AGRICULTURAL ACHIEVEMENTS

Azerbaijan has been implementing comprehensive reforms in the agro-industrial sector for a sixth consecutive year, which particularly envisage minimising the dependence on food imports. Domestic manufacturing of agricultural machinery has been designated as a tremendously important element in the development of the agricultural industry. Launching the assembly of tractors of the US company AGCO, an internationally known agricultural equipment manufacturer, in the Ganca Automobile Plant, could be another step in this direction.

Since Azerbaijan gained independence, several attempts have been made to launch domestic manufacturing of agricultural equipment and machinery. Thus, back in 1998, the Baku-based Azertractor plant embarked on the assembly of tractors using spare parts supplied by a Turkish agricultural equipment manufacturer. However, having assembled about two dozens of machines, this plant discontinued the production. The tractors assembled in Baku turned out to be quite expensive, costing about 17,000 dollars. 

In the 1990s, programs on banks' lending to farmers were simply non-existent in the country, and the latter could not provide a liquid collateral. Moreover, at the time, there were no agricultural leasing companies, which are the main financial instrument for equipping rural areas. Besides, Turkish-made 80 horse power tractors were suitable only for harrowing and turned out to be largely unsuitable for tilling work on most of the arable land in Azerbaijan where the soil structure is highly solid.

Another tractor manufacturing project, which was to be implemented jointly with Turkish company IbrahimOrs, did not come to fruition due to the lack of an effective agricultural lending system and high solvent demand. Its implementation was vigorously promoted by the Turkish agricultural agency in 2002; establishing an assembly plant on the basis of the Baku-based Elevatormas OJSC had been envisaged. An attempt to set up joint assembly of wheel excavators and tractors of Russia's Kirov Plant on the basis of the Sabirabad mechanical repair plant failed as well. About five years ago, manufacturing of attached implements was planned at another Azerbaijani plant - ZeyemKendMas, located in the Samkir district.

A real breakthrough in equipping rural producers was achieved some nine years ago after the government initiated the establishment of Aqroleasing JSC, a new service entity, thus creating firm groundwork for financing purchases of agricultural equipment and machinery. Aqroleasing has purchased over 10,000 various agricultural machines since 2005, including grain harvesters such as Russia's Rosselmas and Niva, and Finnish Sampo combines, as well as tilling and processing tractors of numerous brands. Hundreds of trucks, as well as some 7,000 trailers and units of attached equipment, have been purchased. This impressive depot of machines and mechanisms was entirely leased out, with an opportunity of buyout provided in accordance with leasing arrangements. This was the key factor of the technical support rendered to most of the small farms, ensuring 6-7 percent annual growth of agricultural production. 

Comprehensive support for local industrial enterprises that were prepared to launch assembly of tractors and attached equipment in Azerbaijan was logical continuation of the state policy in this regard. 

The first successful project kicked off in March 2008 with the establishment of an Azerbaijani-Belarusian joint venture (JV) on the basis of the production lines of Ganca Automobile Plant (GancAZ). Assembly manufacturing of "Belarus" tractors as well as MAZ trucks and dump-trucks was launched there, with most of the machines purchased by Aqroleasing OJSC. In recent years, annual output at the Ganca plant has reached about 800 tractors, and this figure can be significantly increased given the existing plans to export agricultural machines to neighboring countries. The capacities of the JV established at GancAZ are to meet the needs of not only Azerbaijan but also neighboring countries, including Georgia, Kazakhstan, Turkmenistan, as well as Iran and Turkey in the future.

The assembly of tractors will reach 2,000 to 3,000 units per year when the JV begins operating at full capacity. These are prospective plans for now; 246 trucks and 739 tractors were manufactured in Ganca in 2013, which was higher the figures reported in 2012 by 52.8 per cent and 19.6 per cent respectively.

Assembly of 15 types of attached equipment for housing construction and agricultural purposes has also been launched on the basis of "Belarus" tractors at the GancAZ production lines, with the support of the Belarusian plant Dorelektromash. The prices for this equipment are cheaper by almost one-third owing to the production of most spare parts in Ganca.

Plans for the nearest future include expanding the range of assembled agricultural machinery, as well as launching assembly of Belarusian buses in Azerbaijan.

In November 2013, Azerbaijan made a proposal during a meeting of the joint intergovernmental commission to create an additional production area at the M. Azizbayov state-run experimental plant to manufacture spare parts for "Belarus" tractors. The proposal is currently being considered by the participants of the project. Another promising project is launching the manufacturing of spare parts at the Sumqayit technical park to assemble MAZ trucks.

It is remarkable that manufacturing of municipal and special machinery using the equipment and technology of the Haller company was launched a few years ago on the basis of MAZ trucks assembled in Ganca. This manufacturer is part of Germany's KIRCHHOFF Group of companies. According to an agreement reached with the holding early this year, GancAZ will supply re-quipped MAZ trucks to the countries of the Caspian region. 

The country will be able to achieve a significant breakthrough in the manufacturing of agricultural machinery if it implements another major project in Ganca, envisaging assembly of tractors of the globally known US agricultural equipment manufacturer AGCO, which sells its products to 140 countries around the world. The management of GancAZ and its American partners are currently negotiating the joint manufacturing of tractors of four models - Challenger, Fendt, Massey Ferguson and Valtra. 

If this project is successfully implemented, Azerbaijan will be able to meet most of the domestic demand for tilling equipment on its own. Moreover, after launching domestic manufacturing of some spare parts, it will be possible to considerably reduce the cost of production of US tractors in the future.