perception. The company's current goal is to produce enough fresh milk and dairy products to meet Omani demand. The company later plans to expand to products such as laban, cheese, ice cream, and juices and even export outside Oman's borders. With its production, Mazoon seeks to not only satisfy local taste buds but also to make the Sultanate self-sufficient in dairy production and turn it into a hub for food manufacturing.
Its current plant has the capacity to house 25,000 cows and the ability to produce 1 million liters daily. The plant is expected to produce around 202 million liters of milk by 2026 and 985 million by 2040. The first batch of cows, hailing from Australia and numbering 1,600, arrived in early 2019. The 15-sqkm vertically integrated plant is located in As-Sunaynah, a remote village found in the country's northwest. The area was selected because of its water abundance, fertile soil, and comfortable climate. The project is estimated to have cost OMR100 million and create 2,300 direct jobs. By 2026, the company plans to increase the farm's capacity to 25,000 cows.
This is in line with Mazoon's goal of closing the gap between demand and local production by 50% over a decade. The plant will help reduce Oman's milk imports, which made up 69% of its demand in 2014, to 13% by 2026. And it looks as though it may already be meeting its impressive targets. Launching its products officially in October 2019, CEO Arjun Subramanian, speaking to TBY, said the company found itself falling short of demands; as such, he plans to use the plant's extra capacity to double its production over the next six to eight months. To date, it currently produces 200,00 liters per day.
Though the company faces some difficulty due to Oman's lack of fresh water, like most companies in the country's agriculture sector, it benefits from Oman's small but strong local manufacturing sector. Subramanian says Oman's supply chain for packaging is particularly good and is wide open to investors looking to create companies specializing in sleeves, labels, and bottles. And with increased production to meet demand, SMEs in these sectors will have a lot of opportunities for work. To this end, manufacturing and logistics are two arms that the Omani government is very interested in strengthening.
According to Oman National Livestock Development Chairman Ahmed Akaak, the biggest challenge Oman's agribusinesses face is efficiency, something that private sector investment could help improve. He continued that the government, through Oman Global Logistics Group (ASYAD) and Oman Investment and Finance Co (OIFC), could encourage and advocate for greater SME involvement in the development of these two sectors. With funding from the appropriate bodies in the form of PPPs or other schemes, Omanis could create new manufacturing plants or new production chains. Key to driving the demand and creation of these services are local businesses like Mazoon selling products that are subject to both logistics and manufacturing processes. With strong manufacturing supply chains and efficient logistics, Mazoon can then pursue its dream of expansion throughout the GCC.
“There are some gaps that we need to fill if we decide to expand abroad," Subramanian continued in his TBY interview. Some of these gaps include knowledge transfer and skill-training for its local staff. But these are two areas the company has already been investing heavily in. For the moment, in spite of COVID-19-related disruptions, it seems as though it will only be a matter of time before other GCC countries see Omani milk on their grocery shelves.