It is not secret that the food safety of any country is firstly ensured due to the agricultural production. The attention paid by State to this sector never remains without result. The grateful land doubly returns the care about it with its riches. After collapse of the USSR, Azerbaijani peasants remained face to face with their small plot of land, presented to them by State without modern technology, means for the cultivation of competitive commodity products and finally without stable market for sale, and was engaged in cultivation of products for her own consumption.
Over five years - from 1990 to 1995 - the volume of agricultural production reduced by 58%. The long absence of State program on development of agriculture was wrapped up by the situation, when the fantastic volumes of production of cotton, tobacco, grapes, early vegetables and the rest, which were intended not only for their own consumption, but also for the immense union market remained in the history.
Restoring large capacity of the agriculture in the country to ensure full food safety is a paramount task for the Government of Azerbaijan until today. Last week the President of Azerbaijan, Ilham Aliyev, issued an order assigning additional aid to the agricultural producers in order to provide them with seeds, fertilizer and livestock. According to order, the Reserve Fund of the State Head will allocate AZN 25mln for Agroleasing JSC to realize these measures. The measures are planned to be fulfilled during 2008 - 2009.
Funds are intended for construction of specialized barns for storing of technology and mineral fertilizers. The additional aid is provided for cover the needs of agricultural producers for the mineral fertilizers, high-reproductive seeds of wheat, livestock and increase in agricultural production. The allocated funds are envisaged to cover 50% of the cost of the seeds of wheat and 70% of the cost of the mineral fertilizers. During 2008 - 2009 it is envisaged to import livestock with its further transfer to leasing to the agricultural producers, who are engaged in livestock, on preferential terms (with payment of 50%). Due to allocated resources, there are plans to design and build the specialized storages for the storage on the basis of the corresponding standards of technological equipment and farm machinery, acquired due to funds allocated by State. These measures must be executed Agroleasing under co-ordination with the Ministry of Agriculture, Ministry of Finance and Ministry of Economic Development.
So this order, undoubtedly, will serve a dynamic increase in the agrarian sphere. However, it should be noted that government's stimulating policy in the agrarian sector of Azerbaijan is not new. Since 1997 the Public budget has been allocating subsidies to cover difference between production cost and diesel fuel sold to the agricultural producers. At present economic subjects in the agriculture are exempt from all forms of taxes, with exception of land tax.
Last year two significant government orders were issued in the agriculture of Azerbaijan to help farmers. According to the January order on State support to agricultural producers issued by the President of Azerbaijan after an increase in the tariffs for oil products, the Public budget allocated AZN 80mln, AZN 56mln from which were directed towards acquisition of fuels and lubricants, and AZN 24mln - payment of 50 percent of the cost of fertilizers. Some 596,806 physical entities and 12 legal entities received financial aid for the privilege purchase of fuel, motor oil, mineral fertilizers.
In November 2007 the Cabinet of Ministers of Azerbaijan issued an order assigning subsidies in amount of AZN 40 to the grain producers for each sowing hectare. This order was directed towards stimulating grain production, increasing material interest of the producers and covering demand for bread and grain products at the expense of internal grain production.
The result of these measures became the increase in the agriculture as a result of the half-year of 2008, which for the first time exceeded 10% from the beginning of economic reforms. 10.7% growth rate in agricultural production was registered during this period in the country. Increase was also observed in the planted area of autumnal and spring cereal crops.
Despite unstable weather conditions, this year an increase is expected in the production of grain and wheat up to 500,000 tons and 370,000 tons respectively. Azerbaijan's Minister of Agriculture, Ismet Abbasov, said that for the first time in the country this year the production of autumnal and spring grains, including legume and maize crops, will exceed 2.5mln tons.
