PARTNERSHIP IN THE NAME OF THE MARKET

When the implementation of the State Programme for the social and economic development of the regions began in 2004, one of the main tasks was to create a processing industry for agricultural produce After all, the local market was often unable to fully "digest" locally manufactured products, and only a few farmers could afford to export. Thus small and medium-sized agricultural businesses were dying out, and the number of jobs was falling accordingly, which caused an exodus of the working-age population from the provinces. Urgent measures were necessary to change the situation.

Urgent government assistance

The new processing facilities were intended to meet several important objectives: first, to stimulate farmers to develop their farms; second, to create new jobs; third, to supply the market with high-quality local products and fourth, to organize export. Despite the fact that the situation in this sector is still far from the ideal, much work has been done in recent years to meet these objectives and it is already yielding results.

According to official statistics, more than 18,240 new companies began operations following the launch of the programme, of which 40% were opened in the provinces. Among these are the giants of the canned fruit and vegetable sector, like the Qafqaz plant in Xacmaz, the Gilan plant in Qabala, the highly advanced sugar refinery in Imisli, and other enterprises in Lankaran, Astara, Masalla, Naxcivan and a number of other districts. The opening of a small enterprise to buy and process farmers' produce is quite a common occurrence today.

There are 66 meat and dairy processing enterprises and 63 canned fruit and vegetable plants in the country today. The companies specializing in meat and dairy products, as well as confectionery manufacturer, are mostly working for the domestic market. As for the fruit and vegetable canning plants, juice plants, tea factories and some of the companies specializing in the processing of sea food, they were designed with a view to exporting at least some of their produce from the outset.

It has to be said that more than 90% of subsidies from the National Business Support Fund were invested in manufacturing and processing facilities and agriculture, as well as in the development of tourism in the provinces. In 2006, the fund's subsidies increased by 96.7%, compared to 2002. The lion's share of credit was allocated towards funding projects in the provinces. Over three years, the National Business Support Fund allocated AZN 145 million to 5,312 businesses to fund 5,385 projects.

Export goods

Government support of farming enterprises promoted the increased output of agricultural produce as well as high-quality industrial processing and packaging to modern standards. This activity has already attracted attention to Azerbaijani goods in Europe, as the recent success of our stands at the Green Week international exhibition in Germany attests.

The Azerbaijani processing industry has great potential, as reflected in the turnover of exports to both "near" and "far" abroad. The Agriculture Ministry reports that the canned food facilities processed the entire crop of fruit and vegetables in the summer and winter of 2007. For example, in 10 months of 2007, 46,762 tons of canned vegetables worth $19 million, 158.4 tons of grapes and raisins, more than 2,000 tons of tobacco, more than 3,000 tons of wheat flour, 621.7 tons of rice, 122,200 gallons of wine, 109,400 gallons of brandy and vodka and 694.4 million cigarettes were exported. The list of exported produce goes on, and the total amount of agricultural exports in 11 months of 2007 reached $172 million.

Ginned cotton, which is a valuable product, is also exported by Azerbaijan. As we know, cotton farmers in Azerbaijan harvested a little over 100,000 tons of raw cotton in 2007, and 70% of it has already been processed by the plants. Just two large companies, MKT and Aqro LLC, processed over 92,000 tons of cotton. The remaining 8,000 tons were processed by Zhekot, Kurdamir-Pambig Joint Stock Company, and small enterprises in the Saatli and Samux districts.

So far, 26,100 tons of first-class ginned cotton, worth $23.346 million, has been shipped to textile manufacturers in Turkey, the Russian Federation and European countries. Hundreds of tons of down and feathers were also exported.

Competition or cooperation?

The majority of food and cotton sector companies are now summarizing their year-end results and planning for the next year. Not many processing enterprises work at full capacity, for which there are both objective and subjective reasons.

For instance, in the opinion of experts, managers of the large companies should review their pricing policy: the prices of raw materials should first and foremost suit farmers, who are not interested in prices on the international markets. Farmers need incentives and assistance to grow green tea, tobacco and cotton, and to be able to buy sufficient raw materials in a timely manner. It is clear that farmers and agricultural processing companies operate in a free market. But if relations between them are good and cooperative, many problems will be soon resolved.

Experts say that another way of dealing with this problem is to encourage competition in the market.  For instance, the canned foods industry is developing so rapidly that enterprises in the same district are already vying for raw materials. This type of rivalry has already resulted in increased prices for various fruit and vegetables; this stimulates the farmers to use modern technology to boost their crops.