Agrarian Industry

Home page

Agrarian Industry

Ismet Abasov: Azerbaijan will export most of agricultural output - INTERVIEW

Ismet Abasov: Azerbaijan will export most of agricultural output - <font color=red>INTERVIEW</font>

28 April 2009 12:26 (UTC +04:00)

- How would you evaluate the state of agricultural sector for the first quarter? What changes are expected this year?

- Development of the agricultural sector is continuing apace in Azerbaijan. Thanks to the government support during recent years, there is an increase in production. There was a 6.1% increase in agricultural production for the first time last year. The growth rate was 4.3% during the first quarter this year. Given that the bulk of agricultural production occurs in the second and third quarters, I can say for sure that growth this year will exceed last yearâ€™s figure.
According to our projections, production growth will be more than 7% in 2009. This year Azerbaijan will be able to supply its domestic demand for some products completely.

- When will Azerbaijan be capable of fully supplying its demand for products?

- The domestic production provides 90-95% of the countryâ€™s demand now. For example, potato crop is twice the demand. Vegetables, fruits, melons are available both on the local market and exported from abroad. From next year, Azerbaijan will be able to supply its need for wheat. As a result, import of thoroughbred cattle to the country and increasing interest in the private sector will allow completely supplying the demand for livestock products. The main problem is in the poultry industry. I think for the development of this sector it is necessary to apply comprehensive measures. In my opinion, after the completion of State Program for Economic and Social Development of Regions, through domestic production Azerbaijan will be able not only to meet domestic demand for food, but also export the bulk of output.

- Last year farmers were unable to sell some part of their products. What steps are the Government taking to solve this problem?

- The Ministry of Agriculture is aware of this problem. Farmers grow produce and spend money on this. However, when they couldnâ€™t realize their crop, they are not interested in production next year. To resolve this problem, the state must purchase some products from farmers. In some countries there are state companies and joint stock companies that deal with this issue. These companies purchase products from farmers, and put these products on market when necessary, or export. In Azerbaijan, it is necessary to establish similar state companies and joint-stock companies. We want this happen soon.

- In your opinion, will the re-imposition of VAT on flour and wheat imports from 30 April affect prices?

- In April last year, under an order of the Cabinet wheat and flour imports were exempted from VAT for 1 year. I can say for sure that today there is no shortage of food wheat, and such problems are anticipated in the future. We have enough stocks. Harvesting will begin in a few months. 1.6 million tons of food wheat is expected this year. Given the annual consumption of wheat per capita is 180 kg, the domestic harvest will supply the demand.

- Which proposals are offered to improve procedures for government assistanc to the agricultural sector?

- So far, the head of state has signed a set of decrees and orders to support the agricultural sector. For instance, agricultural machinery, fertilizer and pedigreed livestock are sold to farmers through AgroLeasing. Today Azerbaijan has no shortage of agricultural machinery. High reproductive seeds were imported from Russiaâ€™s Krasnodar region last year through 25 million manats allocated to AgroLeasing from the Presidentâ€™s Reserve Fund. 50-55 tons of R2 seeds will be imported this year.
I think that high reproductive seeds will be available across the country after purchases this and next year. In addition, through 80 million manats annually allocated from the state budget, farmers are granted 40 manats per hectare for fuel and motor oil. The wheat growers are granted another 40 manats (Total 80 manats per 1 ha - APA-Economics). In addition, the National Fund for Entrepreneurship Support annually allocates a certain amount of funds for agricultural projects.
By the way, I would like to note that this year the budget allocation for the State Agency for Agricultural Lending has been doubled to 10 million manats. Procedures for delivery of government assistance to agricultural sector will be further improved. We offer to allocate the grant not for hectares, but the volume of output. I think that the application of these rules would be useful in subsequent years.

-What incentives are planned for the seed-growing?

- Today, there are a number of benefits for the seed growing. For growing Seeds â€œOriginalâ€, â€œSuperelitâ€ and â€œEliteâ€ we offer 100% government support. R1 and R2 seed growing are subsidized by the state by 40% and 30% respectively. This support will continue in subsequent years. Azerbaijan has set a target to develop seed production.

- Will the government continue to sell thoroughbred cattle to farmers on lease?

- Since the beginning of the year through budgetary funds AgroLeasing has begun to sell imported thoroughbred stock to farmers on credit. In Azerbaijan, it is impossible to develop livestock for the head count. But we can achieve high production through the import of high productive cattle. 500 head of highly productive thoroughbred cattle have to date been imported from Germany. Let me remind you that for the development of animal husbandry there is also an artificial insemination program available in Azerbaijan. I would like to mention that that 50% of the price of imported cattle sold to farmers are paid by the state. Another 25% are paid by farmers in advance, the rest â€“ in installments during 5 years. About 1 150 animals will be imported from Europe to Azerbaijan this year.

- Still there is downswing in the development of areas such as wine-making, cotton and tobacco cultivation. Cotton growers refused to cultivate because of the low prices.

- We are satisfied with the work in wine-making. Several new companies emerged in recent years. In response to growing wine production, vineyards are also growing. But, as you noted, there are some undeveloped areas such as cotton and tobacco cultivation. In this sector, farmers mainly work with joint-stock companies which should encourage and involve farmers. Of course, if the price is low, the farmers will not be interested and incited.

- Sometimes, farmers have problems with taking out a loan. They claim that authorized banks want â€œpalm-greasingâ€ and they are faced with red tape.

- I do not agree with that. The issue of â€œpalm-greasingâ€ was eliminated several years ago. Every bank is trying to give customers their money in the form of loans. There is no red tape. If a bank is interested in lending a loan and get interests on loan, why should it create red tape? Often problems arise because of problems in documents. Against the backdrop of global financial crisis, if banks doesnâ€™t take lending serious, and then can get repaid for loans, they can go bankrupt.

- Are there plans to increase the amount and extend the term of loans allocated by the State Agency for Agriculture Lending?

- There are small, medium and large loans. When the agency received 5 million manat from the state budget, the amount of loans was known. As the agricultural sector develops, farmers tend to take out medium-sized and large loans rather than small loans. We will consider the matter in accordance with the demand.

- When will the shortage of personnel be fully resolved in the agricultural sector?

- In this area there are still unsolved problems. But weâ€™re working to solve this issue. Today, Azerbaijan requires skilled livestock specialists, veterinarians, agronomists and technical specialists. To increase the interest of young people in these professions, they are sent abroad for study. But these students must master a foreign language. Unfortunately, most young people studying in the villages do not have good knowledge of foreign languages. I think that as the agricultural sector develops there will be great need for livestock specialists, veterinarians and agronomists, and this will increase the interest in this area. University of Agriculture will require students aptitude test in admission this year.

- You must know that what the media write about you recentlyâ€¦

- Some media outlets write rumors about me. This is all nonsense. In contrast, I have good relations with all colleagues and officials. We are the team of President Ilham Aliyev. I was appointed to this position by the President, and I have showed and will show my performance as well as I can.