OVERCOMING THE CRISIS

Cotton growing, considered a very profitable sector in Azerbaijan in the 1970s and 80s, has been in a deep economic crisis for the past decade. Experts think this is because farmers have lost interest in cultivating the snow-white fibre. The destruction of production and trade links with ex-partners in the former USSR also played a part, as did the loss of markets, the tough economic position of arable farmers and much else besides.

Contributory factors to the crisis

Land reform turned a working peasant into the owner of a plot of land on which he could produce what could be sold at a profit at the market. In the first years of reform the country badly needed bread, so farmers began to pay more attention to growing cereals, especially promising varieties of soft wheat. It was also profitable to sell fresh vegetables, potatoes and fruit. As agricultural reform deepened, the sowing pattern changed dramatically and the traditional crop rotation was broken. While over 700,000 hectares were given over to cereals, no more than 50-60,000 hectares were sown to cotton. It became more profitable to grow produce that gave a quick return. So the traditionally cotton-growing Barda district suddenly became a "vegetable", or to be more exact "potato", district, and production of cotton here fell to 6-7,000 tonnes. 

Those in the know say that one of the main reasons is that the sector was in the hands of monopolists who regulated the purchase price of raw cotton. Local farmers were forced to conclude agreements with cotton gins on slave terms. As a rule, the purchase prices were much lower than the production cost. Moreover, the gins would take first-grade cotton only before the first autumn rains. The farmers were forced to sell the rest of the harvest as second, third and even fourth grade, which, of course, had a negative effect on their farm budgets.

The decline in the sector lasted several years. Specialists could not understand how the same people on the same land could be producing such low harvests, the volume of which fell to eight to nine centners (800-900 kg) per hectare. However, in 2003 farmers cultivated and sent for processing 99,500 tonnes on an area of 66,200 hectares. The average return on one hectare had grown to 13.2 centners (1,320 kg). 

Officials and the market

The sector reached a turning point in 2004 when the situation changed dramatically and for the first time in all the years of agricultural reform cotton production increased and reached 136,700 tonnes. Last year in the republic 130,000 tonnes were harvested from 102,700 hectares and sent for processing. This is over 50,000 tonnes less than in 2005. Nevertheless, the sector has continued to develop.

Unlike in the previous economic system the sector is not managed from a single centre any more. The situation changed considerably after the privatization of the cotton gins.

According to figures from the State Statistics Committee, more than 40,000 tonnes of cotton fibre are produced in the republic's enterprises, as well as gin motes, lint and cotton down, and by-products of the ginning process. The gins obtain 35-38 per cent fibre, 55-58 per cent seeds, 1 per cent motes, 3 per cent lint and 0.6 per cent cotton down. Processed cottonseed produces 17-20 per cent refined oil, 41 per cent cottonseed meal, 39-40 per cent cottonseed hulls and other products. Since 1998 Azerbaijan has been applying new standards for cotton fibre, confirmed by the International Cotton Association. The produce sent to the country's cotton gins is of average fibre content and has a particular yellowish hue that distinguishes it from American cotton. 

Many gins have gone over to the commercial production firm MKT which exports its products, mainly to Switzerland, the USA, Liechtenstein, Russia and other countries.

Two years ago a new cotton company appeared on the Azerbaijani market, Agro, which built and put into operation the Ali-Bayramli cotton gin and preparatory points in Sabirabad, Saatli, Agjabedi, Bilasuvar, Barda, Imishli, Beylagan and other cotton-growing districts, dozens of reception points and three enterprises to process the raw material. Future plans include construction of a mill to process cottonseed and also a textile mill. The company harvested and processed around 60,000 tonnes of output in 2006.

How to overcome dependence

One of the main problems today in cotton growing is the need to overcome dependence on world prices for cotton fibre. Although the proportion of Azerbaijani fibre on the world market is tiny, prices have a negative effect on the purchase price from producers of the raw material.

The only solution at present is to develop production of the finished product in the republic. To be more specific, it has been decided to revive the Sumgayit Kovlu Iplik enterprise (Sumgayit Cotton Fleece) which, thanks to new investments, has already begun to produce wool, wool-mix and acrylic products, manufacturing 7-10 tonnes in 24 hours. If MTK Istehsalat Kommersiya (MTK Commercial Production) invests the promised $70m dollars in the development of the enterprise by 2008, another two production lines will be put into operation.

Azerbaijan has already learnt to produce oil from cottonseed. The Ali-Bayramli Yag-Piy (Fats) and Ganja Yag-Piy concerns produce 100-110 kg of black oil from 1,000 tonnes of technical cottonseed. When the technical processes are completed, 1,000 tonnes of black pressed oil produces 880 kg of pure (refined) oil and 103 kg of soap stock. The cake, hulls and other by products are used as food supplements for cattle.

Cotton growing, which was once one of the leading sectors in agriculture, is gradually emerging from the crisis. "The success of our cotton growers has been helped by the increase in the purchase price of raw cotton, the creation of farmers' collectives and assistance to joint-stock companies of cotton-growers in cultivation and harvesting," Saday Agababayev said, an expert at the department for crop-growing and agro-chemistry at the Agriculture Ministry. Even further progress is expected in this sector in 2007.