GREEN ME UP

Azerbaijan 2012 | AGRICULTURE | REVIEW: AGRICULTURE

Rural development remained key to economic diversification plans in 2011, boosted by fertile lands that are productive all year round.

Agriculture has played an important role in Azerbaijan's development and in guaranteeing food security, as well as constituting one of the economy's main sectors in terms of employment. The country's fertile lands and its wide range of climatic zones help support a variety of crops, providing opportunities for the production of agricultural products year-round. The country's most significant agricultural outputs include wheat, cotton, potatoes, green vegetables, tobacco, melon, sugar beet, sunflowers, and different fruits.

During Soviet times, Azerbaijan's agriculture sector centered around crops considered vital by Moscow, such as grapes and cotton. This complex has long since changed, however, as Azerbaijan embarked on a comprehensive rebuilding process back in 1995, which included the establishment of market relations in the domestic economy and effective land and property reform. Entrepreneurship was also encouraged, and an attractive framework for foreign investors has boosted production in the country and helped the sector grow by 58.1% in size since 1993. As of 2011, there were over 1,208 agricultural producers and 78,648 cottage farms dealing with the production, processing, and sale of agricultural products. The country produces 70% of the agricultural products it consumes, a figure that the Ministry of Agriculture wants to increase another 5%-6% by 2015. The sector has grown at around 10% per annum over the last few years, and fuelled the creation of 265,000 jobs in regional Azerbaijan since 2003. Currently, 38.3% of the country's workforce is employed in the sector. Subsidies and soft loans are also being offered by the state to promote further entrepreneurship in the sector.

In 2011, Azerbaijani farmers were granted AZN76.2 million in grants to purchase motor oil and fuel equipment, as part of the government's aim to improve technology and agricultural techniques, and more than 1.3 million hectares of sown area received assistance worth AZN52.8 million. In addition, soft loans from the National Fund for Entrepreneurship Support (NFES), under the Azerbaijani Ministry of Economic Development, provided AZN138 million to 1,643 entrepreneurs in 2011. According to the Ministry, through these soft loans, 23 poultry plants, five livestock farms, 14 cold storage rooms and warehouses, 13 greenhouses, five milk processing plants, three meat processing plants, four canneries, and eight grain factories were constructed.

Over the years the agriculture sector in Azerbaijan has become the third main economic sector in the country, accounting for 5.5% of GDP in 2011. It received AZN300 million in capital investments in 2010, up from the average AZN20 million it was receiving in the mid-1990s. Azerbaijan produces a wide range of crops as a result of its climate and geographic richness; grapes, cotton, and tobacco account for half of all agricultural production, whereas fruit and vegetables account for an additional 30%. In 2011 Azerbaijan produced 66,345 tons of cotton, up from 38,216 tons in 2010, and 3,587 tons of tobacco, up from 3,243 tons in 2010. Agricultural production prices followed the trend and increased by 4.7% in 2011.

VEGETABLES

The Lankaran-Astana area, in the southeast, and the Guba-Khachmaz area, in the north, are the most important vegetable production zones in the country, thanks partly to the favorable climatic and soil conditions they boast. Local farmers have successfully increased the cultivated area in the last few years, bringing considerable growth in production. There are currently 79,680 hectares utilized for vegetables, up from 39,000 in 1991. Accordingly, there were 1.2 million tons of vegetables produced in 2011, compared to the 1.18 million tons in 2010.

Exports have also been up in recent years, totaling AZN181.57 million, including fruit, which is a figure 50% above that in 2010. Russia, Ukraine, and Kazakhstan are the main destinations for Azerbaijani fruit and vegetables, and the government is determined to increase the export of Azerbaijani tomatoes, leaf vegetables, melons, and cucumbers, as they have had success in earning a strong regional trademark.

FRUITS

Colorful market stalls are a sign that it is harvest time in Azerbaijan, a country possessing abundant fruit-growing potential. Today, over 130,000 hectares are cultivated for this purpose, and grapes, citrus fruit, apples, and pears are the most predominant crops. However, nuts, hazelnuts, and almonds are also an important part of Azerbaijan's fruit portfolio. The country's harvest in 2011 was 765,818 tons, up from 729,000 tons in 2010 and 718,000 in 2009.

