The Business Year

Ismail T. Hidayatzadah

AZERBAIJAN - Agriculture

Prime Harvest

General Director, Intertobacco

Bio

Ismail T. Hidayatzadah was born in Baku in 1964. He graduated from the Azerbaijan State University in 1986, where he studied at the faculty of biology. From 1986-1993, he worked at the Scientific and Industrial Association for Space Research. From 1993 to 2007, Hidayatzadah was a private businessman, before joining Intertobacco in 2007.

TBY talks to Ismail T. Hidayatzadah, General Director of Intertobacco, on partners in the country, the share of the market, and investment opportunities.

Who are your most important partners in Azerbaijan?

Farmers are our main partners. Every year we summarize the preceding season and make new contracts with the farmers for the upcoming year. We sign contracts with the farmers that grow tobacco, which always go under our supervision. We then provide advance financing for the project. This last season was not very successful, unfortunately, due to climatic issues. When we first started people still did not believe that this tobacco is good to work with, and in 2007 we managed to seal just three agreements—with only three farmers who agreed to test-grow the tobacco. Now, after the last season, we have around 70 agreements. Some agreements are now actually comprised of more than one person, for example, a group of farmers who decide to work together.

What can you tell us about the equipment that you use at the plants and the process of production?

In order to grow tobacco from seed to cigarette, you must go through a set of steps. The first part is agricultural: seed it, grow it, tend it, gather it, and dry it. The second part is to separate the leaf from its strands. The third stage is the production of cigarettes. Our project is big, and we covered the first two steps, while the third is not in our plans yet. We work with two approaches here. Firstly, we contact the farmers, and secondly, we try to grow on our own available company land. We dry Virginia leaves inside special dryers. Green tobacco leaves are put inside the dryer for seven days. We constructed and equipped three points for tobacco where the farmers send it freshly picked. It is dried, and then transferred to our factory where the tobacco leaves are peeled. In order to help the farmers, we work with an American company called Valmont, which helped us install many items of agricultural machinery. After the tobacco is collected and delivered to the factory, we use 180 drying compartments that allow us to dry 4,000 tons of tobacco every year. Afterwards, the tobacco moves to the next stage, which is separation. We have set up two companies that help us with the equipment here: the American company MacTavish and the Italian company Godioli & Bellanti. We have set up our own line of production with the help of these two companies. The drying part of our production has cost us about $20 million, excluding the construction. We are very happy with our suppliers.

The agricultural sector is very important in Azerbaijan. What share does tobacco have in it?

I hope that the tobacco sector will grow and expand. In general, the agricultural sector, overall, is growing quickly: whether it is grain production, cotton production, or anything else. When it comes to tobacco, the drought might become a problem again, and farmers are getting suspicious about weather conditions. Growing tobacco needs a lot of human resources, and human labour always comes with additional costs. We set a goal for ourselves to increase the number of work places. Our sector is also important for the economy of the country: our rates per ton of production are high. On average, our rate per ton is $4,200.

What investing opportunities does your company and the tobacco growing sector in general have for the future?

I believe that the main investment opportunities are available through the companies that work with farmers. Local people have been growing tobacco forever, and whoever wants to invest should work with the farmers. The President has visited our factory twice, in 2007 and 2010. After this, he gave an interview to the regional newspaper and said that we can now speak about the absolute revival and reconstruction of the tobacco industry in the region—the highest praise I could ever get. People here really like working in this area, and all investors should consider this, and plan on improving the agricultural tools, fertilizers, and new means of working the land, for example. Although the latter can be said about any branch of agricultural production, in the tobacco industry, the human factor is essential. In the last couple of years, there has been no new development in the technological aspect of tobacco production, so all you need is to work with people.

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