Review of agriculture in Azerbaijan (January-July 2011)

Analysis Materials 15 September 2011 12:07

Having strategic importance for food security of the state, the wheat, grains and products from them were again subjected to value added tax (VAT) when imported into Azerbaijan. The Cabinet of Ministers made a decision to abolish in the Republic the VAT exemption of imported grain, meslin (a mixture of wheat and rye), wheat and rye flour from July 10 this year. The duration of the last tax exemption was reduced according to estimates by the Ministry of Economic Development, Ministry of Agriculture and Ministry of Emergency Situations.

The practice of tax privileges for the importers of wheat and other products have been applied in Azerbaijan not for the first year. The last period of the VAT exemption (which is 18 percent in the country) had been operated from Dec. 3, 2010, and had to be canceled from August of this year. However, the early cancellation of import privileges in the production of corn and wheat promises market the prospects. If the first removal of VAT on the import of wheat was explained via the higher prices for bread and flour, which was caused by the shortage of wheat in the country, last year's tax privileges more focused on market adjustments, and later were justified by excessive spring floods of the rivers and flooding in large areas of agricultural land.

Last year the country imported 1.3 million tons of grain and 2 million tons were produced by local farmers, including 1.3 million tons of wheat. Today, already 1.730 million tons of grain have been harvested, so the country has sufficient grain reserves in order to avoid shortages or price increases for bread.

Last year, Azerbaijan produced 2.1 million tons of grain, and imported 1.4 million tons. Of this amount, one million tons of grain was not used and remained in that year.

According to the State Program on Reliable Provision of Population with Food Products in 2008-2015, the annual cereal production in the country should reach about 2.8 million tons. In 2011, production in Azerbaijan is expected at 2.5 million tons of grain, which exceeds last year's indicators by 500,000 tons.

The needs of the population and economy of the Republic for crops is currently about 3-3.2 million tons. The missing part is imported from other countries. Today, Azerbaijan imports grain from Russia and Kazakhstan.

According to the Agriculture Ministry of Azerbaijan, the cultivated area of wheat during the year decreased by 0.5 percent - up to 654,197 hectares. So, as of Aug. 8, wheat was sown over an area of 651,551 hectares, while last year the work was carried out in an area of 655,381 hectares. The sown area dropped by 0.6 percent compared with last year.

Despite this, production of wheat increased by 25.3 percent as compared with last year. As of early August, the country harvested 1,635,385 tons of wheat.

As of Aug. 8, the yield of crops in Azerbaijan was 24.7 quintals per hectare as compared to 19.9 q/ha in 2010, an increase of 24.1 percent. According to the Agriculture Ministry, wheat yield is 25.1 q/ha, or 26.1 percent higher than last year.

Spring field work in the country ended in June.

Sowing of spring plants in 2011, ha

2011 (preliminary data) 2010 (last data) 2011/2010, %
Grain and legumes 966,7 968,0 99,9
-Autumn and spring wheat 654,0 657,6 99,5
-autumn and spring oats 262,5 264,7 99,2
Corn 33,7 29,9 112,7
Legumes, in total 12,8 12,2 104,9
Industrial crops, total, including 66,9 52,6 127,2
Cotton 42,8 30,2 141,7
Tobacco 1,4 1,3 107,7
Sunflower 11,3 9,0 125,6
Sugar beet 7,3 8,5 85,9
Potatoes, vegetables, melons - all 179,5 178,8 100,4
- potatoes 65,2 65,8 99,1
- vegetables 81,1 81,1 100,0
- melon and water melon 33,2 31,9 104,1
- feed corn 0,7 1,1 63,6
One-year plants 8,1 5,8 139,7
Many-year plants 84,4 82,8 101,9
Many-year plants of previous year 300,9 294,5 102,2
Total sowing area 1607,4 1583,9 101,5
Source: State Statistics Committee

Since the beginning of the harvest season, there have been harvested 503,000 tons of potatoes (an increase of 31,300 tons compared to the same period of the last year), 709,400 tons of vegetables (55,600 tons increase), 144,800 tons of fruit and berries (4,000 tons more), 308,000 tons of melons (an increase of 62,800 tons), 338,1 tons of green tea leaves (reduced by 23.1 tons), 1,168.8 tons of tobacco (an increase of 212,6 tons).

Thus, according to the State Statistics Committee, over the first seven months of 2011, agricultural production in Azerbaijan grew by 10.2 percent, including crop production by 15.1 percent, livestock by 4.8 percent as compared to the same period of the last year.

During the reporting period, were produced 243,300 tons of meat, 941,300 tons of milk, 590,6 million units of eggs, 14,600 tons of wool. Compared to the same period of the last year, in January-July this year, the production of meat grew by 5.5 percent, milk - by 8.4 percent, and wool - by 6.8 percent, eggs - has declined by 16.8 percent.

Production of cattle-breeding (in ths tons)

Products 2011 2010 Compared to 2010, %
Meat (alive) 243,3 230,6 105,5
Milk 941,3 868,5 108,4
Egg 590,6 709,5 83,2
Meat (alive) 14,6 13,6 106,8
Source: State Statistics Committee
According to State Statistics Committee of Azerbaijan, in January-July 2011, the total production and services in the forestry sphere of the country amounted to 413,200 and fishing - 63,100 manat.

Factual prices of the products of the agricultural, forestry, fishery and hunting economies in Azerbaijan, in ths manat

2011 2010
In total, including 2702293,4 2182112,6
Agriculture 2701817,1 2181263,0
Forestry 413,2 790,0
Fishery 63,1 59,6