Amongst other measures of Government for the revival of agriculture, it is possible to mention the establishment of Agrolizing JSC in 2004 with 100% participation of the Public capital to supply farmers with farm machinery on privilege prices. Taking into account that over recent years the park of basic types of agricultural machinery strongly reduced and worn out, the introduction of the new model of logistic support of an agrarian sector became imperative of the time. The deficit of the financial resources always hampered life for landowners. As a rule, only large enterprises can acquire technology with own cash resources.
For the enterprises of small business the leasing becomes almost the only mechanism, which makes it possible to timely acquire technology. The advantages of State support to the Agrolizing clearly appeared after an increase in the tariffs on some types of fuel at the beginning of 2007. Then private agro-technical service raised prices of their services, but the facilities owned by Agrolizing preserved them on the previous position (period of re-payment of credit for purchase of equipment at10 years).
In the first years of the establishment of Agrolizing, the Public budget allocated funds to acquire techniques abroad. This continues today as well because still there is a need for it. However, the specific part of these funds already remains in Azerbaijan and serves the creation of local production. In Azerbaijan the production of agricultural machinery began, agro-service centers were created, tractors are already produced in Ganja city. Since the beginning of its activity (in 2005), due to funds allocated by the Public budget, Agrolizing acquired 565 grain-harvesting combines, 1,578 tractors, 120 excavators, 21 technological equipment, 4,396 units of other agricultural machinery, 161,000 tons of the mineral fertilizers.
With regards to privilege crediting of farmers, according to the data by the National Fund for Entrepreneurship Development, since the beginning of the year, privilege credits totaling AZN 53.8mln was obtained by 483 entrepreneurs in 51 cities and regions. More than 78 percent of the financed projects fell on the regions and 85 percent - production projects, which cover the sphere of processing. Privilege credits were provided for manufacturing industrial products (94 projects), production and processing of agricultural goods, development of farmer economies (348 projects), development of tourist infrastructure (24 projects), service sector (16 projects).
Privilege credits of the National Fund are provided through 29 authorized commercial banks, one non-banking credit organization and four credit unions. The term of micro-credits and small credits is determined of up to two years, average - three years, large - five years, huge - seven years. The maximum amount of the credit for one entrepreneur composes AZN 3mln. Rate on the credit must not exceed 7 percent.
Subsidizing agriculture is still compulsory for Azerbaijan in order to re-establish former glory of the agricultural country, which produced competitive goods. Specifically due to State assistance, after all misfortunes and adversities, experienced in the viticulture, at long last it was possible to move this sphere from dead center. Six years ago, a Law on Viticulture was adopted, which provided strong pulse to the revival of this sphere. Specialized economy was created on the cultivation of disease-resistant materials.
The same problems were observed with regards to tea growing where the planting area decreased by almost ten times. However, certain progresses have been observed in this regard over the last two-three years.
The work of cotton growers goes most intensively. Several public companies put large investments in the modernization of the cotton-processing enterprises, concluded partner agreements with the farmers and render them substantial aid in the cultivation of raw material. This mechanism allowed to increase the areas under the cotton plant by almost 50 %.
Thus, summing up pluses of State assistance to agriculture as a result of the first stage of the agrarian reforms, its main components should be mentioned.
- The agro-industrial complex of Azerbaijan gradually passes to the market rails; - Control system of agricultural production incurred quality changes;- New forms of property and management appeared; - Agricultural producers are exempt from all forms of taxes (except Land tax);- Privilege fuel supplied to the farmers;- New inter-economic production and economic ties appeared. - Access was facilitated to the privilege credits and agricultural machinery;- Class of agricultural producers was formed that led to the fundamental changes in the psychology of peasants.
However, much in this sphere must be made in connection with the course on the gradual integration of the agriculture of Azerbaijan into the world community. This dictates the necessity to re-consider and adapt normative-legal documents, national standards, certificates and technical specifications of agrarian production to the requirements of the European Union. It is necessary to study experience and new technologies of the EU countries, to organically use them taking into account the soil-and-climatic conditions of Azerbaijan. However, let us join the World Trade Organization with strong agriculture.