HIGH PRICE FOR BROILERS

The agricultural sector can be rightfully considered to be the most subsidized in Azerbaijan. Entrepreneurs engaged in this sector enjoy a number of tax benefits, receive financial support from the state in the form of payment for 50 per cent of the cost of fuel and fertilizer and have simplified access to the credit resources of the National Fund of Support for Entrepreneurship. These subsidies are set to continue for years to come despite the objections of international institutions and the World Trade Organization, because the objective of the government is to enhance the country's ability to satisfy its own food requirements.

Despite this, farmers do face certain problems. The world financial crisis has recently started to affect poultry breeding farms. As a result, imported feed and additives have become more expensive. 

Feed problem 

There are currently 29 poultry breeding enterprises in the republic, including one company which distributes veterinary medicines. These enterprises employ almost 20,000 people.

According to the chairman of the National Union of Poultry Breeders, Aydin Valiyev, the number of enterprises having to suspend their operations may increase in November. The main reason being the high cost of products, which makes them non-competitive compared with imported goods. For example, Mardakan-Broiler produced 2,400 tons of poultry meat every year. However, due to the lack of profitability and losses, production has had to be suspended. A similar picture is observed at Hovsan Broiler.

Experts believe that this process has been triggered by the high prices of imported feed, medicines and equipment used by poultry farms. "We have repeatedly asked the government to reduce state duty rates and eliminate VAT," said Valiyev. The costs of imported goods are lower because local farms are fully dependent on foreign feed.

A legitimate question may be asked: why import feed from Europe, Ukraine, Belarus and Russia, when local supplies are quite sufficient? This year Azerbaijani farmers have reaped a record high harvest of grain crops. The point is that all Azerbaijani poultry breeding farms operate with foreign equipment and technology, and this requires feed of a certain quality. Otherwise, the entire technological process may be disrupted, threatening a high rate of poultry mortality. Thus protein and vitamin additives have to be purchased abroad.

All this leads to another question: is it possible to produce feed in Azerbaijan using western technology? Experts think this is quite feasible, but requires the availability of highly productive equipment and a production line of nutritious feed and medicines.

Ball in the government's court 

It is worth mentioning that two months ago the Ministry of Agriculture, having analyzed the situation in this sector, submitted suggestions to the Cabinet of Ministers of the Azerbaijan Republic for resolute action to avoid the impending crisis. The package included not only  corrective measures in the sector, but also the reduction of state duty and the removal of VAT on the imported feed, medicines and equipment which have become substantially more expensive.

According to a Ministry of Agriculture representative, Vaqif Ramazanov, the government will take action to improve the situation soon. The State Food Programme requires that the productivity of Azerbaijani poultry-breeders should increase steadily and reach a level of 60,000 tons a year. The target is to reduce the flow of imported poultry. Production of poultry meat is expected to increase to satisfy local demand for this product.

"However, there are problems which need to be resolved jointly by the government and the poultry breeders. One of them has to do with a shortage of pedigree eggs. This shortage is created in local factories. The production of eggs declines considerably in winter and such fluctuations have been observed over the last few years. We are trying to use plant products to produce mixed feed in local conditions. This shortage of eggs will soon be resolved, in both winter and summer seasons," Ramazanov said.

The strongest win

The production of grain crops in the Aran economic region is better organized than elsewhere. In Imisli District, for example, the production of barley has increased from 9,000 to 14,000 tons. Barley is used for the production of nutritious poultry feed. As a result, the poultry population has increased, together with the egg-laying capacity of poultry, by 3 million eggs a day, while the number of egg-laying hens has reached 670,000 in the first nine months of 2008. One can hardly find imported, super-cheap "chicken legs" in local shops, while local chickens are in great demand, even though they are slightly more expensive.

The Hajiqabul Broiler farm has also enjoyed a good season. The farm keeps over 500,000 head of poultry, using locally produced feed.

"It would be best to form the feed base from components produced by local fields, rather than those imported. It is necessary to cultivate more oats and beans in our fields. The use of state-of-the-art technology for the breeding of poultry with high genetic potential allows greater productivity at relatively low cost," says Chairman of the Hajiqabul Broiler joint-stock company, Adisirin Babasov.

In general, entrepreneurs are sure that if enterprises are re-equipped, their products will become competitive. Finally, almost 90 per cent of farms do not have the land to grow and produce their own feed, which could halve costs. Poultry-breeders should not wait for decisions from the executive authorities but act themselves, free themselves from their dependence on foreign feed and medicines, and import only highly productive equipment. The risks have always been there, but this is a market where only the strongest survive, isn't it?