By Mehmet UgurGürkaynak, Milling and Grain

 

Wheat price breaks on looser than expected supplies

The Republic of Azerbaijan resides between the Greater Caucasus and the Lesser Caucasus. North side is 480km away from Georgia and 390km in distance from the Dagestan Autonomous Republic. In the South, Azerbaijan is 755km from the Islamic Republic of Iran, and 10km West to the Republic of Turkey (Nakhchivan, including the Autonomous Republic) and is adjacent to Armenia in the east, as well as 715km from the Caspian Sea.

50 percent of the land structure is mountainous. The cpountry is 655 metres from sea level. The mountainous region is composed of the Great and the Little Caucasus and the Taurus Mountains. The largest plain is the Kür-Aras plain.

Azerbaijan has a total land of 86,600 km2. 50 percent of this land consists of arable land. The Caspian Sea, the largest lake in the world, is an impressive 400,000 km2 and at its deepest is 1,025 metres deep.

Cold weather from the north of the Great Caucasus Mountains, hot tropical air currents from the south of the Lesser Caucasus Mountains and the Caspian Sea are the main factors affecting the regular climate of the country.

The southeastern part of the country has a humid subtropical climate and the winters are warm and summers are very hot. The annual rainfall is 1,200-1,400 mm. In the remaining regions the climate is dry and semi-arid. The majority of the agricultural work takes place around the Kür and Aras rivers.

Basic economic ındicators

After the economic problems caused by the disintegration of the USSR, an agreement called 'Agreement of the Century' was signed on September 20th, 1994 between Azerbaijan State Petrol Company and other big foreign petrol companies for the Azeri, Çırağ, Güneşli Beds in the Azerbaijan-owned section of the Caspian Sea.

Having experienced a 60 percent reduction in this period, Azerbaijan has managed to overcome the problems in time due to its specialisation in petrol. The country, which has significant petrol reserves, started to benefit from petrol revenues as of 2005.

The country's economy has started to recover in the last ten years and it has grown by 9.3 percent in 2009 and has been the country with the highest growth in Gross Domestic Product in the world.

In 2015, it achieved a real growth rate of 1.1 percent. Although the country's economy shrank by 3.8 percent in 2016, the next year, it started to grow again with a positive effect and increased by 0.07 percent. In 2019, a growth rate of 3.9 percent is projected.

Azerbaijan, which achieved a rapid growth in the period of high petrol prices until the half of 2014, was affected by the decline in oil prices after this year. Due to the devaluations taking place Azerbaijan had to enter into a comprehensive reform; banking, foreign trade, customs and the tax system were restructured.

A large part of Azerbaijan's economy constitutes a heavy industry. The most important sectors are aluminum, iron and cement. However, these sectors were neglected due to the fact that most of the revenue came from oil.

In 2014, other industrial areas were given importance and investments were made. Housing construction, service sector, transportation, infrastructure and communication activities have gained weight in recent years.

Distribution channels

Collaborating with a company based in the country will help to get into market market. This will facilitate entry to the market, as well as less budget for research, promotion and marketing. Private firms established after independence started to play a more active role in trade.

Agriculture and food

The agriculture and food sector is the second most important sector of the country's economy after oil. 37 percent of the total workforce is employed in this sector. In the south of the country with fertile soils, it is possible to have two arvesting seasons per year.

The main agricultural products produced in Azerbaijan are tobacco, cotton, tea, vegetables, olives and fruit. Although the agricultural sector corresponds to six percent of the total gross domestic product, it is the most important sector in terms of employment.

Almost all of the agricultural sector in Azerbaijan is in the hands of the private sector. State-owned farms from the time of the USSR were abolished. Smaller and private farms were established. The share of these farms in agricultural production was 60 percent in 1995 and recently reached 99 percent.

In the meantime, grain production has doubled compared to the period around 1995 and has now reached two million tonnes per year. According to official statistics, 2017 was a especially successful year for the agricultural sector. Total agricultural production increased by 4.2 percent, cattle breeding by 2.7 percent and crop production by 6.1 percent.

Compared to the previous year, the increase in 2017 was as follows: Cotton production was 2.4 times increased, sunflower production by 78.1 percent, tobacco leaves 45.4 percent, sugar beet production 22 percent and fruit production by 1.3 percent.

However, the production of green tea leaves decreased by a rather drastic 23.7 percent, the production of cereal products decreased by 5.2 percent and pumpkin production decreased by 5.7 percent during the analysis period.

One of the urgent problems of the agricultural sector in Azerbaijan in 2017 is the low level of productivity as in previous periods. For example, the productivity of cereal crops (29.8 metric per hectare) has fallen further compared to 2016 (30.6 metric per hectare), and on average is two times less products harvested than in other developed countries.

In addition, yield per hectare decreased by 20 percent for tea cultivation, 35 percent for sugar beet production and 10 percent for cotton.

According to official statistics, the production of animal products increased. There was also a 2.2 percent increase in meat production, 0.7 percent in dairy products, 6.7 percent in egg production and 3.5 times in cocoon production.

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