Commercial houses with elite and political ties dominate the food sector in Yemen

The Capacity Assessment Project Organization said that a few powerful trading houses with long-term elite and political ties dominate the food import and processing sector, including storage, grinding and packaging in the areas of the legitimate government and the Houthis.

In its latest update, "Yemen: Food Supply Chain Update," the organization added that the main wheat importers have their own milling and food distribution capabilities and can deliver directly from silos and mills to end users.

She explained that an extensive network of small traders, including agents, wholesalers, petty traders and sellers (i.e. shopkeepers), distributes and sells products to end users in Yemen.

Small traders play a pivotal role in Yemen's domestic economy, creating jobs in the service sector while also acting as lenders for daily necessities, including food.

According to the report, since July 2022, 64% of food market vendors have sold on credit to trusted customers in their communities, and most rural households relied on these credits to buy food.

Private sector companies are the main importers of food, and in 2020, the private sector provided up to 90% of imported food.

The report stated that exchange companies play an important role in the commercial financial cycle in Yemeni riyals and financing imports, as major importers use exchange companies to manage currencies and cash flows within the distribution networks of small and medium food merchants.

The report indicated that major food importers are usually in the first part of the supply chain in an excellent position to set prices and arrange terms of trade.

According to the report, pricing is not transparent, making it difficult for supply chain members working under the importer to determine the cost distribution along the respective food supply chains and the share of the cost per unit of food packaging sold.

The report pointed out that some wholesalers and retailers left the market due to the damage caused to their facilities due to the conflict, and the multiple taxes and fees imposed, and their business became unprofitable in general.

المصدر: نيوزيمن