FROM GENERAL TO PARTICULAR

The state programme charting the course of the country's social and economic development and which logically continues the first State Programme for Social and Economic Development of the Regions, adopted in 2004, has been in operation for the second year now.  During this time, the foundation was laid for the further development of the regions, shaping the non-oil sector of the economy by strengthening and developing the country's agroindustrial sector (AIS).  Overall, current progress in Azerbaijan's rural areas is driven by the land reform which was launched 15 years ago.

Historic reform

The issue of land in Azerbaijan was always acutely relevant to residents of the countryside.  However, a logical solution was found during the years of independence, thanks to the reforms announced by Heydar Aliyev.  As is known, they were implemented in several phases.  At the initial stage, from 1993-1994, delegations were sent to foreign countries (Germany, the Netherlands, Japan, Turkey, Egypt, the USA and China) from Azerbaijan to study local experience, collect information about the principles of the market economy and fundamentals of agrarian reform.  In 1994 alone, President Heydar Aliyev held 9 meetings on matters concerning the agrarian sector of the economy.

To embark on the charted course, a legal framework was required.  On 18 February 1995, the republic's Parliament passed important laws: "On the fundamentals of agrarian reform" and "On reforms of collective and state farms," and on 16 July 1996, the Law "On land reform" and later, "On land lease," "On land cadastre, monitoring of lands and land use," and the Land Code.  Between 1995 and 2004, the Milli Maclis passed more than 100 bylaws and regulations on the development of the country's agrarian sector.

In August 1996, perhaps the most important decision was reached during the next phase of reform - the decision on free distribution of land. In 2005, measures were taken to abolish the state and collective farms and to replace them with private farms which began to operate under free market conditions.  The property of the defunct state and collective farms, worth AZM2.7 billion, was distributed among villagers, following the principles of social justice and monitored locally by agrarian commissions.

So, as a result of the land reform, three forms of ownership were introduced.  Of the land pool of Azerbaijan, 4.9 million hectares, or 56.9%, was still state-owned, 2 million hectares, or 23.5%, became municipal property, and the remaining 1.7 million hectares, or 19.6%, were handed out to private owners.  As a result, 3.4 million people received land plots, and 826,000 people became owners of property shares.  Land owners were given the right to sell, buy, bequeath or present their land as a gift.  The reforms were not applied at just 8 farms, which were either on occupied territory or had problems with the delimitation of their borders.

State support

From the very beginning of land reform, the development of the country's agrarian sector was strongly supported by the state.  Many decrees were signed to support the agriculture sector, including decrees on the abolition of the eight mandatory forms of taxation on farmers, non-interference with business operations, writing off of debts of the collective and state farms and 50% discounts on fuels and lubricants.  State regulation of the prices of agricultural produce, including bread and cereals, was also abolished.

To this day, the state pays subsidies to local farmers and allocates them preferential-rate loans.  In 2009, by decision of the Agriculture Ministry Commission, AZN 60 million was released as assistance to buy fuel and lubricants to 417,623 producers of agricultural products for the tilling of 1.5 million hectares of land.  Also last year, AZN 6.5 million in subsidies were allocated to farmers to purchase mineral fertilizers at preferential prices (half the market price), and AZN 4.6 million to state and private farms to purchase seeds.

To strengthen the technological infrastructure of the agrarian sector, the AgroLeasing Joint Stock Company purchased 9,467 items of new hardware and transferred them to private businesses.  At the same time, the construction of about 200 modern production and service facilities for different purposes continues in all regions.

For a more rational use of the potential of the agrarian sector and to increase exports of produce, the National Enterprise Support Fund issued AZN 48 million in preferential-rate loans to 32 businesses for the construction of modern warehousing facilities where produce may be processed and stored before it is sold.

As a result, for the first time since the launch of agrarian reform, growth rate in the Azerbaijani agriculture exceeded 7,5% in 2005.  Compared to 1995, production in the crop farming sector increased several times, notable: cereals - 3.2 times, vegetables - 2.8 times, fruit - 2.2 times, gourds - 9.8 times, potatoes - 6.3 times.

Growth in the agriculture sector was 3.5% last year and a record amount of grain was harvested, production of staple foods increased considerably.  The country's food security is ensured mainly by local production.

Scientific approach

It has to be said that, compared with some other countries, the Azerbaijani market is quite small, whereas the country's population is growing, and there are already 9 million of us.  Thanks to the reforms, local manufacturers meet a significant part of local demand for food products.  At the beginning of the reforms, however, the main food products were mostly imported.

Land reform in Azerbaijan has made millions of the labourers land owners, and working on their private land has made the land owners thrifty and efficient businessmen.  These successes could have brought us closer to the level of countries with developed agrarian sectors much earlier if mistakes had not been made during the land reform.  For example, reforms were carried out using the same standards for all regions, while environmental and weather conditions, as well as agriculture traditions, called for an individual approach.  This was not the only reason, but certainly one of the reasons for decreases in the size of tea and cotton plantations and vineyards.  Among the other reasons was the loss of traditional markets after the dissolution of the USSR, the difficulties of entering the international market, unviable prices and so on.

Chasing profits, the majority of the rural areas, even Barda, Yevlax, Sabirabad, Agcabadi and many others, which in the past were traditional cotton-growing areas, began to farm vegetables.  And, as a result, cotton farming started to experience an economic crisis of sorts.  This happened despite the fact that the majority of processing enterprises have been upgraded and new textile industry enterprises built in the republic.  The farmers' refusal to farm unprofitable cotton resulted in a disruption of grain-cotton crop rotation, which was one contributor to better crop yields.

There are also many examples of increasing numbers of villagers renting out their plots of land to successful businessmen from urban areas.  This is often the case with small enterprises which, for a number of reasons, went bankrupt.  There are instances of selling land to representatives of large financial businesses, which results in growing numbers of landless peasants.  Some of the residents of rural areas then move to the cities to earn their living.

The prevalence of small individual private farms, which are hardly amenable to combination into large organized agrarian complexes capable of doubling or tripling production output to meet demand, and operating companies which badly need processed raw cotton, technical varieties of grapes, tobacco leaves, hazelnuts and walnuts, also hinders accelerated development in the agriculture sector.  In present-day conditions, the agro-industry badly needs cooperation.  It would be desirable for production and processing to occur locally and for the produce to reach the market in modern-standard packaging.  This would help reduce losses during the harvest season.  Greater cooperation would positively affect both production output and the quality of produce and make crop farming more modern.

In addition, today's agriculture sector needs highly professional personnel who can achieve the important goals set out in recent decrees and directives by President Ilham Aliyev on supplies of food products to the population and the social and economic development of the regions in 2009-2013.  Despite the tax, loan and other benefits from the state, the majority of the owners of agriculture enterprises are trying to cut production expenses.  To save money, work is done without being monitored by experienced agronomists, zoo technicians or veterinary doctors.  And the effects are the opposite of what is desired.  There are many examples.  Here is a well-known case:  the owner of a large cattle farm in Mugan bought 48 pedigree animals.  Because the farm did not have a knowledgeable zoo technician or vet, 14 cows from Germany died.  The cattle farmers did not know how to care for the "imported" animals and did not watch their food rations.

In other words, development of the agricultural sector requires a scientific approach to minimize losses to producers and to give them incentives to grow.  This would help to both strengthen the agrarian sector of the country's economy in general and to improve the quality of local agricultural produce.