The Business Year

HE Heydar Asadov

AZERBAIJAN - Agriculture

The Right Season

Minister, Agriculture


HE Heydar Asadov graduated from the accounting department of the Soviet Trade School, and in 1983 graduated from the Economic Department of the Azerbaijan Institute of National Economy named after D. Bunyadzadeh. In 1987, he received his PhD, and from 1992 to 1995, he was a PhD student at Marmara University in Turkey. In 1995, he was appointed as Deputy Minister of Finance. Between 1996 and 2007, he worked as General Director of the Head State Treasury under the Ministry of Finance and Deputy Minister of Finance. In April 2007, he was appointed as Chairman of the Chamber of Accounts. In October 2011, he was decorated with the Second Degree Order “For Service to the Motherland“ and in October 2013, he was appointed Minister of Agriculture of the Republic of Azerbaijan.

TBY talks to HE Heydar Asadov, Minister of Agriculture, on the Year of Agriculture, the decline of imports, and the potential of the country's winemaking.

In January, the President announced that 2015 would be the Year of Agriculture. What is the role of the ministry in supporting this initiative of the government?

The Ministry of Agriculture is a coordinating body in the organization of the Year of Agriculture. The decision is a logical continuation in connection with the beginning of a new stage in agrarian reform in Azerbaijan. Strategic tasks in connection with the development of the agrarian sphere have already been identified by the President. The Ministry has now prepared a relevant plan of action to implement these ideas.

In which spheres did agriculture see a greater growth in 2014, and in which segment are there more opportunities?

Except for grain, the production of local agricultural products, especially fruits and vegetables, saw solid growth in 2014, which created abundance on the market. The amount of fruits and vegetables imported into the country dropped by 13.5% and amounted to $25.2 million in 2014. In natural terms, the amount of fruit imports dropped by 32.7% and vegetables, melons, and gourds by 47.3%. The role of local production has increased considerably in meeting the demand of the local market for agricultural produce. At the same time, the amount of fruit and vegetable exports, which form the basis of the country’s agricultural exports, increased by 16.1% compared to the previous year and reached $291 million. Azerbaijan currently produces more than 50 types of fruits and vegetables. On the basis of evaluations carried out with World Bank experts, the comparative advantage of fruits and vegetables produced in our country is high. The country has enough export potential in this sphere. Fruits and vegetables form the basis of our agricultural exports. Cereals, such as wheat, barley, and maize, are produced only to meet domestic demand. Due to unfair competition that emerged as a result of subsidies in cotton growing in other countries, this sphere has become weak. We used to produce 400,000-500,000 tons of cotton per year; however, now this indicator has dropped to 40,000-50,000 tons. Animal husbandry, which is aimed mainly at meeting the demand of the domestic market, is also well developed in Azerbaijan. Cattle, sheep, and poultry breeding form the basis of this.

The Ministry of Agriculture attended the 37th World Congress of Vine and Wine in Argentina in November 2014. What is the potential of the Azerbaijani winemaking industry for accessing new markets?

Azerbaijani wineries currently export their products to 10 countries, predominantly in the CIS region, Russia, and Ukraine in particular. We are now focusing on diversifying our export market, because the potential is great. In the 1980s, there were more than 200,000ha of vine plantations in Azerbaijan, which produced more than 2 million tons of products. The 180 vine-processing factories that operated at the time manufactured more than 60 brands and 120 million deciliters of wine. Joints projects are being implemented with European companies in order to develop the spheres of vine growing and winemaking. New vine plantations are laid out and new factories working with the latest equipment. Over the past 10 years, the volume of vine production in the country has increased by 2.7 times, wine production by 2.5 times, and the volume of export by 2.8 times.

Technological innovations throughout the world are an important growing part of agriculture. How well does Azerbaijan accept the need for technological achievements?

The main focus is the intensification of production using modern technologies. The natural reserves and climatic conditions in our country are favorable for agriculture, but are limited in terms of the land available for cultivation and water reserves. For this reason, we are taking measures to expand production using intensive technologies. We import highly productive animal breeds from France, Germany, and other European countries. The intensive farming model has been identified as the priority task in the agrarian policy of the government. We have started creating agricultural parks that act as a new business technology used in the production of agrarian food products and that makes it possible to produce a large harvest in small areas. In addition, the application of modern technology in management is one of our top priorities. Thus, we have started developing “E-agriculture” system which is very important tool to increase the transparency and effectiveness. This system is among our priorities inline with the European experience. Seven modules of the system will cover the full automation of the system of land plots and farms, the receipt of requests for subsidies and payments and other requests. Apart from that, we have started a joint project with the World Bank, which is aimed to manage the sphere of animal husbandry in our country.

Agriculture is a sphere that has the highest number of employees in Azerbaijan and is growing as a sector. How can the ministry continue to support those working in this field?

About 37% of those working in the country are engaged in agriculture, and about 90% of agricultural products in Azerbaijan are produced by family farms. From this point of view, state support for manufacturers of agricultural products is of social importance. In 2014 alone, 150,000 manufacturers were given AZN20.1 million for sowing wheat and rice in the fall of 2013, while 384,000 manufacturers received AZN51.8 million in aid for the fuel and motor oil they used. The mechanism of offering adequate subsidies has been a top priority. The volume of discounts for the fertilizers selling to manufacturers of agricultural products this year increased from 50% to 70%. Also, a 40% discount was made in the initial cost of agricultural equipment leased or sold through leasing by JSC Aqrolizing. The state also supports manufacturers of agricultural products in the field of supplies with seeds. For example, all production expenses on original, elite, and super-elite seeds produced by scientific centers are currently covered by the state budget. In addition, farms receive subsidies for seeds and seedlings of the first and second reproduction sold by farms that produce seeds and seedlings. About AZN6.5 million were paid from the state budget in 2014.

How do you evaluate the government’s attempts to diversify the economy in the non-oil sector, especially its attempts to develop small and medium-sized enterprises (SMEs) in agriculture?

Despite the relative decline in oil production in the country, economic growth has been secured due to the development of the non-oil sector. The share of the non-oil sector in GDP increased from 50.3% in 2010 to 61% in 2014. Currently, the state has set up various institutions in order to develop SMEs. The National Fund to Support Entrepreneurship and the State Service for Agricultural Projects and Credit Management under the Ministry of Agriculture are issuing preferential loans to SMEs. On top of this, manufacturers of agricultural products are exempt from all taxes, except for the land tax, until January 1, 2019. The measures that are currently being taken to provide manufacturers, including SMEs, with seeds, increase technical support for this sphere and improve the breed of animals, as well as other measures that will lead to qualitative changes in agriculture. The measures that are being taken also aim to strengthen market principles in agriculture and create competitive manufacturers. One of the priority aims is to develop various economic forms in agriculture, including SMEs.



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