Azerbaijan’s agricultural scenario: perspectives, challenges and capacities
Even today, agriculture constitutes the largest employment sector in Azerbaijan’s economy. This roughly constitutes 40 percent of the country’s working population, who derive a major portion of their individual income from it. Moreover, the contribution of agriculture to its overall GDP comes as the third largest sphere, after energy (oil and natural gas) and construction.
The fundamental driver in this sector has been the post-independence privatization policies under which individual (personal) property replaced the Soviet-era public ownership over tenable lands, cattle, and agricultural equipment. So, privatization ensued reorganization of several large firms to being downsized to smaller specialized units. These new smaller units were centered around land and asset share of member owners. Also, this resulted in a considerable degree of separation of ownership and management (employees).
Under prevailing scenario, the owners of the farm land do not automatically become entitled to employment, which is left open to the market. However, a significant degree of state support and intervention still comes in to these firms. This is to ensure the farm owners (commonly referred to as farmers) enjoy various inputs (benefits) offered by the state, such as subsidies, soft loans and tax exemptions. However, the country still needs international technical support to scale up land consolidation activities (converting small and medium-sized farms into commercial family farms) to a fully operational national programme. This challenge remains largely unaddressed, despite being in the knowledge of the government.
Other challenges include: land fragmentation, informal and not-updated land registry, and outdated agricultural infrastructure remain the major impediments in the agricultural sector.
It may be said, Azerbaijan’s land related challenge are more structural in nature than situational. This mean they are deeply rooted into the country’s economic system; hence, the government will need both determination and careful planning in order to address them in the best possible manner.
Azerbaijan’s main agricultural exports: Agricultural cash crops, primarily grapes, cotton, tobacco, citrus fruits (pure nuts. palm, apples, cherries, peaches, pomegranates), and vegetables (tomatoes, potatoes, cucumber and gherkins, onions, fresh grapes and so on. Grapes, cotton and tobacco account for over half of all production, whilst, citrus fruits and vegetables account for an additional 30 percent.
The country produces quality wine from grapes, and its main export market is Russia (85 per cent) and China (7 per cent). It also exports to the European Union, Belarus and Kyrgyzstan. According to the ‘State Program of Wine Development in 2018–2025’, the country plans to increase wine production fivefold by 2025, would amount to 5 million deciliters as compared to around 1 million deciliters produced in 2017. Under the ‘State Cotton Growing Program 2017–20’, cotton production has got an impetus benefiting the local textile industry. The program has already started yielding positive results from 35,000 tons in 2015 to 207,000 tons in 2017 to 215,000 tons in 2018; the average productivity exceeded 16 centimeters per hectare (50-pound weighing measurement) in 2018 as compared to 2017. The annual cotton production in is expected to reach 500,000 tons by 2022.
This insinuate Azerbaijan government’s goal and endeavor to bring in foreign textile companies to start manufacturing units, whilst also create new partnerships with local companies along the production and distribution process.
On a similar line, the ‘State Program for the Development of Tobacco Growing in Azerbaijan for 2017–2021’, currently being implemented, aims to increase both the volume and area under cultivation of tobacco. Tabaterra CJSC, a private company has gained state support, set up its first manufacturing unit in Sumgayit Chemical Industrial Park in November, 2018. The company, with an annual production capacity of 11 billion filter cigarettes in three types, will manufacture international standard cigarettes branded “Made in Azerbaijan” using British, German and Italian technologies, It also plans to cover a domestic share of the tobacco market to 80 percent shortly. It has also recently started growing Hallabong, scientific name citrus retroclora, produced only in 4 countries in the world.
Amid the success stories related to the advances in Azerbaijan’s agricultural sector, there is another side that the local media (which is mostly state-controlled) avoids to highlight. Azerbaijan has been importing tons of different fruit and vegetable products from neighboring countries, including from Pakistan and Iran. The import figures are significantly rising in recent years. Estimates claim that from January 2018 to April 2018, 600,735 tons of fruit and vegetable were imported into the country. Turkey, Iran, Kazakhstan and Russia remain the major agricultural exporters into Azerbaijan.
General Info about export and imports
Azerbaijan’s top export countries are Italy ($4.71B), Turkey ($1.22B), Canada ($780M), the Czech Republic ($765M) and Germany ($700M). Its top export commodities are Crude Petroleum ($11.7B), Petroleum Gas ($1.29B), Refined Petroleum ($323M), Acyclic Alcohols ($57.4M) and Raw Aluminium ($56.2M).
The top import origins are Russia ($1.4B), Turkey ($1.18B), China ($789M), Germany ($453M) and Ukraine ($409M). Its top imports are Cars ($312M), Refined Petroleum ($245M), Wheat ($219M), Packaged Medicaments ($212M) and Broadcasting Equipment ($158M).
It is interesting, Italy has emerged as the biggest trading and export destination partner for Azerbaijan, however, significant portions of the bilateral trade that happens is in oil and oil products. From a continental perspective, 62.1% of Azerbaijan exports by value were delivered to European countries while 32.1% were sold to Asian countries.
References:
Azerbaijan Ministry of Agriculture : www.agro.gov.az/
Azerbaijan Food Safety Agency: http://afsa.gov.az/en/home
http://www.fao.org/europe/news/detail-news/en/c/1206387/
https://www.textilegence.com/en/turkey-azerbaijan-cotton/
https://www.textilegence.com/en/turkey-azerbaijan-cotton/
https://www.pressreader.com/azerbaijan/azer-news/20190130/281676846139070
