1. Impact of On-farm and Off-farm Labor Allocation on the Sustainability of Farming in Oman
Hemesiri Kotagama, Slim Zekri and Hamam Alfarsi
Department of Natural Resource Economics
College of Agricultural and Marine Sciences
Sultan Qaboos University
International Conference on Food Security, Agriculture Sustainability and Pulses
5 –6 DECEMBER Crowne Plaza, Muscat

2. Agricultural Sustainability Food Security and Pulses
Justification
Water, Land vs Labor as relatively most constraining factor in Oman’s farming.
Al Batinah farmer organization Chairman’s observation:
Scarcity of labor
Sustainable Agricultural Development Strategy (SADS, 2014): Report on Land Use, Tenure and Management
Omani labor leaving farms
Agricultural Sustainability Food Security and Pulses

3. Agricultural Sustainability Food Security and Pulses
Research Problem
Why are Omanis leaving farming?
Is there a scarcity of labor for farming in Oman?
Agricultural Sustainability Food Security and Pulses

4. Agricultural Sustainability Food Security and Pulses
Theory and Literature
Undistorted factor markets are a perquisite for efficient allocation of resources.
Apergis et al., (2014) based on a study conducted on Middle East and North African (MENA) countries, for the period of 1970 to 2011 have concluded that:
the boom in the oil sector have had an adverse effect on the agricultural sector.
This effect has been attributed to the “Dutch disease” phenomenon:
Where, the boom in the oil sector would increase real wages in the oil related off-farm sector siphoning labor out of the relatively low waged farm sector (Reed, 2012).
This could also be due to government intervention in labor markets with increased wages in non-farm sector.
Agricultural Sustainability Food Security and Pulses

5. Agricultural Sustainability Food Security and Pulses
Theoretical Model
If there are no off-farm employment opportunities the optimal time spent farming is T**F
If off-farm work is available, the optimal time spent farming decreases to T*F (where the marginal returns to off-farm employment are equal those to farming/ slopes equal).
The optimal time spent working off-farm is equal to T*O - T*F.
The option with off-farm employment is preferred as a higher indifference curve is achieved.
Agricultural Sustainability Food Security and Pulses

6. Quantitative Model (FL+OF+HL]
Max GR (OR)
Extent (Spring + Summer)
3.81
3.67
534.58
Profit/month
423.00
Perennials
Forage
Vegetables
Livestock
Per unit
Family labour
Alternatives
Date
Banana
Lemon
Rhode G
Alfalfa
Tomato
Pepper
Cauliflower
Melon
Cattle
Goat
Sheep
Off Farm
Hired Labor
Gross Margin (OR/Feddan)
311.64
189.42
121.38
102.06
594.30
344.82
393.96
200.00
50.00
70.00
Out put Level
2.79
0.00
1.01
0.87
2.40
1.00
Input output co-eff
Resource use
Const
Resource Level
Land
Land Spring (Fed)
0.50
0.10
4.05
<=
5.00
Land Summer (Fed)
4.92
Water
Water (CuM/Year)
8910.4
10019
8349.2
12246
2760.9
1175.5
1615.6
2714.6
6123
1224.6
Labor
Labor Family (Person/Year)
0.26
0.17
0.24
0.18
0.27
0.28
0.22
0.16
0.13
0.03
1.30
Labor Hired (Person/Year) =
Labor Off-farm (Person/Year) CS
Perenial
0.55
-0.45
-38.70
61.30
Agricultural Sustainability Food Security and Pulses

7. Agricultural Sustainability Food Security and Pulses
Measures
Household income (OR/Year/Household)
Land use intensity
(Land cultivated Spring + summer/ Land Owned*2)*100
Proxy on domestic food production/food security
Agricultural Sustainability Food Security and Pulses

8. Agricultural Sustainability Food Security and Pulses
Data Sources
Secondary sources:
The agricultural census of Oman (MAF, 2004 and 2013),
Report on cost of crop and livestock production in Oman (MAF),
Study on profitability analysis of selected farms in the Batinah region of Oman Al Said et al., (2007).
Primary data of:
Survey on farm labor use in Oman conducted by the Department of Natural Resource Economics.
Agricultural Sustainability Food Security and Pulses

