Research on World Agricultural Economy

Private commercial credit and governmental funding play an essential role in increasing agricultural production, achieving food security and stabilizing domestic market prices. This study examined the influence of both private and public funding on the value of agricultural products in Saudi Arabia. Utilizing annual time series data from 1990 to 2022, the unit root test results indicated a mixed order of integration among the variables. Consequently, the Autoregressive Distributed Lag (ARDL) error correction model was used to assess the effects of financing and production inputs on the value of domestic agricultural output. The findings reveal that private funding exerts a positive effect on the value of agricultural products, whereas public funding does not demonstrate a similar positive contribution. This outcome is likely due to inefficiencies in the allocation of public funds by beneficiaries, with a significant portion directed towards foreign agricultural investments and import activities. Labor as a production factor was found to positively impact the value of agricultural output. This research has also explored the presence of economies of scale within the Saudi agricultural sector and concluded that the sector is currently experiencing diseconomies of scale. This paper recommends designing a policy that ensures that the allocated funds used in agricultural and food activities will eventually enhance the value of domestically produced food and agricultural commodities. It is very important to balance between increasing the available quantity of agricultural products through importing and protecting the value of domestically produced agricultural products.