Azerbaijan - Agricultural SectorAzerbaijan - Agriculture
Azerbaijan has designated agriculture as one of the four priority sectors for diversifying its economy. The agricultural sector is Azerbaijan’s largest employer, employing 37% of the population, but accounting for only 6% of GDP. Azerbaijan produces a wide variety of crops, due to excellent climatic conditions and an extended growing season. Fruits (apples, cherries, grapes, olives, lemons, persimmons, melons, watermelons, raspberries, strawberries, currants, plums, peaches, pears, quince, and pomegranates), vegetables (potatoes, carrots, beets, cabbage, tomatoes, cucumbers, onions and greens), grains (wheat, maize, barley), tea leaves, and nuts are high quality, have minimal unit production costs, and have strong brand recognition in post-Soviet markets. The government seeks to support the agricultural sector through various measures including: import substitution, which significantly limits opportunities for U.S. agricultural products; tax exemptions; and subsidies of machinery, pesticides, and fertilizers. The subsidies for machinery, in particular, have increased sales of U.S. combines, tractors, harvesters, and irrigation equipment.
As a legacy of the collapse of the Soviet Union, Azerbaijan inherited outdated food processing equipment and rudimentary packaging facilities. Improvements in these facilities will require imported equipment. There is potential for the development of food processing, but large-scale U.S. exports will likely remain limited; niche deals are more prevalent. We advise U.S. companies and investors to work with established firms with a proven market track record.
Post-Soviet land reforms parceled small land plots of roughly two to five acres out to individual farmers, creating a structural impediment to larger-scale agriculture, mechanization, and consolidation. Furthermore, inadequate record keeping and titling of land have complicated efforts to reform the sector and complicated lending to farmers unable to prove a legal right to the land they cultivate. The degradation of Soviet-era irrigation systems has led to the salinization of large areas of farmland, which will require significant investments to repair and may provide a niche market for partnering with the government on restoring arable land. A lack of agricultural experts and specialists also poses significant challenges to development in agriculture. The Azerbaijan State Agricultural University, located in Ganja, is the only university that specializes in agriculture. Like other sectors in the Azerbaijani economy, a handful of large enterprises with connections to the central government distort the market.
Azerbaijan requires import licenses for food products of animal origin. Starting January 1, 2009, the State Customs Committee began issuing licenses for those products based on a letter of import permission from the State Veterinary Service (SVS). The responsibility for import permissions was transferred to the newly established Food Safety Agency in March 2018. To protect and spur domestic production, starting November 1, 2016, the government increased import fees for certain agricultural and construction products (See the Customs Regulations and Standards section for additional details.)
There is demand for food processing and packaging equipment, especially for mid-size meat, dairy, and fruit and vegetable processing production. There is also a need for production of packaging materials for different market segments.
American-manufactured agricultural equipment and used equipment dealers should consider personally traveling to the rural markets to meet with target audiences, such as farmers and large private holding companies active in agricultural processing. The Azerbaijani government is also interested in promoting small-scale dairy processing in rural areas. There is demand for agricultural consulting in such areas as international certification and distribution. Azerbaijani exporters are eager to export into the more lucrative Western markets, including the United States and Europe.
Ministry of Agriculture: www.agro.gov.az/
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Azerbaijan Agribusiness Trade Development and Promotion