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Time to address agricultural subsidies in Azerbaijan

Analysis Materials 26 October 2011 16:20
Today, an increasing number of countries put food security issues at the core of their present day policy. This is not surprising, for at a time when manmade disasters increasingly jeopardise the planet by threatening it with serious environmental consequences, food security becomes an effective tool to providing a guaranteed development of society. In this regard a lot of attention is paid to the development of agriculture.
Time to address agricultural subsidies in Azerbaijan

Azerbaijan, Baku, Oct. 26 / Trend /

Leyla Abdullayeva, head of Trend's analytical center

Today, an increasing number of countries put food security issues at the core of their present day policy. This is not surprising, for at a time when manmade disasters increasingly jeopardise the planet by threatening it with serious environmental consequences, food security becomes an effective tool to providing a guaranteed development of society. In this regard a lot of attention is paid to the development of agriculture.

Since 2007, the Azerbaijani farmers have been granted subsidies for the purchase of motor oil and fuel, as well as the sowing of wheat and rice to the tune of 360.3 million manat.

In 2007-2010, the state budget allocated farmers subsidies for the development of seed to the sum off 15.1 million manats. Based on the Azerbaijani Agriculture Ministry's data, more than 49 million manat has been spent to ensure the sale of fertiliser to the population at a discount of between 50 and 70 per cent since 2007. During this period, 294,700 tons of fertiliser was sold.

The subsidies were aimed at stimulating the interest in peasants and farmers. As much as 500,000-600,000 hectares of land were taken up in the region and after receiving the subsidy, the figures increased by 50,000-100,000. People do not hold the land for nothing, sow alfalfa, for example, or other feed for livestock.

According to the State Statistics Committee in 2007, the sown area hit 652 hectares of land and the harvest of 2011 were sown on 967,300 hectares, including wheat planted areas of 654,200 hectares.

Subsidies in Azerbaijan are supporting agricultural producers very well. However, according to farmers, the addressed subsidies are not applied in Azerbaijan.
Lack of the addressed subsidies suggests that all farmers in Azerbaijan, regardless of sector and conditions, have been receiving grants by the same criteria. This leads to discrimination against farmers who operate in more difficult circumstances (for example, on a less fertile soil, or grow difficult products). This ultimately reduces the effectiveness of the subsidies.

In addition, the amount of subsidy in Azerbaijan is very small compared to European countries., Subsidy per producer was 139.17 manat (131.3 euros) in Azerbaijan in 2010, while in Europe (for all 27 countries) farmers received on the average 6.797 euros each as part of agricultural policy.

Analysis of statistical data, the study of foreign studies, expert opinions and views of farmers showed that Azerbaijan should take specific measures to increase transparency and effectiveness in the policy of agricultural subsidies.

In particular, to cut funding for compensation for the factors of production per hectare and increase funding for agricultural producers, as well as to diversify the channels of subsidy according to the conditions of activity.

The official exchange rate is 0. 7869 manat to $1 as of Oct.26.

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