HARVEST AGAINST CRISIS

The drought in the United States and other countries, and record prices for agricultural raw materials are probably the most discussed topic in the world today. The decrease in crop production and, consequently, the significant rise in its prices is a long-term trend, analysts say. Its consequences are growing economic and political tensions in many countries that depend on food imports.

Eight months of the year are now behind and on the whole, the results of the summer harvest in Azerbaijan are already known, and therefore, we can make preliminary predictions as to whether residents of our country should worry about their daily bread in the near future.

In the world: less harvest, higher prices

The main event on the global agricultural market is the drought that has gripped the United States. About 1,300 counties or one-third of all the administrative regions of the country have been declared a disaster area. The drought, which is the most severe in the last three decades, has primarily affected the so-called corn and wheat belts - the key agricultural areas of the world, where hundreds of millions of tons of wheat, corn and soybeans are harvested. They meet the needs of the American economy and serve as a source of mass export. The drought in the United States and several other countries means a global food shortage - tens of millions of tons.

The weather let us down not only in the US. There are no rains in an important area of export agriculture - in the south of Latin America, as well as in the second most populous country in the world - India, where precipitation is 22 per cent below the average level.

The year has also been quite dry for Russia, Ukraine and Kazakhstan, which now play a key role on the market of grains and oilseeds. The adverse weather conditions in these countries do not augur well for a rich harvest of wheat. Its prices in Europe are rising in anticipation that the Russian government will introduce quotas on grain exports as it did in 2010 and a 20-30-per-cent duty on exports.

Yet in July alone, the price of soybeans increased by 16 per cent and corn and wheat - by a quarter. The last two crops are now more expensive than ever before in history. Meat products will become more expensive later, when the old feed has been used up and the herd inevitably "thins out". Soybean products - the main protein crop - are the most important component in the diet of modern high-yield breeds.

Given that the situation on the market is becoming more and more tense, G20 and the Food and Agriculture Organization (FAO) are going to develop a strategy to work together to prevent a sharp increase in food prices.

G20 and FAO encourage governments to abandon measures that led to the global food crisis in 2007-2008 such as quotas on grain exports and the accumulation of reserves. Apparently, at the forum, the FAO will also raise the question of the inadmissibility of producing biofuel from grains as the world faces a new food crisis. The organization urged the authorities of the US, EU and other countries to reduce the planned production of biofuels. Anyway, it is obvious that it is necessary to take effective measures to prevent "food riots" in the countries that depend on exports the most, which can certainly have an impact on the overall political and economic stability throughout the world.

Azerbaijan: a year of plenty

The threat of the crisis immediately "echoed" in virtually all countries of the world. Azerbaijan, of course, is no exception, given that the country is well integrated into the global trading system. For example, in the last days of August, the State Service for Antimonopoly Policy and Consumer Protection under the Ministry of Economic Development published the results of monitoring, according to which a slight increase in the price of wheat flour had been recorded in the country. "The small increase in flour prices is due to the recent rise in the price of grain on the world market," the ministry said. The monitoring has not yet revealed a rise in bread prices at enterprises producing it and at retail facilities.

At the same time, experts do not show strong concern about the continued rise in prices of agricultural products in the country, given that this year has been quite successful for the agricultural sector in Azerbaijan. Last autumn, the grain growers of the country laid the foundations of new crops on an area of 995,888 hectares and then throughout the growing season, they ensured that the plants were developing. The current harvest of grains started earlier than last year, and is not yet fully completed. However, it is already possible to draw some conclusions and say with certainty that the wheat harvest this year has been more than successful. As of 1 August, 2.5 million tons of grain had been produced (about 2.3 million tons in the previous year).

And it should be noted that the growth in the harvest was furthered by favourable climatic conditions. Although some areas of the country saw torrential rains and strong winds, according to reports, farmers experienced low losses. In addition, new promising varieties of barley and wheat that are resistant to disease, frost and drought were cultivated thanks to breeders. This is mainly low-growing varieties of plants that do not lodge after rain, and foreign-made harvesters collect them without losses. Given the success of experimental sowing, land plots were allocated in some areas of the country, where reclamation will be carried out and new major seed farms will be created for the development of these species.

According to experts, at such a pace, Azerbaijan will fully ensure the country's food security with internal resources in 2015 although some problems still exist due to the low rate of the creation of regional seed development complexes. So, according to the plan, it is necessary to create large grain-growing farms in an area of over 200 hectares, which can provide one million tons of grain. In Agcabadi, Beylaqan and Imisli districts, wheat seeds of first reproduction will be planted in tens of thousands of hectares. The method of collecting two harvests a year can effectively solve the global problem of food security.

The problem of storage of products, including potatoes, is also still waiting to be resolved. This year, farmers have grown a rich harvest of root crops, but it might be damaged because of the lack of storage facilities. In turn, this threatens farmers with losses, which they are likely to try to compensate by raising prices for the products that survived. Therefore, the issue of storage of perishable products requires a quick solution.

At the same time, there is very good news for the farmers: In 2012, Azerbaijan will increase the total amount of subsidies for the purchase of motor oil and fuel for agricultural producers by 3.964 million manats, according to Azerbaijani Minister of Agriculture Ismat Abbasov. "To purchase motor oil and fuel, Azerbaijani agricultural producers will be given 56.441 million manats from the state budget to grow perennial crops and cultivate 1.418 million hectares of cropland in 2012, which is 3.964 million manats more than in the same period last year," he said.

In addition, according to the minister, to sell the public fertilizers on favourable terms in 2012, 2.284 million manats will be allocated from the state budget. In 2012, the state plans to sell 11,900 tons of fertilizers with a 50-per-cent discount.

The minister said that subsidizing the agricultural sector is yielding positive results. "In 2012, agricultural production in the country grew by 10.4 per cent, and as a result, the prices decreased by 0.2 per cent as a whole," Abbasov said.

Thus, according to analysts, along with other tasks to improve the situation in the country's agriculture, the agrarian sector of Azerbaijan will soon be ready to independently attack possible external threats to food security.