The fruitful return of the Azeri farmer
After decades under the Soviets, Azerbaijan’s agriculture sector blooms again

Since ancient Greece, and until quite modern times, Azerbaijan was renowned agriculturally as a wealthy land. Blessed with a balmy climate that boasts nine out of 11 climatic zones (from sea level sub-tropical areas to high mountains), the Azeri people farmed fertile lands or fished the rich bounty of the Caspian Sea for virtually everything they needed to feed their families.

But all that changed in 1920 when the Soviet Union annexed the country and transformed it into an economic colony of the USSR. As is the norm with colonies, the Soviets used Azerbaijan’s agricultural lands strictly as they saw fit for themselves and as useful to the overall needs of USSR as a whole.

Any efforts to maintain a logical balance of produce within Azerbaijan itself were abandoned. Small private farms were closed and combined to create vast government-run agricultural cooperatives known as kolkhoz. It was agricultural ministers in Moscow who decided what crops Azeri farmers would grow, how much their produce would sell for, and exactly where in the USSR it would be sold.

Just as certain states of the Soviet Union were given a single key crop to focus on (Uzbekistan, for example, produced vast amounts of cotton), the Soviets wanted to develop Azerbaijan’s vineyards. Rice, wheat, cattle and poultry farming was drastically cut back, as other areas of the Soviet Union were already producing those items, and Azeris could import these products at state-controlled prices without ever worrying about paying the transportation costs, no matter how far the produce had traveled to reach Azerbaijan.

At the same time, anything that Azerbaijan could produce would be purchased in Moscow by what was called ‘the All-Union Fund.’

"Moscow always wanted Azerbaijan to be dependent," he continues, "in cattle breeding as well as in other things. Each year, Azerbaijan received an average of 1.2 tons of milk and dairy products and about 40,000 tons of meat and meat products from the All-Union Fund. We couldn't breed our own cattle because we weren't allowed to grow the proper feed for them. With the so-called 'planned economy' excuse, Moscow hampered our cattle breeding."

Under this fixed-price, fixed market system developed by the Soviet regime, Azerbaijan had a built-in market for its wines, vegetables and fruits, since they were all sent to the All-Union Fund. In turn, the Azerbaijanis received such products as they needed --- meat, dairy products and various grains and cereals ---- at fixed and often artificially low prices, all supported or subsidized by the Soviet government.

For 70 years, like a train going non-stop in the wrong direction, that was the history of Azerbaijani agriculture and Azeri farmers: no need for profits, no need to worry about transport costs and, no need to even worry about buyers.

Second shock to the farmers
Then for the second time in a century, Azerbaijani farmers received a great shock. When Azerbaijan gained independence from the Russians in 1991, the old Soviet collective system collapsed.

Despite the shock to all sectors of the economy, however, Azerbaijani leaders bit the bullet and quickly undertook serious agrarian reform. "In 1995, we adopted two basic laws, the ‘Principles of Agriculture Reform’ and the ‘Direction of Agriculture Reform,’ " says Minister of Agriculture Irshad N. Aliev. The government also adopted a whole raft of new laws and regulations, some 40 in number, to ensure that the population knew that times were truly changing back on Azerbaijan’s farms.

By moving fast to convert the huge profitless collective farms into private property in 1996, the Azeri Parliament performed a kind of ‘economic shock therapy’ on the farming sector. In fact Azerbaijan was the first of all the CIS countries to move into agricultural privatization so quickly.

In that same year, nearly all farm animals were divided among the private sector as well. Close to 99 percent of both sheep and cows passed into private hands, with the government still holding only a tiny percentage for breeding purposes.

To encourage and reinforce the private ownership and management of the new generation of farmers who have been in operation less than a decade, the government of Azerbaijan has, since then, incorporated state level programs to encourage private ownership. Specific attractions include tax holidays for farmers for up to five years, and the government sells certain farm materials and needed machine lubricants at 50 percent discounts.

On a broader scale the government is adopting farming programs suggest by the World Bank, and the TACIS program of the European Community. Azeri farmers are even being sent to study overseas in places such as Japan, Germany and Holland, to see how efficient even relatively small farms can be managed there.

Shock therapy -- but it worked
Today the results of this ‘shock therapy’ are already showing impressive results. "Our production last year, overall, increased 12 percent," the minister says.

Despite the fact that up to 20 percent of Azerbaijan’s farmlands are now occupied by the Armenians, and that the nation suffered a serious draught over the past two years, in 2000 Azeri farmers produced a record 1.54 million tons of wheat, says Islam Ibrahimov, manager of agrarian reforms for the Ministry of Agriculture. That’s 380,000 tons higher than the average figure for the last decade.

These days, Azeri farmers are deciding for themselves what they want to grow and how they grow it. And, whether it's tomatoes, cucumbers, watermelon, potatoes, berries or grapes, they set their own prices and reap whatever profits result.

Many different examples stand out as a showcase of how successful private farming has been, and how it is helping the nation at large develop its full potential. With more than 450,000 tons produced a year, fruits, especially its famous apples, have been ranked at the top of the list of Azerbaijan exports.

Another profitable trend has been cattle farming. After privatization in 1996, cattle breeding increased and the dairy farms actually make money. Today Azerbaijani companies produce about 15 kinds of dairy products including milk, cheeses and its famous yogurts.

But not all the problems have been sorted out. Under the Soviets sugar beets were not commonly planted, as the Soviets allowed the cheap importation of processed sugar. But soon after Azeri independence, sugar beets became a popular choice for farmers and today Azerbaijan plants a whopping 60,000 tons of sugar beets each year.

But, because the Russians never allowed a sugar processing plant, none yet exists in Azerbaijan. So, all beets grown in the country must be sent to Iran to be refined and processed. But then the returned product -- refined sugar -- costs the Azeri consumer more than double the price that it should.

Now the government is focusing on encouraging investments in food processing plants so as to produce upstream, added-value products for its delicious jams and fruits, its savory nuts, its rich tobacco, and its flavorful teas. Once up and running, these new factories can earn hard currency by exporting their produce to various countries, including Russia, Japan, Western Europe and even the United States.

McDonald's Azerbaijan has plans to grow its vegetables on Azeri farms, such is their consistent quality. Organically produced fruits and vegetables, whereby no chemicals or pesticides are used, is a highly popular and profitable aspect of farming in the West. It is yet another potential money-spinner for Azerbaijan’s farmers, but something that many know little about.

For many farmers however, there is the chronic problem of cash flow, which greatly affects their ability to purchase the necessary advanced equipment to make modern farming efficient. The Azeri government, however, is already well aware of the situation and plans to establish the credit unions in every village so that farmers can easily and safely borrow money. The World Bank has a pilot program in six regions to teach farmers how to use credit.

An invitation to investors
"Azerbaijan has four million hectares of arable land," Minister Aliev says, "only 1.5 million are used now - the rest are used for grazing. Our natural gas production should lead to an increase in the supply of inexpensive fertilizer. Our farmers lack information and education, but we are getting help from the World Bank, and even a little from the United States.

"But the real key to agricultural development," Aliev continues, "is to attract foreign investment of the kind that can bring value-added processing here. I want to invite all businesses here for cooperation and to get involved. We are ready and willing to work with them for mutually beneficial business.

"To American politicians, I say that the world is envious of American democracy. The development of the world depends on the American example. We really hope that the Republican Administration will correct the error in American policy toward Azerbaijan, the unfair and unjust section 907 of the Freedom Support Act."