THE WEATHER IN THE FIELDS

Far-reaching changes in the sphere of agriculture have been carried out in the country in the past three years. The main objective of the reforms initiated by the Ministry of Agriculture has been to switch small farm production on to an industrial scale, by reducing overheads and ensuring multiple export growth.

"Intensive state support for the agricultural sector in recent years has boosted the competitiveness of the output from Azerbaijan's agro-industrial sector, appreciably broadening the industry's export potential," Agricultural Minister Heydar Asadov said recently at the opening of industrial forums in Baku - WorldFood Azerbaijan 2016 and the VIIIth Dairy Olympics. He said that the current year bodes extremely well for land productivity, and if the weather remains fine for the harvest in the summer an increase in the output of agricultural production in a number of areas can be expected.

From import to export

Specifically, thanks to intensive technical support for the cereal farmers, as well as grain-farm amalgamation, just short of 3 million tones of forage and cereal grain were harvested in 2015. One can expect a similar size of harvest this year, too, experts in the agricultural department believe. What is more, together with an increase in the production of cereal crops, there are also plans to alter the sowing structure: by increasing the sowing area of hardy grades of wheat, Azerbaijan will in the course of a few years replace the import of cereal grain. This will help to save about 300m dollars - this is the amount the country spent on importing 1.3m tonnes of wheat last year.

As regards other area of plant-growing, the production of vegetables, cucurbits and fruit has great potential. For example, last year 1.256m tonnes of vegetables, 831,000 t of potatoes, 484,000 t of cucurbits, 880,000 t of fruit and 153,000 t of grapes were produced in the country. According to the forecasts, in 2016 we can expect a 3-7 per cent increase in production of fruit and vegetables. This high production performance has been achieved in many ways thanks to increased foreign demand, mainly in neighbouring Russia, where a deficit emerged following the departure of European and Turkish exporters. "In 2015, fruit and vegetables to the value of 312m dollars were exported from our country, which was 7.2 per cent up on the figure for 2014," minister Asadov said. Agricultural Ministry experts believe that the export of Azerbaijani fruit and vegetables this year will not be less than last year's figure. According to State Statistical Committee figures, in January-March this year, the export of seasonal fresh vegetables alone amounted to 13,000 t to the value of 13.6m dollars, which is above last year's figure. International experts estimate that Azerbaijan has made perceptible progress in the export of a number of types of fruit - our farmers lead the way in supplies of date plums and pomegranates to markets in the countries of the former Soviet Union.

The favourable external situation is conducive to attracting foreign investments in the sphere of plant-growing, specifically from neighbouring Iran. Companies in the Islamic Republic are keen on setting up joint agricultural enterprises in Azerbaijan, as well as using agricultural land for the production of food products which could be exported to third countries. Among the priorities are creating state-of-the-art glasshouses, fruit growing and dried fruit production, the construction of canneries and the development of silkworm breeding. 

Aid and subsidies

According to the new strategy for the development of agriculture, the main flow of state funding will be directed towards the development of several areas representing the greatest export value. Minister Asadov says that large-scale work has begun this year on increasing the production of industrial crops, such as cotton and tobacco, as well as silk yarn. The maximum amount of assistance will be provided for cotton growing, an industry that has experienced serious problems in recent years. Some 52,000 hectares were sown in March-April of this year and a cotton harvest of about 100,000 tonnes is expected - three times that of last year. Also included among the priority industries are the wine trade, tea-growing and bee-keeping. The amount of investments and the format of capitalization will be determined according to their export potential.

"Notwithstanding crisis developments, agricultural production rates as of the first quarter this year have remained positive, providing a growth of 2.7 per cent," President Ilham Aliyev said during a recent meeting of the government. "However, we need to increase production volumes dramatically and build up our agricultural exports even more, which means we must optimize the mechanisms of funding and support for the farmers." According to the head of state, a new mechanism for subsidizing farmers will be introduced in the country: packages of subsidies will be drawn up based on regional characteristics, the special nature of climate zones and industrial specifics.

Broadly speaking, determined efforts will be made to improve the system of state subsidies for agriculture: in the past there have been serious violations and even embezzlement of funds in this sphere. "In order to ensure transparency in the distribution of subsidies, all information about these funds will be available on the ministry's website. Besides this, the composition of regional commissions has been changed: regional departments for the issue of subsidies have been set up, headed by the heads of regional ministerial departments, and this measure will help to ensure efficiency and transparency of the process of issuing subsidies to farmers," Deputy Agricultural Minister Ilham Quliyev believes. Changes have also been introduced to the frequency of issuing state funds: henceforth subsidies for fuel, engine oils and grain will be issued to farmers simultaneously, and not in the summer and autumn as was the case previously.

