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25.01.2021 | 18:59 | Agrarian sector overview 

Azerbaijan’s agricultural landscape: cooperation with Germany

Berlin - As the participant of the EU Eastern Partnership initiative, being one of the leading producers of agricultural goods in the South Caucasus and holder of substantial share in the GDP of the very region, Azerbaijan continues its efforts in economic diversification, non-oil sector development, further promotion of equal progress of the country’s regions, increasing national economic competitiveness, improving export structure and efficient integration into the global food supply chains.

Azerbaijan’s agricultural landscape: cooperation with Germany
Bild vergrößern
H.E. Mr. Ramin Hasanov (c) Pressefoto

In this context, country’s agricultural sector plays an exceptional role and has promising prospects in breaking into new markets. Agriculture remains a strategic priority in Azerbaijan’s non-oil economy as it offers a tremendous potential, accounts for a significant share of employment, contributes to the livelihood of the population and food security. Agricultural sector constituted almost 7% of the country’s GDP in 2020. The percentage of the lands suitable for the agriculture exceeds 55%.

Being the industrial-agricultural country, Azerbaijan attaches high importance to the advancement of sustainable agriculture as one of the priority fields in the non-oil sector development. Increasing the international competitiveness of agricultural products, ensuring the food security and provision of population with high quality and safe food products are the directions of the agrarian policy of Azerbaijan. 

The fertile lands and advantageous climatic diversity create favorable conditions to increase the agricultural productivity. The existence of 9 climatic zones in Azerbaijan allows the country to produce a variety of bio-organic agricultural products throughout the year and provides favorable opportunities for the introduction of new kinds of agricultural varieties.

Country’s agrarian sector is mainly specialized in the cultivation of fresh vegetables and fruits, cotton, tobacco, as well as livestock, poultry, wine-making, silkworm breeding, sheep husbandry and dairy. As a food-secure country, Azerbaijan is fully or almost self-sufficient in beef, poultry, eggs, lamb, diary, vegetables, fruits and other agricultural products. Food-processing sector constitutes an important component of the agricultural sector. In order to further increase production of agricultural products and accelerate development of agropreneurship, the local producers of agricultural products have been exempted from all taxes, except the land tax. Azerbaijan is keen to further develop its agricultural potential and food industry to foster the export-led growth and import substitution.

A number of agro-parks (Shamkir, Yalama, Aghstafa, etc.) currently operate in the various regions of Azerbaijan in order to increase production of agricultural goods, support the domestic SMEs, contribute to the food security, as well as promote “Make in Azerbaijan” and “Invest in Azerbaijan” concepts. Economic Zones Development Agency has been established, in January 2021, to improve the management of the industrial parks and estates, as well as the agro-parks. The holders of Investment Promotion Document (IPD) enjoy certain tax and customs holidays for the period of 7 years. The issuance of IPD is based on the following criteria: Areas of economic activity; Minimum investment amount (down payment); Administrative units where investment is to be made

“Made in Azerbaijan” brand

Azerbaijan trades intensively in agricultural products. The number of the country’s trading partners, as well as the quantity of bilateral trade, investment, double taxation and economic partnership agreements and treaties continue to expand. Azerbaijan possesses a liberal foreign trade regime, as well as favorable business and investment climate (no restrictions on technology transfer, foreign exchange, repatriation of profits; no local counterpart requirement; no discrimination between foreign and domestic investor; no limit on the amount of foreign capital in companies; no prior authorization of foreign investment is required). Traditionally the main destination and the largest consumer of agricultural and food exports have been the relevant neighboring countries, but in recent years this market has expanded to include many other countries in Europe, Asia and the Americas.

A special focus is placed on contributing to the sustainable and inclusive development through stimulating exports of the agricultural products, as well as promoting “Made in Azerbaijan” brand abroad. Export promotion is boosted by “Made in Azerbaijan” program which includes the following support mechanisms: Participation at international exhibitions and fairs under the national stand; Trade/Export missions; Organization of customer missions to Azerbaijan; Market research; Individual participation at the international exhibitions and trade fairs. In order to stimulate agricultural exports, the following associations have been established in Azerbaijan: Beekeepers Association, Hazelnut Producers and Exporters Association, Fruit and Vegetable Producers and Exporters Association, Pomegranate Producers and Exporters Association, Wine Producers and Exporters Association.

