RELIANCE ON EXTERNAL MARKETS

In terms of export volumes, the agriculture is the second largest sector of the national economy after the oil and gas industry. At the same time, local food products meet about four-fifths of the domestic demand with import substitution rates increasing annually. Tangible growth in production volumes and acceptable quality parameters and prices of national agricultural products ensure Azerbaijan’s food security and create a suitable background for expanding the export opportunities.

Despite a slight decline in growth dynamics, the basic agricultural indicators maintain a positive trend.

"Today, we have to focus main efforts in the development of the agrarian sector of Azerbaijan on annual increase in exports. Agricultural exports in January-April 2017 increased by 44% compared to last year, and this growth was mainly due to crop production, in particular, exports of fruits and vegetables. We expect an even greater increase in agricultural exports in the coming years," said the Azerbaijani Minister of Agriculture Heydar Asadov.

The intensive state support of the agrarian sector, as well as the depreciation of the national currency promoted the export of local products in foreign markets. Over the past two years, the export factor has become the driver of development in many areas of agriculture. The growth dynamics is very high in a number of areas, which is confirmed by statistical data for spring 2017. Thus, in comparison with March, in April 2017, the export of fruits and vegetables increased by 57.6%, tea - by 38.4%, vegetable and animal oils - by 47.1%, sugar - by 59%, alcoholic and nonalcoholic beverages - by 32.6%.

The production and export of fresh seasonal products have also increased. According to the State Statistics Committee, the volume of agricultural production in Azerbaijan in January-May 2017 exceeded ₼1.5 billion, which is 2% more than the same period last year. During this period, the production of livestock products increased by 2.3%, crop production - by 0.1%.

Traditionally, Azerbaijan has the highest rates of development in the livestock sector, where modern reproductive centers and numerous integrated livestock complexes are established. According to the State Statistics Committee, the growth rate in livestock production for the five months of 2017 was 2.3%. During the reporting period, the country produced 189,000 tons of meat, 817,800 tons of milk, 739.8 million eggs and 12,000 tons of wool. Compared to January-May 2016, meat production increased by 2.9%, milk - by 0.5%, eggs - by 6.5%.

Despite a relatively small overall growth in crop production, production volumes were significantly higher in a number of export-oriented areas of this industry. In particular, as of June 1, 2017, Azerbaijan produced over 81.3 thousand tons of potatoes (increase of 46.1%), 107.2 thousand tons of vegetables (6.6%). It is not surprising, as potatoes, tomatoes, cucumbers, eggplants, peppers and other early vegetables are the main products exported to the markets of Russia and other post-Soviet states in the spring. This stimulates farmers to introduce modern agrotechnical methods in vegetable growing, despite a certain reduction in crop areas.

The next most important export product is fruits, berries and melons. As of June 1, 11,200 tons of fruit and berries were collected in Azerbaijan (a decrease of 1.4%), but this indicator may change for the better, as the bulk volume of the fruit and melon crops is harvested in the second half of summer and autumn. It is noteworthy that the unstable weather in April-May 2017 did not have a significant impact on the decline in fruit harvest.

"According to our data, showers and hail in some mountain regions of Azerbaijan did not cause any serious damage to the production of agricultural products," said Deputy Minister of Agriculture Ilham Guliyev. "Moreover, precipitation in the spring is a positive factor for the development of production in such sectors as cereals, cotton growing and in general for the development of crop production."

Thus, due to the sufficient amount of moisture this year, one can count on the growth of agricultural land productivity, and if the weather is good for harvesting in the summer, we can expect an increase in production in a number of areas.

Favorable weather conditions, as well as timely technical measures, are the main conditions for increasing yields in grain-growing sector. According to the State Statistics Committee, from the beginning of the spring planting season and as of June 1, 2017, 67.6 thousand hectares were sown with grain and leguminous crops (including 32.3 thousand ha of fodder corn).

Spring rains somewhat delayed the beginning of the grain crop in several regions, and by June 1, 17.5 thousand tons of grain were harvested from an area of ​​7.4 thousand hectares, while the yield was 2.37 tons per ha. For comparison, in the same period last year, 78 thousand tons of grain were harvested on the territory of 34.9 thousand hectares, but with slightly lower yields (2.24 tons per ha).

