Why Oman is investing in alt protein with a US 🍄 startup

Nearly one in three people in the Middle East and North Africa (MENA) region lack access to adequate food, according to the UN Food & Agriculture Organization.

The MENA region faces numerous challenges in food and nutrition security:  a dearth of viable farmland is an obvious contributor, exacerbated by rapid population growth, urbanization, low productivity, climate change, and a limited natural resource base.

Inflation, and supply chain issues caused by Covid-19 and the Russo-Ukrainian War, have further aggravated the region’s food security problems.

But MENA countries had something of a sneak preview of what can happen when food prices spiral out of control. After a sharp rise in food prices in 2008 and 2009 helped launch the widespread Arab Spring uprisings in the early 2010s, pushing MENA countries like Oman to place food security even higher on the agenda.

In 2012, the sultanate created the Oman Food Investment Holding Company (OFIC) with a mandate to invest in food security, economic diversification, and the provision of jobs to Omani citizens. It also put an emphasis on technology and innovation, according to the Oman Vision 2040 industry plan which targets the long-term economic sustainability of the country.

Now with inflation enveloping most of the world, we’re already seeing food prices increase dramatically with supply chain shortages brought about by the Ukraine war exacerbating the economic backdrop for importers of core commodities like wheat such as Oman.

That’s why when news hit about Oman’s central investment agency Oman Investment Authority (OIA) partnering with a foodtech company – MycoTechnology – on protein supply, it was worth taking a closer look.

Protein demand

According to Expert Market Research, the demand for dairy protein in the MENA region is growing as rapid population growth creates an increasingly health-conscious middle class. The overall demand for protein in the MENA region is also heavily influenced by the demand for whey protein, which had a market size of around $1.01 billion in 2021. This is expected to surge to roughly $1.38 billion in 2026.

Oman’s plant protein industry is steadily growing as well, having recorded a CAGR of 27% during 2018 to 2020. This is expected to grow 18.8% between 2021 to 2027 to reach a market value of $41.7 million in 2027.

MycoTechnology is a US-based startup that was founded in 2013 by Alan Hahn, Jim Langan and Brooks Kelly. It has raised a total of $207.6 million over several rounds. Its latest round was a Series E investment of $85 million earlier this year led by OIA alongside 12 other investors, both new and existing.

The startup uses mycelium derived from mushrooms to make novel food ingredients through fermentation. The ingredients can be used as bitter blockers, to clarify food flavors or boost the functionality or protein levels of foods.

The deal

MycoTech and OIA have established a joint venture to scale up and commercialize the production of alternative protein ingredients in the country by using leftover dates.

Oman is the eighth largest producer of dates globally with over 250 indigenous varieties. However, humans eat less than half of what’s produced locally as they often fail to meet certain standards or consumer preferences and are then either wasted or, primarily used in animal feed.

The new joint venture is expected to upcycle a significant portion of these excess dates, using the natural sugar present in the fruit as a source of carbon to fuel the production of MycoTech’s mushroom-based protein.

The venture, which combines OIA’s local knowledge and public sector relationships with MycoTechnology’s cutting-edge technology, will see the establishment of a production facility in Oman in the first half of 2023 on a 10-hectare site.

Production is set to begin by the second quarter of 2025, with up to 16,000 tonnes of dates to be processed each year. Once operational, the partners intend for the new facility to evolve into the Middle East’s leading innovation hub for food technology.

“Oman was looking for a domestic solution and we had a long-term relationship with the Oman Technology Fund. So we explored what would be the best way to tackle that challenge [of food security],” Hahn tells AFN.

“With the war in Ukraine and its impact on the global supply chain, every country should be looking at this technology to see if it fits into their strategic initiatives. If you’re importing, you need to figure out a way to do all kinds of side stability improvements and so forth. You’re not shipping stuff around. So I think it’s really critical that they look at their sources of food and how they produce protein for its population,” he notes.

Innovation for food security in MENA

Oman has taken strides to use innovation in other ways to bolster its food security, such as controlled environment agriculture.

These moves are just a few examples that follow World Bank recommendations for the MENA region to cut back on an overreliance on imported foods and invest in agricultural technologies that can mitigate climate change effects. It also suggests promoting private sector investments into agriculture.

Other countries in the region are taking similar steps. In the United Arab Emirates, the ruler of Dubai, Sheikh Mohammed bin Rashid, invested with vertical farming group AeroFarms alongside IKEA and renowned chef David Chang to establish a vertical farming project in the city.

Qatar has invested in both vertical farming and alternative protein innovations. Last year it invested in the Series D round of Dutch indoor ag startup Infarm and a growth stage funding round for Eat Just, the alt protein leader. Qatar and Eat Just also have plans to launch a cell-cultured meat hub together.

Israel is a leading player across many agrifoodtech categories, not just alt protein and indoor farming. (Here’s a roundup of AgriFood Week in Israel that a colleague attended a few years ago to get a flavour of the breadth of its innovations.)

What they’re saying

“MycoTechnology is excited to be co-operating with Oman Investment Authority to build this highly innovative food oasis in the desert. It represents a breakthrough in the quest to bring food security to Oman and the wider region. This initiative will be transformative – and not just for the Middle East. We are foraging for the future, unlocking the ancient power of culinary mushrooms to feed the world’s growing population with a solution that’s been beneath our feet all along,” says Hahn.

“In our international investments at OIA, we target localizing advanced modern technologies. Our partnership with MycoTechnology will deliver substantial local benefits as we pioneer the proteins of tomorrow. It will support our mission to enhance food security, diversify the Omani economy, and create well-paying jobs in an eco-friendly new sector,” says Ibrahim Al Eisri, Director of Private Equity at OIA.

“This joint venture will be the foundation that enables Oman to foster a new generation of talent in the sphere of food technology, here and further afield.”