Azerbaijan has a great potential with respect to geographical indications such as “Zira” tomato and olive, “Sirab”, “Badamli” and “Vaykhir” mineral waters, “Goychay” pomegranate and others. The commercialization of intellectual property generates the substantial revenue for the Azerbaijani economy, as well as promotes “Made in Azerbaijan” brand.

Azerbaijan Export and Investment Promotion Foundation contributes to the national sustainable development through stimulating exports in the non-oil sector, including agricultural products, as well as promoting “Made in Azerbaijan” brand abroad. Azerbaijan Investment Company supports the development of the non-oil sector of the economy, including agriculture, via investing in current and new projects in the country or abroad in order to attract local and foreign investments to the economy. The soft loans are provided to the agricultural producers by the Entrepreneurship Development Fund. Agrarian Credit and Development Agency provides the soft agricultural loans, as well as the concessions for the equipment and breeding animals, including subsidies to the farmers.

Agrarian Services Agency carries out the state services related to the animal-plant health, seed production and agricultural machinery. Food Safety Agency implements the state control over the food safety, as well as issues the veterinary and phytosanitary certificates. “Agrarian Procurement and Supply” OJSC performs the centralized procurement of the foodstuffs by the state order, supports the participation of the local farmers and food producers in the agro-trade chain and promotes their products abroad. “Aqroservis” OJSC focuses on supporting agropreneurship through purchasing and leasing of agricultural machinery to the local farmers on the concessional terms and conditions. Agrarian Insurance Fund provides the insurance services to the agricultural producers through promoting sustainable agro-insurance system.

Bilateral agricultural cooperation with Germany

The German-Azerbaijani economic relations are one of the most dynamically developing areas of the bilateral cooperation between the two countries. Mutual visits and economic events promote business opportunities of Azerbaijan, as well as contribute to the expansion of bilateral economic and trade relations. Azerbaijan considers Germany as a strategic market, especially for its agricultural exports.

Azerbaijan is the most significant trade partner of Germany in the South Caucasus. During January-September 2020, trade turnover between two countries constituted almost EUR 1 billion. In the same timeframe, Azerbaijan’s share on Germany’s overall trade turnover with the countries of the South Caucasus was equivalent to roughly 65%. During 1995-2020, Azerbaijan has invested more than USD 2.6 billion to the German economy and the inflow of the German investments, particularly to the non-oil sector, exceeded USD 765 million.

The various bilateral formats and platforms open up new horizons for expanding Azerbaijan’s economic cooperation with Germany. The German companies (total: 224) and German-Azerbaijani Chamber of Commerce (members: 149) successfully operate in Azerbaijan. The German-Azerbaijani High-Level Working Group on Trade and Investments, as well as the German-Azerbaijani Business Dialogue provide important platforms to discuss bilateral economic perspectives.

Germany is a strategic market for exporting agricultural products of Azerbaijan. Currently, in Azerbaijan’s exports to Germany, the certain part in the non-oil sector belongs to the agricultural products. Several companies with the Azerbaijani investment are operating in Germany and specialized in selling, among others, Azerbaijani agricultural products (wine, dried fruits, canned products, juices, jams and etc.).

Azerbaijan intends to boost its agricultural exports to Germany in upcoming years. With the aim of promoting economic potential of the country, Azerbaijan has participated, with a national stand, at various international food and agricultural exhibitions held in Germany (“International Green Week”, “ProWein”, “Anuga”, “Fruit Logistica”). Furthermore, Azerbaijan organizes annual international agricultural exhibition entitled “Caspian Agro”. The 14th Azerbaijan International Agriculture Exhibition, envisaged to be held in June 2021 in Baku, has been included at the trade fairs list of the Association of the German Trade Fair Industry. This trade fair provides an opportunity to demonstrate the agricultural products, introduce the advanced technologies in the agro-industrial sphere, hold “B2B” meetings, expand networking, as well as strengthen the mutually-beneficial business ties between the local and foreign companies.

In order to further promote “Made in Azerbaijan” brand, Azerbaijan organized, in 2017, its first export mission to Germany with participation of a number of national companies. The second export mission to Germany was organized in 2018. Azerbaijan procures the agricultural products and machinery from Germany, and is particularly interested in importing from Germany the sophisticated agricultural technologies (smart, bio, nano), as well as learning the German experience and best practices in the agricultural digitalization and green innovations.

Azerbaijan cooperates, in the agrarian sphere, with the relevant German companies and technical assistance agencies. Furthermore, with the aim of developing human capital and strengthening capacity building, the cooperation exists with the relevant German scientific-research institutions and universities in the field of agriculture and food security.
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