REVIVAL: THE COTTON STARTS FIRST

A need to adapt to rapid economic post-oil period inspired the government of Azerbaijan to appeal to the traditional areas of national economy, which will provide considerable public revenues in relevantly short period, if right approach is employed. As the saying goes, history repeats itself.

Previously, one of the most popular and highly developed areas in Azerbaijan was cotton development. In Soviet times, Azerbaijan had been among the leaders in cotton production for many years, but in the last 20 years, the cotton industry, as well as an array of other agricultural areas have declined. For comparison, in 1981, the cotton production reached 1 million tons, while only 35 thousand tons of cotton was produced in 2016, which is the lowest indicator of all times.

The authorities had tried to encourage the revival of cotton industry through agrarian reforms, but starting from 2016, the issue is attached a strategic importance, mainly by tPresident Ilham Aliyev.

Quite recently, President visited the regions in which cotton is particularly popular. He personally got acquainted with cotton fields. According to Mr. Aliyev at a meeting of the Cabinet of Ministers dedicated to the socio-economic results of the nine months of 2016, the country should procure 100 thousand tons of cotton this year, 250-300 thousand tons in 2017, and even more in subsequent years. “This year, the industry has some 70 thousand people employed. If next year we are able to increase the acreage in two or two and half times, more than 100 thousand people will be provided with jobs, or maybe even 150 thousand people”, said the President.

The government will also provide financial support to cotton farmers. According to the decree of President Ilham Aliyev, it is envisaged that cotton producers are paid subsidies in the amount of 0.1 AZN per kilogram of cotton delivered and sold to processing companies. This order applies to the raw cotton produced and sold to processing enterprises in 2016.

Also, the production and processing companies have allocated an advance payment of 90% of the purchase price to reduce the costs of farmers for collection and transportation of the crop to enterprises. In addition, the Ministry of Agriculture lowered the price of pesticides by 70%. The cotton growers will now enjoy all the benefits provided for grain producers. In particular, starting this year, the cotton farmers will be able to purchase fuel and lubricants at a significant discount.

In addition to the subsidies, the government provides farmers the necessary equipment as well - 100 cotton harvesters were purchased in 2016 alone.

In principle, under current conditions the financial incentives to farmers may become the driving force that pulls the development of the industry. It should be noted that this year the purchase price of cotton increased from 40 to 50 kopecks. A ton of first grade sold by cotton farmers to processing enterprises is 500 manats (previous price was 410 AZN per ton), Class II - 470 (390) AZN, Class III - 440 (370) AZN, Class IV - 440 (350) AZN. But this is not the limit. It all depends on the economic efficiency of business, and only within the framework of market economy it is possible to provide long-term interest for rural entrepreneurs to produce “the white gold”.

Anyway, according to government’s long-term strategy for the development of cotton production up to 2020, about 200 thousand hectares of lands can be employed under cotton.

As to the increase of productivity, it all depends on the employment of new technologies, in particular in the field of irrigation, which can increase the volumes of production to 3.5-4.5 tons. “With such an average yield, we expect to harvest 700 thousand tons of cotton from 200 thousand hectares. This will mean a full and high level of cotton production”, said President Aliyev.

In parallel with the increase in cotton production, it will be required to expand the potential of cotton gin plants, or ginneries, which currently yield 300-350 thousand tons. Frankly, the country cannot produced such volume of raw cotton; however, we may have these volumes by 2018. Therefore, the need for new ginneries will increase. However, most likely, these projects will be interesting for private entrepreneurs - as they say, demand creates supply. Therefore, the government will not have to spend additional financial resources.

Meanwhile, the harvesting period was launched in the fields of Azerbaijan and the use all the means trying to reduce losses and achieve better results. In traditional cotton regions such as Salyan and Sabirabad the raw is sown almost in all areas. According to head of the Salyan Agricultural Department, Tariyel Atamaliyev, more than 1,500 cotton growers are engaged in cotton harvesting currently. They received five new American cotton harvesters and expect to get another five machines this fall. “Next year, it is planned to plant cotton in 7,000 hectares. Currently we determine the appropriate lands, which will be used next year”, says Atamaliyev, adding that in a short period, they have managed to harvest about 100 tons of Class I raw  cotton and sent it for processing.

244 tons of top-quality raw cotton was collected in Neftchala region just in two weeks. This region also received six cotton harvesters and expect to get more in the near future. In 2017, the area of ​​cotton plantations will be expanded and will make 10 thousand hectares with an average yield of 2.5-3.0 tons per hectare increasing to 30 thousand tons. This is almost as much as the area harvested in the Soviet era.

In another ​​cotton-rich region, Sabirabad, which once was the largest producer of raw cotton, the farmers procured 500 tons of Class I cotton.

Two commercial companies, MKT and Agro LLC, are responsible for the production and processing of raw cotton. They have concluded contracts with private farms growing raw cotton in 2413 and 3656 hectares of land, respectively. These companies received 40 carriages, dozens of tractors and other equipment from Agroleasing JSC.

The farmers in Saatli, Agjabedi, Zardab, Yevlakh, etc. are also interested in the growth of the volume of the cotton harvest. Everywhere farmers tell us about the same - maintaining the current interest in the sector and increasing the volume of raw cotton production. However, the agriculture is traditionally the most risky sphere of economy and, unfortunately, natural disasters, or “non-standard” weather conditions can sometimes fundamentally affect the farmers' plans. But the main achievement was that the government has managed to change the once prevailing anti-cotton mood in the regions. Rural entrepreneurs are convinced in the economic profitability of cotton, but more support is necessary to develop their interest and the agricultural insurance system, to solve problems with additional loaning in addition to preferential subsidies.

However, one of the main problems of the agricultural sector of the country in the period of independence has been a lack of coordination between the regions, on the one hand, and the producers of raw materials and processing enterprises - on the other. Establishment of a system of interactions at the proper level can yield the best effect.

So, 24 areas of the country are engaged in cotton growing currently, and the cotton is grown different varieties. And only the even distribution of grants, equipment, ginneries, timely resolution of infrastructural and other problems will help to achieve the intended objective.