MUSCAT: Oman has recently adopted a policy of revenue diversification, in which the agricultural sector is expected to contribute prominently. Undistorted factor markets are a perquisite for efficient allocation of resources and growth in production.
In 2013, only 16 per cent of Omani households have reported agriculture as the main occupation and 53 per cent have reported nonagricultural government employment as the main occupation, whilst the balance is employed in the private and non-formal sectors. This situation is hypothesised to be related to the labour market; where government legislated higher remuneration in the nonagricultural government sector vis-a-vis agricultural sector, influences Omani farmers to move to nonagricultural employment, causing reduced cultivated area and farm production.
Researchers from Sultan Qaboos University conducted a study to examine the nexus between labour market policies, agricultural employment and sustaining of local production, for food security in the Sultanate. The study used operations research methods to quantify the impact of labour market policies on agricultural employment, farm gross income and land use intensity (proxy for farm production and food security).
The research was carried out by Dr Hemesiri Kotagama, Assistant Professor, and Hamam al Farsi, a graduating student, at the Department of Natural Resource Economics of the College of Agricultural and Marine Sciences at Sultan Qaboos University.
It was found that in an average farm of 0.9 hectares (2.1 feddans), with 1.33 persons of family labour available, only 75 per cent land use intensity is achieved, with a gross income of RO 1,061/Year/Household, which is below legislated minimum income from low skilled employment in the nonagricultural government sector (RO 4,632/Year/Household). The household gross income would increase to RO 5,304/Year/Household with nonagricultural employment of 1 person and 0.33 persons in agricultural employment, which explains low employment of Omanis in agriculture. Farm production too decreases with land use decreasing to 61 per cent.
Farms of 2.1 hectares (5 feddans), with availability of 1.33 family labour earns a gross return of RO 2,50/Year/Household, which is again less than the salary in the nonagricultural government sector and only achieve a land use intensity of 75 per cent. The household income would increase to RO 5,320/Year/Household with 1 person in nonagricultural employment and 0.33 persons in agricultural employment. Farm production too decreases with cropping intensity decreasing to 28 per cent. However, with the current government policy of allowing to hire 1 expatriate labourer per 2.1 hectares (5 feddans) and with 1 Omani person in nonagricultural employment and 0.33 family labour in agricultural employment, gross income increases to RO 6,414/Year/Household. If temporary labour hiring is allowed at peak farm labour requirements, gross income could be increased to RO 6,632/Year/Household. The current policy on hiring 1 expatriate labour per 2.1 hectares along with nonagricultural employment of Omani labour is in the short-run optimal.
The research indicates that income from an average 0.9 hectare farm that uses family labour is below the national poverty line of a household in Oman, providing incentives for farmers to fetch for nonagricultural employment with legislated higher income.
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