9. Off-farm Income in Oman
Agricultural Sustainability Food Security and Pulses

10. Farming Systems in Oman
Farm size distribution in 2013 (Average Farm size 2.1 Feddans)
Feddans
No of Holdings
Total Area (Feddans)
Cropped area (Feddans)
%of Holdings
% of Total area
71.58
7.0
8.18
4.9
9.33
12.7
9046.0
5.87
17.7
5501.0
3.57
20.3
1210.0
0.79
8.0
409.0
5242.8
0.27
3.9
174.0
7612.3
2752.2
0.11
2.1
273.0
6961.5
0.18
5.2
120.0
4050.1
0.08
4.5
and more
75.0
0.05
13.7
Total
100.0
Agricultural Sustainability Food Security and Pulses

11. Duality in land ownership
Duality: 90% people owning 25% land area vs 10% people owning 75% of land!!!
The small farms are cultivating more than 50% of farm area, whilst large farms are cultivating less than 50% of the farm area.
Small farms use more labor per unit of land.
Small farm income per unit of land is high.
Agricultural Sustainability Food Security and Pulses

12. Recent Policy/Strategy
Agricultural Sustainability Food Security and Pulses

13. “Farmer’s” main occupation in year 2013
% of Total 2013
Agricultural
15.9
Government sector
52.9
Non-agricultural private sector
12.3
Other
2.3
Unknown
16.6
Total
100.0
Agricultural Sustainability Food Security and Pulses

14. Type of labor by farmed area
Agricultural Sustainability Food Security and Pulses

15. Results: 2.1 Feddan Average Farm
Condition
Gross Revenue (OR/Y/HH)
Land Use Intensity
Family Labor
1061
75%
Family Labor + Off-farm
5304
61%
Family Labor + Off-farm + Hired Labor
4973
The gross revenue from an average 2.1 farm is below the poverty line (34 OR/Month/Per capita).
There is an incentive to move away from farm to Off-farm employment.
It reduces land use intensity 11%.
Use of hired labor increases income and land use intensity.
Hired labor use is illegal.
0.55 labor/persons would be used.
If allowed to hire legally it is beneficial to food security.
Tanfeedh recommendations are appropriate for the agricultural sector too.
Agricultural Sustainability Food Security and Pulses

16. Results: 5 Feddan farms 1 Expatriate labor per 5 feddans
Family labor is not sufficient to achieve high LUI.
There is an incentive to move to off-farm employment as income increases 2 fold.
But LUI decreases by 47%.
1 Expatriate labor per 5 feddans is sufficient and increases HH income and LUI.
However labor is constrained during planting and harvesting periods.
Allowing for temporary hired labor further increases HH income and LUI.
Condition
Gross Revenue (OR/Y/HH)
Land Use Intensity
Family Labor
2502
75%
Family Labor + Off-farm
5320
28%
Family Labor + Off-farm + Hired Labor
6414
Family Labor + Off-farm + Hired Labor + Temporary Labor
6632
94%
Agricultural Sustainability Food Security and Pulses

17. Tanfeedh: Labor Markets
Agricultural Sustainability Food Security and Pulses

18. Agricultural Sustainability Food Security and Pulses
Conclusions
Income from an average 2.1 feddan farm is insufficient for livelihood, whilst 5 and more feddan farms are viable for livelihood.
There are incentives to move for off-farm employment, with higher wages in the off-farm sector at a cost to local food production.
Policy of 1 expatriate labor per 5 feddan is insufficient during planting and harvesting periods.
Allowing temporary labor hiring is recommended (as Tanfedh).
Agricultural Sustainability Food Security and Pulses

19. Policy Recommendation
At present a flexible labor market policy of allowing temporary labor hiring will improve family income and local production.
In the longrun agricultural productivity need to drastically improve to retain Omanis in farms and simultaneous removal of labor market distortions.
Agricultural Sustainability Food Security and Pulses