At present, winter crops are being harvested in the low-lying regions of Azerbaijan, and the final grain harvest will be cleared by the end of August, taking into account spring harvesting. Nevertheless, it should be taken into account that this spring there were markedly increased sowing areas for a number of cereal crops: wheat crops 2.5 times, barley 38.2%, corn 12.7%. Apparently, this will make a significant contribution to the overall indicators of the grain harvest. The above data indicate that, together with the increase in grain production in Azerbaijan, it is planned to change the structure of crops - to increase the production of hard wheat varieties, replacing the increased import of food grain (in dollar terms).

Experts predict that by the end of 2017 the harvest of cereals could approach the indicator of 2015, when thanks to intensive technical support of grain growers, subsidies, as well as the consolidation of grain farms in the country, 3 million tons of forage and food grain were harvested. However, this indicator was not reached in 2016, and grain harvest figures fell to just over 2.8 million tons.

Apparently, this year, as in the previous ones, the farmers will be provided with all the necessary assistance. "The benefits offered to agricultural producers are almost never met in the practice of other countries. For example, the amount of state subsidy per each hectare of land allocated for grain production is ₼90. In other areas of crop production, the state provides ₼50 to partially cover the costs of motor oils and fuel. At the same time, agrarians are provided with 40 percent benefits when purchasing agricultural machinery in leasing," said Ilham Guliyev.

For the same purposes, Azerbaijan continues to implement the strategy of forming large specialized agro-complexes, confined to the production of cereals, primarily food wheat. In the long term, such farms are supposed to gradually allocate more than 200 thousand hectares of arable land. The first specialized farms were established about five years ago in Beylagan, Agjabedi, and Imishli regions. In general, today 19 large farms with more than 30,000 hectares of land are being established in regions.

"The development of the production of elite seeds is the main goal facing the agricultural sector of Azerbaijan, and to achieve this goal, the construction of large enterprises specializing in the production of potato and vegetable seeds has already started. I think that by the end of this year these enterprises will be commissioned," said Minister Heydar Asadov. He added that the construction of seed production and processing plants is planned in the future. He also noted that the agrarian department has started construction of seed receiving points at the research institutes of the ministry in a number of regions of Azerbaijan, and some of them are already ready.

According to the new road map for the development of agriculture, the main flow of state financing will be directed to the development of several areas of greatest export value. In particular, it is planned to increase the production of technical crops - cotton and tobacco, silk yarn, intensive development of viticulture and winemaking, tea growing and beekeeping. High export potential for hazelnuts, as well as production of almonds and olives.

The greatest amount of state support since last year has been given to the development of cotton growing. In March-April of the previous year, 52 thousand hectares were planted in the cotton-growing regions of the country, and the harvest of raw materials was more than 87.2 thousand tons - 2.5 times more than in 2015. According to the Ministry of Agriculture, in the spring of this year, 136 thousand hectares were assigned to cotton, and at the end of April, contracts for the production of cotton from more than 15,000 producers were signed. According to forecasts of specialists, we should expect at least a twofold increase in productivity.

"Measures to develop agrarian industries that create high added value, give the first results. Currently we are trying to gradually increase the production of cotton to 500,000 tons per year," said Mr. Asadov.

Azerbaijan also tries to develop the silkworm industry: thanks to the measures taken last year, silk production in the country reached 71 tons - a year earlier, only 236 kg of silk was produced in Azerbaijan. Material and technical assistance to the silkworm industry will be provided this year as well. "By the end of this year, Azerbaijan expects about three-fold growth in silk production: silkworms imported into Azerbaijan are distributed among 3,000 producers in 31 regions of the country," said Ilham Guliyev.

The presidential decree "On additional measures to improve the material and technical base of silk production in Azerbaijan" signed on May 19, 2017 will provide significant support for the silkworm production. It also provides ₼4.5 million for the restoration of the Gakh station of breeding sericulture, creation of additional production sites, purchase of modern equipment, provision of silkworm producers with elite and hybrid silkworm grenades and organization of breeding.

In general, the prospects for the development of agriculture in Azerbaijan look quite optimistic, especially amidst a recession in other sectors of the non-oil sector. The updated regional report of the Tradein Transition of the World Bank (WB) predicts a 3.4% growth rate in national agriculture in 2017. It follows that in 2018, Azerbaijan's agricultural sector will grow by 4.2%, and in 2019 - by 4.5%. According to WB experts, in the next two years the growth of Azerbaijan's agriculture will become the highest in the South Caucasus and one of the highest in Europe and the CIS.