Consider the effect of trade liberalization on agricultural markets. Discuss the challenges experienced by the Saudi Arabian agriculture industry. What is the role of the government?How could the KSA improve its agricultural sector policies? What types of results would you expect for these improvements?
Saudi Arabia Trade Regulations and Industrial Policies
The Kingdom currently subsidizes cow producers’ use of synthetic feed and promotes vegetable growing through conservatories and drip irrigation. As part of its Vision 2030 strategy, the Saudi government has undertaken significant efforts to strengthen the country’s agricultural sector. RIYADH, SAUDI ARABIA’S KINGDOM (Reporter: Reuters) According to the minister in charge of the sectors, Saudi Arabia has granted 92 billion riyals ($24.5 billion) in monetary aid for the environment, water, and agricultural sectors to help them meet the president’s 2030 economic plan objectives. During a speech to an industry conference, Minister of Environment, Water, and Agriculture Abdulrahman al-Fadhli claimed that his ministry had gotten “help” from the government in meeting 16 main goals associated with the Vision 2030 economic reform program (Baig, et al., 2020).
Governments have used a variety of strategies to maintain agricultural production and incomes above what the market would usually deliver. Tariffs or trade levies, trade restrictions, export subsidies, timely financial aid to farmers and output constraints have all been used. Desalinated water supplies about half of the government’s drinking water. Groundwater contributes up around 40% of the total. The remainder is supplied by groundwater. Desalinated water is commonly used around the coastlines, in groundwater in the southwest, and in groundwater across the country. For demand control, improved irrigation systems, particularly sprinkler and drip irrigation, should be addressed. A water literacy program, as well as regulations controlling the sustainable use of underground water and pollution management, should be implemented. As the principal department in responsibility of putting agricultural policy into effect, the Department of Agriculture conducts research and supports farmers with extension assistance. Another sponsor is the Saudi Arabian Agricultural Bank (SAAB), which gives subsidies and interest-free loans (Al?Sakran, 2001). Agriculture growth in the nation has been increased by combining large-scale mechanization and adding formerly barren regions to the inventory of cultivatable land.
After learning from earlier failures in the 1980s, the Saudi government has redirected its subsidies and initiatives toward more efficient crops and activities, such as fish farming. It has also abandoned crops and wastewater-related growing methods. While satellite technology helps current Saudi output, new, cutting-edge technologies such as Liquid Nanoclay show promise for the future of Saudi food security and climate change. Despite the fact that food imports continue to account for the majority of the Saudi government’s supply, the Saudi government has acknowledged the issue and is working hard to modernize the country’s agriculture business. These steps might help Saudi Arabia avert a future food and poverty catastrophe.
References
Al?Sakran, S. A. (2001). Leverage determinants in the absence of corporate tax system: the case of non?financial publicly traded corporations in Saudi Arabia. Managerial Finance.
Baig, M. B., Alotibi, Y., Straquadine, G. S., & Alataway, A. (2020). Water resources in the Kingdom of Saudi Arabia: Challenges and strategies for improvement. In Water Policies in MENA Countries (pp. 135-160). Springer
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EFFECT OF TRADE LIBERALIZATION ON AGRICULTURAL MARKETS
According to World Trade Organization, all the member countries must lower the Tariff imposed on trade, reduce domestic protection and other trade barriers that are specifically imposed by the developed countries so that the developing countries may benefit from trading in a foreign market. Trade liberalization will expose those domestic producers who are influencing higher prices but offering lower quality products
CHALLENGES FACED BY SAUDI AGRICULTURE INDUSTRY
Some of the challenges faced by Saudi Arabia are agricultural pests, high incidence of animal disease, low fertility, dry and high climate, and scarce freshwater resources etc. Country is among most water-scarce nation. Saudi Arabia is currently consuming the ground water four times higher than it being refreshed by rain because of scarce rainfall in the region. The Saudi Arabia also has lower fertility of crops because it has saline soil, which means that the quantity of salt is so high in the region that it does not support crops unless treated.
FINANCIAL SUPPORT BY KSA TO AGRICULTURE SECTOR
Minister of Environment, Water and Agriculture approved indirect and direct financing of organizations partnering local banks to import agricultural products until the country becomes self-sufficient to cater its own agricultural demands. Saudi Arabia government has financed 2 billion Saudi Riyal to import agricultural products specifically soybeans, yellow corn, and sugar from abroad. Usman et al., (2020) stated that though it is a major importer, but it does export agricultural products such as vegetables like: cucumbers, pumpkins, egg plants, cabbage, brassicas, cauliflower and broccoli. Among dairy products it exports: condensed, dried, skimmed and evaporated milk, fresh milk, buttermilk, cheese and fresh cream. Among fruits it is a large exporter of grapes, figs and dates.
WAYS TO IMPROVE AGRICULTURAL POLICIES
Zhai et al., (2019) stated that the government of Saudi Arabia must also in the development of the water treatment plants which can be used to support agricultural sector. Provide loans and subsidies to farmers. There must be basic standard of care of the crops and animals in the country government must keep a check on the quality and quantity of crops being grown and animals being taken care off.
RESULTS FROM THESE IMPROVEMENTS
In becoming a self-sustaining country government must invest on its own agricultural sector. Salinity is a major problem in many countries because of greater salt content in the soil it makes it almost impossible to grow crops in the region, to tackle this problem nutrient rich soil can be imported from other countries which can sustain the growth of crops. Carbaugh (2019) states that the government when taking necessary steps to ensure the quality and standards of the crops and animals could turn this sector into profitable one.
CONSEQUENCES
The country must have a sustainable agricultural sector which can cater the country’s needs. At the moment country is based on an oil-based economy. This will lead it to more and more difficulties such as when Covid-19 spread all import and export halted and it must face shortages of supplies. This wouldn’t happen if Saudi Arab has a self-sufficient agricultural sector.
References
Carbaugh, R. J. (2019). International economics (17th ed.). Boston: Cengage.
Zhai, Z., Martínez, J. F., Beltran, V., & Martínez, N. L. (2020). Decision support systems for agriculture 4.0: Survey and challenges. Computers and Electronics in Agriculture, 170, 105256.
Usman, M., Farooq, M., Wakeel, A., Nawaz, A., Cheema, S. A., ur Rehman, H., & Sanaullah, M. (2020). Nanotechnology in agriculture: Current status, challenges and future opportunities. Science of the Total Environment, 721, 137778.
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