Grain should be of high quality, too

In 2009-2010 grain production worldwide is expected to be lower than the level of consumption, will partly annul increase of reserves achieved as a result of huge harvest in 2008. According to forecasts of the international Grain Council (IGC), grain production will decrease by 5.5 percent, or 37 million tons worldwide in 2009-2010 to some 651 million tons against indices of 2008-2009, when record harvest was met at 688 million tons.  

The expected cut in 2009-2010 in world grains production is related to cut in profitability of production due to high world grain prices and 1 percent cut in grain area due this reason.

ESTIMATION OF GRAINS WORLDWIDE

Meanwhile, this year record grain and leguminous harvest is forecasted in Azerbaijan: it is planned to collect 2,616,000 tons of product from 810,000 hectares allocated for sowing these plants - it is close to the country's annual consumption, which comprises 3 million tons. Azerbaijan's annual demand for grains is 1.53 million tons and monthly - 129,640 tons.

Thus, it is possible to state that task to ensure food security has been has been met in its part concerning grains. Grain in such volume has never been produced in Azerbaijan so far and rapid growth of production in this segment of agro-industrial complex should be related to a service of relevant agencies, which designed and realized timely a range of stimulating tools in this field.

If productivity grows in the country by such pace, Azerbaijan can fully refuse from import even in 2010. Presently, Azerbaijan imports 1 million tons of grain. Import comes mainly from Russia, Turkey and Kazakhstan.

In addition, this year it is planned to put into exploitation flour mill at the Baku grain terminal. Azerbaijan imported equipment of Swiss production. The capacity of Baku grain terminal, located in Hovsani settlement and being one of Azerbaijani-Kazakh joint ventures, constitutes from 500,000 to 800,000 tons of grains a year. The enterprises will enable to cover local demand in grain, but also export grain to Georgia, Turkey and South Africa.

To stimulate domestic grain production the Azerbaijani Agriculture Ministry proposed to the government to introduce customs duties on grain import. At present, VAT is imposed on imported grain (18 percent), while maximal rate of import customs duties in Azerbaijan constitute 15 percent. 

For the time being the rate proposed for grain is unknown. However, grain imported to the country should be taxed by 100 percent of customs duties of its price to stimulate the market.

Presently, direct price of grain in Azerbaijan is 13-14 gepiks per 1 kilogram.

In accordance with Article 6.2 of the law on Grains, reserves of the Grain Fund should be formed mainly on the base of local production. It is important to ensure grain fund with reserves of local production. It will boost interests towards grain production, and finally regulate prices at the market.

However, only the currently produced grains meet the accepted standards. In accordance with the rules, local produce can be accepted as wheat of 3rd quality category. The analysis into grain products, held by specialists of the National Grain Fund in the fields, revealed that they meet none of quality standards. Only 3.5 percent of research areas with the square of 22,000 hectares was sown under qualitative grain.

A factor of quality of agriculture products fully depends on the level of rivalry among producers. There is always rivalry in the grain market, whilst during harvesting grain prices drop a little bit and in this case farmers are obliged to sell trade at its direct price or even a bit lower. To gain profit the farmer should sell grain at a price higher than its direct cost and in this case they will be interested to continue the work. Terms of increasing quality of grain will be less favorable if local producers are obliged to rival with import product.

The state of local farmers is complicated by rules on storage and use of state grain fund, adopted by the Cabinet of Ministers. Thus, in case of admitting grain it will be necessary to have a certificate of relevance from the State Committee on Standardization, metrology and patent and a certificate of domestic quarantine issued by the Agriculture Ministry. While admitting import grain it is necessary to produce customs declaration, a certificate of relevance issued by the country's authorized body - a producer, as well as a certificate of origin, quality and phyto-sanitary.   

Special laboratory will be established to achieve relevance of grain to necessary requirements and quality standards. All grain reserves will be stored in special elevators of state consumer and they will be placed depending on type and quality indices only in case of their relevance to requirements.

Currently, major attention is paid to quality of product in the country. Under the program on encouraging the rural and agriculture development the European Union intends to increase Azerbaijan's access to safe and qualitative food through financing. Generally, the EU allocates 20 million euro to Azerbaijan, including 12 million euro to be directed at a program on support to rural and agriculture development, 6 million euro will be directed at boosting management potential in Azerbaijan, based on an action plan sign between the Azerbaijani government and EU in 2006 and execution of an agreement on partnership and cooperation signed in 1996. 

These actions are related to goals of state program on reliable foods supply of Azerbaijani population, targeting decreasing dependence on internal food market from import, increase of food reserves through raising agriculture production.