THE WORK HORSE

Azerbaijan 2015 | ECONOMY | FOCUS: SUPPORT FOR AGRICULTURE

Amid nationwide hype for the European Games, Azerbaijan looks to expand and renovate its most traditional sector, with 2015 being declared “The Year of Agriculture."

In January of every year, President Ilham Aliyev declares which sector the government will be focusing on for the coming months, with 2015 being the Year of Agriculture. It is a testimony to progress made that, despite 2015 being the year of the First European Games, the government has chosen to focus on agriculture. A steadily increasing export market and a consistently improving range of products makes the timing highly logical. However, it is also a timely reminder that agriculture must be revolutionized in order to keep up with the success that has been seen in other sectors.

On the announcement of the Year of Agriculture, President Aliyev set out the main targets of the year, primarily focusing on modernization, solving existing problems, consolidating administrative and financial resources, and promoting the agrarian potential to a wider market sector. From 2000 to 2013, revenues, production, and profits have all increased, suggesting that necessary consolidation has taken place and efficiency increased, and 2015 is set to improve these aspects even further.

Savafl Uzan, CEO of Azersun Holding, a group which primarily focuses on agriculture, is particularly positive about the coming year, announcing that there are “major plans" for the year, including a new feed factory in Imishli that will double the group's capacity to 200,000 tons of feed a year. The Holding is also expanding operations through the establishment of livestock breeding enterprises in Masalli and Shamakhi.

Namig Mammadov, Chairman of the Supervisory Board of Ganja Sharab-2, a producer of wine and spirits, is excited about the prospect of the government proposal but also wary of the challenges that lie ahead. “The announcement that 2015 is the Year of Agriculture has delighted all of us; however, at the same time it has placed tremendous responsibility on our shoulders." With plans to increase their vineyards to 500 hectares, however, Ganja Sharab-2 is making the most of this government project. “The development of grain growing will have a positive impact on the production of ethyl alcohol. It will also accelerate development in the area of viticulture and, consequently, wine making."

For some, one of the most important elements are the opportunities the year will provide for employment. Savafl Uzan explained, “Growing in size with every passing year, our company [Azersun Holding] provides an increasing number of people with jobs and implements projects contributing to improved prosperity and well-being." Ismail Hidayatzadeh, CEO of Intertobacco, is also eager to see the coming year produce an increase in employment, stating, “We set a goal for ourselves to increase the number of work places." With 37% of Azerbaijan's employed population working in the agricultural sector, it is already the most significant employer in the country. However, the challenge lies more in ensuring heightened efficiency. The World Bank's January 2015 report notes that the agricultural sector is a “low-productivity, low-growth sector...contributing only a little over 5% of GDP." Improving the efficiency of the agriculture sector will be a priority in order to ensure that the sector has a considerably greater contribution to national GDP.

Production is only relevant, however, if there is a hungry market. Azerbaijan has now made major steps in ensuring its own food security. A large proportion of its foodstuff and agricultural imports are for the sake of variety rather than necessity. Accessing a wider export market is fundamental and 2015 will be a landmark year if domestic agricultural products start to enter new foreign markets. Azersun Holding already exports to a range of non-regional countries including from Europe, China, America, and the Middle East, and other agricultural enterprises will be looking to do the same.

It is evident that the First European Games are taking the attention of most of the country. Additionally, the continuing worry about oil prices is putting pressure on a so-far successful energy sector. As one of the oldest and the most traditional sectors of Azerbaijan's economy, agriculture has the potential to be an important contributor both to GDP and Azerbaijan's trade potential.