Overview
Azerbaijan has designated agriculture as one of four priority sectors for diversifying its economy. Agriculture is Azerbaijan’s largest employer, employing 37% of the population but accounting for only 7% of GDP. Azerbaijani produce has strong brand recognition in post-Soviet markets and often sells at a premium. The government supports the agricultural sector through grants, tax exemptions, and subsidies for machinery, pesticides, and fertilizers. Machinery subsidies have supported sales of U.S. combines, tractors, harvesters, and irrigation equipment.
Azerbaijan’s food processing equipment and packaging facilities are outdated and hinder development. This creates opportunities for U.S. equipment producers to support food processing modernization. U.S. companies and investors are advised to work with established firms with a proven market track record.
Post-Soviet land reforms parceled small land plots of roughly two to five acres out to individual farmers, creating a structural impediment to larger-scale agriculture, mechanization, and consolidation. Inadequate record keeping and land titling have further complicated lending to farmers who are unable to prove a legal right to the land they cultivate. The degradation of Soviet-era irrigation systems caused salinization of large areas of farmland, which will require significant investments to repair, potentially opening a niche market in land restoration. A lack of trained agricultural experts and specialists also poses significant challenges to agricultural development. The Azerbaijan State Agricultural University, located in Ganja, is the only university that specializes in agriculture. Like other sectors in the Azerbaijani economy, a handful of large enterprises with connections to the central government distort the market.
Azerbaijan requires import licenses for food products of animal origin. The Food Safety Agency issues licenses for these products. To protect and spur domestic production, the government in 2016 increased import fees for certain agricultural and construction products. (See the Customs Regulations and Standards section for additional details.)
Leading Sub-Sectors
In the current market, there is high demand for food processing and packaging equipment, specifically for mid-size meat, dairy, and fruit and vegetable processing equipment. There is also a need for production of packaging materials for different market segments. Consulting services to ensure export diversification (destination and product) is another important area of cooperation. The government is paying particular attention to automation and nanotechnologies in the agricultural sector.
Opportunities
U.S. agricultural equipment and used equipment dealers should consider personally traveling to rural markets to meet with target audiences such as farmers and large private holding companies active in agricultural processing. The Azerbaijani government is also interested in promoting small-scale dairy processing in rural areas. Currently, there is high demand for agricultural consulting in international certification and distribution.
Azerbaijan’s returned territories have created new opportunities in agriculture for both local and international companies. One important area is the need for feasibility studies to identify agricultural potential in the returned territories. The Azerbaijani government is also paying increasing attention to the country’s diminishing water resources. In 2020, Azerbaijan announced a new commission on water resource preservation that is primarily tasked with improving water use in the country’s growing agriculture sector. As the government considers ways to improve Azerbaijan’s irrigation systems and processes, there may be new export opportunities for companies specializing in water-efficient irrigation systems or water management solutions. On March 30, 2023, the State Water Reserves Agency was established with its mandate to use water resources effectively by improving irrigation and water resources management. The Agency also now controls the former property of Azersu and the Azerbaijan Melioration and Water Management joint-stock companies.
Resources
Ministry of Agriculture https://agro.gov.az/az
Food Safety Agency: https://afsa.gov.az/
Agency for Agro Credit and Development (AKIA) http://akia.gov.az/en/
Agro Procurement and Supply: http://att.gov.az/en/about/mission