Grape production totaled 137,038 tons in 2011, which represents an increase of 9.4% on the 129,000 tons harvested in 2010. Once famously known for its wine, the Azerbaijani government aims to invigorate the industry, starting with a new state program on the development of viticulture in Azerbaijan for the 2012-2020 period. The program, which was approved in December 2011 by President Ilham Aliyev, also aims to fully satisfy the need for fresh table grapes from local production, improve the resources available to wine companies, and increase export potential by creating a “producer-consumer" scheme. The scheme involves expanding vineyards, offering technical support, and introducing innovative technology. Azerbaijan currently boasts 15,400 hectares of grape cultivation. In 2011, Azerbaijan produced more than 12 million deciliters of wine, of which 21% was exported.

GRAINS

Grain production in Azerbaijan reached 2.45 million tons in 2011, according to the Ministry of Agriculture. The figure represents a 450,000-ton (22%) increase compared to 2010 following the floods of that year. Indeed, Azerbaijan has successfully increased grain production 1.7 times over the last two decades. Among the most important crops are sunflowers for seed and corn. Azerbaijan produced 19,986 tons of the former in 2011, compared to the 15,742 tons in 2010, and 152,306 tons of the latter, up from 134,653 tons in 2010. The average productivity of grain fields was 2.47 tons per hectare, up from 0.48 in 2010. Domestic consumption stands at 3 million tons per year, with imports from Russia and Kazakhstan filling the gap. The main goal of the government is to eliminate the country's dependence on grain imports, while trying to encourage the establishment of larger farms. In this regard, President Aliyev inaugurated a new corn processing plant in Oguz in November 2011, in which the government invested AZN18 million. Two grain warehouses with a capacity of 500 tons have also been constructed within the complex area.

POULTRY

At the beginning of 2011 more than 45 large- and medium-sized poultry farms were operational in Azerbaijan, with a total volume of production estimated at 60,000 tons of poultry meat and 1.2 billion eggs per year. Prior to 2008, Azerbaijan had only 30 poultry farms with a total production level of 40,000-50,000 tons of poultry meat per year. Continuing on the growth curve, and as part of a comprehensive strategy to reduce food import dependency, the Azerbaijani government aims to increase poultry production to 80,000 metric tons per year by 2015. “Our poultry production was at a low level. Now, as a result of the measures taken and the new poultry farms to be built in 2012 and 2013, we will fully provide ourselves with poultry," President Ilham Aliyev stated after cabinet meeting on the results of socioeconomic development in 2011, stressing the importance the government is giving to the development of this segment of the agriculture sector. The Davachi Broyler poultry factory is the largest facility of its kind in the country. In accordance with the State Privatization Program, the Davachi poultry factory was privatized in 1997 and the Azerbaijan State Investment Company owns 25% of its shares. The company also has ambitious plans to increase production capacity by 60%, up 20,000 tons annually.

FISHING INDUSTRY

Azerbaijan is a land rich in rivers and lakes, and it boasts 871 kilometers of Caspian coastline. In 2011, Azerbaijani fishermen caught 1,061 tons of fish, well below the national quota of 2,174 tons. According to Azstat, 141 legal entities and individuals caught 485 tons of sardines, 152 tons of herring, 139 tons of mullet, 72 tons of bream, and 82 tons of Arctic cisco. However, it is the country's sturgeon that makes headlines, due to the quality of the caviar it produces. Today, a kilogram of beluga caviar could easily fetch more than $5,000, with prices above $15,000 not unheard of. The Marine Stewardship Council recently named the beluga sturgeon as one of the most endangered species of fish on the planet, prompting the heads of the five Caspian states to discuss a moratorium on commercial sturgeon fishing at a meeting in Baku in 2011. It is expected that an agreement between the five countries could be reached in 2012.

In parallel, aquaculture production is rapidly developing in Azerbaijan, which has proved to be a crucial element within the country's strategy to preserve the sturgeon breeds. Caspian Fish Company is leading the way after the establishment of a sturgeon farm on the banks of the Kura River, near the Mingachevir area. The facility will enable the company to produce around 200 million fingerlings a year, and the company plans to introduce about 15 millions fingerlings into the Caspian Sea every year.

LIVESTOCK

In 2011 Azerbaijan recorded a 0.37% increase in total livestock through cattle breeding. According to Azstat, by early 2012, milking cows and buffalo livestock in the country totaled 2.67 million head, above the 2.65 million head recorded in early 2011. Sheep and goat numbers also increased from 8.49 million heads to 8.51 million heads. Red meat production in 2011 also increased by 4.3%, up to 485,900 tons.