The Role of Greenhouses in Filling Trade Gap of Tomato Crop in Saudi Arabia

Abstract

Using, time series data, this research aimed at studying the role of greenhouses planted with tomatoes in reducing the import trade gap in Saudi Arabia by forecasting the impact of the change in the area of greenhouses of tomatoes on imports and total production in the Kingdom of Saudi Arabia. The study adopted Piecewise Linear Regression, ordinary least square and simultaneous multi-equation models, using Seemingly Unrelated Regression model. The results of the study indicated that the area and production of tomatoes in greenhouses showed a decreasing trend during the study period. As a result, there was an import trade gap for tomato crops estimated at 171.1 thousand tons on average for the study period, which represents about 42.2% of the average total tomato production. The most important determinants of the production of tomatoes in greenhouses include the area of greenhouses planted with tomatoes, one year lagged tomato price, and the value of medium-term loans allocated to greenhouses production. The study showed that the effect of temperature change on tomato production is more significant than carbon dioxide emissions. The study estimated forecasted reduction in the Kingdom's imports of tomatoes by 98% if the area of greenhouses is doubled. Hence, to reduce trade deficit of tomatoes and convert the deficit into a trade surplus, the study recommended horizontal expansion in greenhouses planted with tomatoes.