With the aim of optimizing this sphere, the Ministry of Agriculture has put forward an initiative to introduce additional benefits to farmers producing grain, cotton and tobacco and to ensure a favourable sale of bio-compost and pesticides, and also to offset 70 per cent of their cost, as in the case with mineral fertilizers. It has also been proposed to set a cap on subsidies applied to the cost of mineral fertilizers for each hectare of area under crops at 100 manats, and subsidies for the acquisition of pesticides at 10 manats. Supplying farmers with a sufficient quantity of fertilizer at affordable prices is an extremely important question and, unfortunately, we are not even close to the required goal here.

"According to established agricultural standards, land sown to crops in Azerbaijan requires about 1 million tonnes of mineral fertilizer, but their actual intake is many times less than this," minister Asadov believes. In 2014, 85,000 tonnes of fertilizer were used in Azerbaijan, and last year this amount rose to 152,000 tonnes, but despite this evident increase, these figures are way below the standard required. Today, local industry is capable of producing 16-17 per cent of the required amount of fertilizer and the rest has to be imported, which is extremely costly. Qualitative changes in this sphere may be expected in 2018 following the commissioning of the Carbamide plant of the State Oil Company and the production of 660,000 tonnes of carbamide and about 400,000 t of potassium fertilizer.

The new strategy for the management of agriculture entails tightening control over the appropriate expenditure of state funds and provides for the creation of mechanisms for the long-term planning and detailed accounting of the volumes of agricultural production. With the objective of ensuring transparent monitoring an information system - "Electronic Agriculture" - is being developed in the country.

Facilitating access of agricultural produce to the sales markets is seen to be a no less important task, and to this end "green" markets are being organized, transport and warehouse logistics are being improved, and so on. Work is being completed on setting up the first three agricultural parks - in Samkir, Xacmaz and Xizi Districts, where hi-tech greenhouse farms will be concentrated and processing shops and a logistics and services infrastructure will be created.

Additional incentive mechanisms are also being created in the country to support the local agro-industrial sector: recently, at President Ilham Aliyev's initiative, construction began of an open joint-stock company "Procurement and Supply of Food Produce". The new structure has been charged with optimizing the process and increasing the volume of state purchases of food from local food industry enterprises. The object of this timely measure is to strengthen the state's food security, covering domestic demand through the output of local import-substituting enterprises.

A strong base

The level of import substitution and export potential is also to be increased in the sphere of livestock breeding and the meat and dairy industry. Prospects for the development of this branch of industry were discussed at the international forum, the VIIIth Dairy Olympics, which was held in Baku from 23 to 26 May this year. "An effective strategy of increasing the production of milk and the productivity of dairy cattle has been implemented in Azerbaijan in recent years," the head of the Agricultural Ministry's apparatus, Ilham Bayramov, said. "Specifically, medium-size farms with elite breeds of 10-15 head, where the average annual yield is in excess of 6,000 litres a head, are being created in the country." At the basis of this new strategy for the development of livestock breeding is the transfer of a greater part of the herd to a stabling system and the mechanization of the feeding and watering processes, which has considerably increased productivity and reduced the costs of livestock management. The import by the "Agrolizing" OJSC of about 10,000 elite breeds of cattle and leasing them out to farmers on favourable terms has increased the efficiency of the large and medium-size stockbreeding complexes that have been set up in the regions. Thanks to breeding, the number of elite cattle has almost doubled, and today the country is preparing to export a portion of the pedigree cows bred in Azerbaijan to Turkmenistan.

A strong stockbreeding base is capable of supplying Azerbaijan's dairy milk processing plants with sufficient volumes of raw material. There are 78 large and medium-size dairy processing plants in the country. Besides this, a considerable portion of the milk is processed at small farmsteads and at about 1,500 mini production facilities belonging to farmers. The development of this industry is also supported through preferential credits via the National Fund for Entrepreneurship Support (NFPP), which has allocated about 140 million manats of preferential credit for the creation of 42 stockbreeding complexes and dairy milk processing plants. 

The process of the technical re-equipment and production of new dairy products in the context of the policy of import substitution continues. A state of the art dairy will soon be built with the help of a Dutch company in Imisli District and mass production of strong types of cheese - Gouda and Edam - will be developed for the first time in the country.

One of the Agricultural Ministry's long-term priorities is the large-scale export of dairy produce, as well as poultry products. This work had already begun, and Azerbaijan will soon be exporting beef-and-dairy and poultry products to Russia. Last August, the Russian Federal Service for Veterinary and Phytosanitary Supervision included seven Azerbaijani enterprises in its register of permitted producers and suppliers. However, a number of serious problems which are preventing local manufacturers of stockbreeding produce from squeezing out imports and developing foreign markets are still to be resolved in this sphere. Specifically, beef and dairy enterprises are extremely interested in obtaining privileges when importing production equipment, as well as feed additives and materials used for packing and processing. These factors have a perceptible impact on the price of the end product, reducing its export competitiveness.