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Azerbaijan 2016 | AGRICULTURE | REVIEW: AGRICULTURE

Farms across the country are pursuing a policy of increased yields for year-round fruit and in the wheat harvest to stave off an over-reliance on imports. With carefully targeted increases in exports, better routes to port and to market, and greater sophistication of agricultural facilities, farming could soon be the morning star of Azerbaijan's diversified economy.

Farming enjoyed a year in the limelight in 2015, Azerbaijan's Year of Agriculture. And rightly so, as the sector has an important role to play in Azerbaijan's economy, yet has suffered a period of decline, in 2014 contributing only 5.7% to the country's GDP though employing 39% of the total workforce, according to World Bank figures. Thankfully, reform of the agricultural sector is a government priority, and the agricultural sector has a lot going for it. In that regard, Azerbaijan is well on its way to achieving self-sufficiency in food products. However, the prices for agricultural produce and commodities have been slow to rise, leaving the sector with the uncomfortable impression that it is stagnating—running only to stand still. That said, managed correctly, the rural economy has a major role to play. It is, after all, the oldest and best-established sector in a country crying out for more diversification. It would ensure expansion of the wider economy to rural areas, relieving dependence on Baku and the hydrocarbons sector, and energizing rural start-ups and SMEs linked to agriculture, trade, and market gardening. Just over 30% of Azerbaijan's land is under cultivation, with 22% devoted to arable farming, mostly wheat, barley, and fruit. Farmed land occupies over 1 million ha, most of which are located on the country's fertile plains to the east and south. A 40,000-km network of pipes and canals ensures the soil is adequately irrigated. The country's varied climate (famously home to nine of the world's 11 climatic zones) affords it a wide range of cultivated crops, from warmth-loving pomegranates to potatoes. The key farm produce of the country consists of wheat, barley, rice, cotton, grapes, pomegranates, apples, peaches, almonds, hazelnuts, lemons, oranges, tea, tobacco, and a livestock herd comprised of cattle, pigs, sheep, and goats.

Exports

The country's main agricultural export is fruit, and here the reforms are showing real results. Fruit production increased by an incredible 32% between 2013 and 2014. The increase can be attributed to efforts by the government to foster closer ties to foreign markets. At the same time, the country has invested in new “green" logistics centers constructed in Baku and on the Absheron peninsula. The centers are specially designed to cope with handling large quantities of fresh and fragile produce that is also highly perishable. Meat is another product in high demand abroad, and a similar logistics site is now established in Baku for the efficient cutting, processing and packaging of meat. In other areas, too, Azerbaijan is repositioning itself to increase its exports. In 2005, the country was a net importer of potatoes. Today, in addition to serving the growing domestic market, the country exports more than 50,000 tons of potatoes a year.

Dairy and livestock

To its credit, Azerbaijan is almost self-sufficient in meat (90%), poultry (81%), eggs (80%), and dairy produce (76%). The numbers are impressive. In 2014, the country registered grand totals of 26 million chickens, 8.1 million sheep and goats, 2.5 million cattle, and 7,000 pigs. That same year, these animals produced 98,000 tons of poultry meat and products, 77,000 tons of goat and mutton, 125,000 tons of beef, and 8,000 tons of pork. The country's dairy herds yielded 1.78 million tons of cow and buffalo milk, and 40,000 tons of goats' milk. Since 2006, meat production has risen by a factor of 1.7, and overall animal husbandry goods by a factor of 3.6. A program of cattle breeding (often bringing in stock from abroad), has seen the cow population rise 3-fold over the past 10 years.

Arable farming

As part of the 2015 Year of Agriculture, a State Grain Fund was set up by the government, with subsidies given to farmers to develop interest in the project. The fund seeks to provide seed producers with high quality seeds for crops that will ensure they meet tough export criteria—particularly those of the EU. Although the country's arable farms suffered a devastating setback in 2010, when vast flooding destroyed the year's harvests, the story of late for Azerbaijani crop cultivation has been a good one.

The story is largely one of wheat, and this is mostly grown on the level plains to the east of the country. Demand is absolutely huge—Azerbaijan needs between 3 and 3.5 million tons of wheat each year. It is so huge that Azerbaijan needs to import 40% of this to make up for a homegrown shortfall. The Ministry for Agriculture is now actively working to eliminate this imports dependency. The strategy is simple: equip farmers with the knowledge, the technology, and the incentive to grow more wheat and fewer other crops, such as oats and barley. The method for this is called bed planting, which involves crop rotation, with wheat grown in the winter and pulses or oil seed rape in the summer. The double-cropping technique involves less soil erosion, less irrigation, and fewer seeds. It also leads to much bigger yields: in a trial in Barda district, yields rose from 4 to 5.5 tons per hectare. The bed planting method allows water to be delivered to the crops via permanent furrows, and ensures the soil's composition and fertility is preserved.

Fruit & vegetables

In 1H2015, fruit and vegetable exports were worth $136.9 million. Azerbaijan has recognized an opportunity to greatly expand its exports of fruit and vegetables to Russia, and is investing in glass houses specifically to cultivate lemons, tomatoes, cucumbers, rhubarb, and other crops that Russia's climate is not conducive toward. Modern greenhouses with capacity for growing 2,300 tons of vegetables are currently being constructed in Baku, using grants worth AZN 145.4 million from the National Entrepreneurship Support Fund (NESF) of Azerbaijan, which started issuing funds at the beginning of 2015. Baku already has 24 new greenhouses as part of the NESF's program. The scheme has already generated 9,000 new jobs in market gardening for maintaining the enormous glass houses. As well as fuelling export growth, the idea is also to make the big price rises that plagued Azerbaijan's markets each winter a thing of the past, by ensuring an abundance of fresh produce year-round.

In the Azerbaijan food industry, however, it turns out that the most ancient commodity is also most profitable. Grapes are grown widely in Azerbaijan, and the country produces more than 8,200 tons of wine (2014). There are at least 6,500sqkm of vineyards of some half-a-dozen grape varieties, including Pinot noir, Pinot blanc, Aligoté, and Madrasa. Most vineyards are situated on the foothills of the Caucasus mountains, where the well-drained gravel ly soils and warm summers provide nearly ideal conditions.