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Saudi Arabia to Launch First Specialized Company for Marketing Agricultural Products

A Saudi farmer plucks rice plantation, known as “Hassawi Rice” in a rice field in Al-Ahsa, Saudi Arabia, September 10, 2020. (REUTERS/Ahmed Yosri)
A Saudi farmer plucks rice plantation, known as “Hassawi Rice” in a rice field in Al-Ahsa, Saudi Arabia, September 10, 2020. (REUTERS/Ahmed Yosri)
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Saudi Arabia to Launch First Specialized Company for Marketing Agricultural Products

A Saudi farmer plucks rice plantation, known as “Hassawi Rice” in a rice field in Al-Ahsa, Saudi Arabia, September 10, 2020. (REUTERS/Ahmed Yosri)
A Saudi farmer plucks rice plantation, known as “Hassawi Rice” in a rice field in Al-Ahsa, Saudi Arabia, September 10, 2020. (REUTERS/Ahmed Yosri)

Saudi Arabia is preparing to launch the first company specialized in the marketing of agricultural products, with funding from the Agricultural Development Fund amounting to 700 million riyals (USD 186.6 million).

The National Agricultural Committee said the move would further support investors in the agricultural sector and Saudi farmers in various areas of the country.

Ibrahim Al-Turki, Chairman of The National Agriculture and Fisheries Committee at Union of Chambers of Commerce, said that the idea to establish the company was launched at the initiative of the Ministry of Agriculture in its efforts to develop the sector, in accordance with Vision 2030, by raising agricultural domestic product from 130 to 165 billion riyals ($44 billion).

The specialized agricultural marketing company will represent a qualitative addition to the sector, helping to create an identity for agricultural products and crops, allowing farmers to better access retail markets, and organizing the work of the 660,000 farms currently operating in the Kingdom.

Al-Turki added that work was underway between the Ministry of Agriculture and the Committee of the Federation of Saudi Chambers to establish the new company, which would operate across Saudi Arabia in order to contribute to achieving food security and support the farmers’ technical capabilities.

According to the Saudi official, during a joint meeting that included the Ministry of Agriculture, Environment and Water and the Federation of Saudi Chambers, the Agricultural Development Fund expressed willingness to finance the company with a minimum amount of 700 million riyals.

In a separate development, the National Logistics Committee of the Federation of Saudi Chambers is preparing to launch a detailed study on the localization of the logistic sector professions and its impact on investors and the national economy.

The study would be submitted to the competent authorities to find appropriate solutions that guarantee the competitiveness and sustainability of companies.

The Committee chairman, Khaled Al-Bawardi, emphasized the support of investors in the logistic sector for the state’s efforts to implement localization projects, within the Kingdom’s strategic development goals. But he added that such an endeavor requires intense parallel efforts to train and qualify national cadres and focus on jobs that attract Saudi youth to the logistic sector.

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Venezuela Depreciation Risks Reversing Years of Inflation Gains

People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
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Venezuela Depreciation Risks Reversing Years of Inflation Gains

People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)
People walk through a market in the low-income Petare neighborhood, in Caracas, Venezuela November 16, 2024. (Reuters)

Currency depreciation is set to reverse years of declining inflation in economically beleaguered Venezuela, public and private sector sources say, as foreign currency sales fall short of demand and the socialist government keeps tight-lipped about its strategy.

After years of hyperinflation and amid broad US sanctions, in 2022 the administration of President Nicolas Maduro began using orthodox policies including credit restrictions, lower public spending, a fixed dollar-bolivar rate and central bank sales of billions of dollars in foreign currency to tamp down consumer prices.

Maduro, who will begin his third term in January after a disputed election that the opposition and international observers say he lost, has said his government defeated inflation of more than 100,000% and prices in 2024 are similar to those in 2014.

But the administration's policy has now changed.

After more than nine months of the exchange rate being held at 36.5 bolivars to the dollar, the government in mid-October allowed the currency to float, beginning a depreciation that has seen the bolivar slide to about 45 versus the dollar, according to central bank figures.

Analysts say the over-valued currency made imports cheaper than locally-produced goods, impacting Venezuela's private sector and helping push prices up by 12% in nine months.

The untethering of the exchange rate will also put upward pressure on prices in the final quarter of 2024, financial and business sources said, with analysts predicting in a LatinFocus survey the rate will end the year at 50 bolivars to the dollar.

Year-on-year inflation was 25% through September. Official figures for October have not yet been released.

"For nine months the depreciation of the currency was zero while inflation was rising, which exposed problems in the exchange scheme," said economics professor and consultant Daniel Cadenas, who added the market depends on oil income. "For the system to function, there needs to be a growing source of exchange and that's not possible."

The government had predicted internally that inflation would close the year at 30%, two sources with knowledge of the projection said, but depreciation could increase the figure and local analysts have estimated inflation between 35% and 40%.

"There has been a necessary adjustment in the exchange rate that will have an impact on inflation," said Asdrubal Oliveros, head of local think tank Ecoanalitica. "The government has understood it needs to devaluate."

REDUCED CENTRAL BANK SALES

Vice President Delcy Rodriguez, who until recently also served as finance minister, told an event with business people last month that there must be "reflection" about the use of foreign exchange.

"We should all be concerned with how foreign exchange is used in imports. It is a subject the Finance Ministry is reviewing," she said. "We need to take care of foreign exchange because this is a blockaded country and there cannot be cheap exchange for hair dye."

Rodriguez's comments are the only ones made on the subject by the government since devaluation began. Neither the central bank nor the communications or finance ministries responded to requests for comment.

Private sector demand for cheap foreign exchange increased during the nine months the rate was held, even as the quantity of dollars being injected into the market by the central bank was reduced, sources said.

In July the bank was offering some $800 million, but by October that figure had fallen to $400 million, according to calculations by local consultancy Sintesis Financiera.

The central bank did not respond to a question about the reduction.

"The strategy in exchange policy is not going ahead," a government source said, without giving further details.

Food and medicine companies in Venezuela are allowed to pay for some of their goods with foreign currency, while other companies are given central bank promissory notes indexed to a specific exchange rate.

Two private sector sources said many businesses are eating through their inventories in the face of import difficulties.