INCENTIVE TO REFORM

Subsidies for products made in the agricultural sector and the use of preferences to buy equipment for irrigation systems - such are new incentives for farms focused on increasing the crops not only of products of strategic importance (wheat) but also in every segment of crop farming. 

Thus for instance, quite recently, Azerbaijan President Ilham Aliyev ordered additional measures to strengthen state support for the development of crop farming and instructed the Cabinet of Ministers to increase by 25 per cent the amount of aid from the state budget per hectare of cultivated area for farmers to buy fuel and engine oil used in agricultural operations. The Head of State has also decided to give subsidies for the preferential purchase of fertilizers and for repeat sowing. 

At a time when the world markets are showing a downward trend in oil prices, the decision taken by the Head of State to increase the volume of subsidies in the agricultural sector is certainly a new proof that the development of agriculture and providing the population with full supply of food from domestic producers have a priority status for the country's economy. 

The petrol price rise in December last year brought to the forefront the issue of increasing subsidies for farmers. Despite this, no direct efforts were discussed to strengthen financial support to agriculture. Yet farmers did not lose hope and for a good reason, as it turned out. Towards the start of active sowing, President Ilham Aliyev signed the directive "On additional measures for strengthening state support to the development of crop farming". Another directive was issued to apply preferences for sets of equipment for irrigation systems leased out by the Agroleasing open joint stock company. Both these documents are of much importance for the development of agriculture. 

According to analysts, agricultural subsidies in Azerbaijan fall into two target areas: to develop the production of strategic items (food wheat) and ordinary farm produce. As a rule, the amount of subsidies for the first area is twice the amount earmarked for ordinary produce. It is known that 40 manats is issued to farms per hectare for the production of ordinary products and 80 manats for wheat. Considering the latest directive, farmers making strategic and ordinary products will receive 100 manats and 50 manats per ha in subsidies, respectively. 

It should be taken into account that the latest years have seen no rise in subsidies while farmers' expenditures have increased over the period. Hence the need arose to increase the amounts of subsidies for strategic products. 

The republic's Ministry of Agriculture has announced that, in the context of the new directive of the Head of State, efforts will be taken to finalize the list of farmers eligible for subsidies.  

According to the ministry's representative Murtuzali Haciyev, the directive will embrace a number of crop farming branches. This again applies first and foremost to those who repeat sowings and grow intermediate products. From now on, they will have mineral fertilizers at a discount. Azerbaijan's climate allows growing two crops of potatoes annually. Or, for example, after barley harvesting in June, the cleared areas are sown with maize. 

As for the other directive of the Head of State, a 40 per cent discount is envisaged for the purchase of equipment for irrigation systems sold by the Agroleasing open joint stock company. As is said in the documents, this discount will be reimbursed at the expense of the state budget. On the whole, the document is aimed at eliminating the negative effects of prolonged droughts, improving water supply, increasing businessmen's interest in this sphere and encouraging investments in modern irrigation systems. The country has implemented a number of big projects in this area, created an infrastructure furnished with modern process equipment. Some large farms use advanced irrigation technologies on lands allotted for food wheat which enables them to get 55-60 [metric] centners of grain per ha. This technology has aroused great interest in farmers from other grain farms.  

"The documents signed by the president are of great basic importance for further development of crop farming, increasing yields and production volumes," Imran Cumsudov, the head of a sector at the republic's Agriculture Ministry, told R+. According to him, following this directive, farmers will receive more than 13m manats in state support from the state budget and 5m manats for repeated sowings. The practice to plant a second crop after grain harvesting is over is being introduced mostly on farms in Aran Economic District. During its first phase, the method will cover 50,000 ha and may further increase to 400,000 ha. This indicator points to efficient use of land resources. All these steps will have a positive effect on growing forage grain and creating a solid reserve of feed for the development of pedigree stockbreeding. The use of modern irrigation methods helps save water resources and money. The purchase of new equipment at a discount will make it possible to introduce progressive irrigation methods in agricultural production within a short time. This will in turn effectively enhance plant productivity and yield per ha of irrigated land. 

It should be pointed out that state support to the rural areas was rendered in the past, too. Thus for instance, subsidies issued to farmers in Saatli District totalled about 1m manats which was distributed among 500-600 farms. The funds were distributed by a local five-strong commission under the district's executive authority. Documents compiled by them were sent to the Ministry of Agriculture where the republic's commission was normally headed by the minister himself. As has been reported from the Agriculture Ministry, in keeping with directives of the Head of State relating to the farming sector, the Cabinet of Ministers is drawing up new rules to put the entire burden of management and distribution on local agricultural directorates under control of the Agriculture Ministry. The commissions will enter upon their duties in May this year. District executive bodies will not interfere in the activity of private entities working in agro-business. In other words, this will not only improve the system of subsidies and support but also remove obstacles such as red tape and corruption standing in the ways of farmers who want to obtain them. More than one year ago, President Ilham Aliyev spoke fiercely about those drawbacks. "It is necessary to ensure total transparency in the allocation of subsidies to agricultural producers. We have failed to achieve transparency in this sphere," the Head of State said as he touched upon problems of agriculture at a conference held to discuss the implementation of the State Programme for the Social and Economic Development of the Regions in 2009-13. 

In brief, one can say that reforms have been boosted in this segment. As regards their efficiency, it will be possible to judge about it by the farms' productivity figures as early as this year.