Azerbaijan Agribusiness

Sector outlook

With its 9 different sub climate zones (out of 12 in the world), Azerbaijan grows a large variety of crops. Accounting for about 6% of GDP, agriculture is one of the largest sectors after oil and recorded an annual growth rate of 10% over the past decade. The main agricultural products are cereals (about 40% of total output of crops), vegetables and fruits. While most of the land is eligible for agriculture, only a small part is currently being cultivated, opening many opportunities for foreign investors.

Food processing is also developing rapidly. Most businesses are engaged in dairy production (many small businesses and a few medium and large packaging and distribution companies), meat processing (12 large plants) and fruits and vegetables’ canning (43 plants).

Accounting for nearly 25% of total exports, agribusiness is the first exporting sector after oil. CIS (Russia, Georgia, Kazakhstan) is the first export market. The development of new markets will require improving both productivity and quality. The transfer of modern technology and international standards by foreign companies could speed up the process.

Strategic direction/ Specific schemes and incentives

Put forward as a priority for import substitution and economic diversification, agribusiness development is the focus of several State initiatives:

  • State Program on Socio-Economic Development of Regions 2009-13: infrastructure modernisation, promotion of exports, improvement of local businesses’ competitiveness (training sessions), rehabilitation of existing facilities and development of Greenfield projects;
  • Fiscal incentives: tax free system for the sector, 50-70% discount on the purchase of fuel, fertilisers and seeds, exemption of custom duties on a number of equipments and breeds;
  • National fund for entrepreneurship support (ANFES): cheap loans to small producers;
  • KredAqro : credit to the microfinance sector financial services to micro and small enterprises;
  • Azerbaijan Investment Company: 17.46% stake in Azertokhum (construction of a modern seed processing plant and granary), 25% stake in Davachi Broiler (renovation and capacity increase of the poultry production farm), 25% stake in Azerbaijan Salt Production Association (construction of a modern salt processing plant), 20% stake in M-pro (construction of a modern milk processing plant);
  • Generalized System of Preference agreements with countries contributing to 70% of the world imports.

Business opportunities

  • Seed farming, fresh fruits (apple, cherries, persimmons, pomegranate, kiwi, grapes) and vegetables (early potatoes, tomatoes, cucumber, olives), greenhouse production
  • Tomato paste and sauces, potato flour and chips, fruit juices (pomegranate juice), dried fruits and berries
  • Feed mills, animal husbandry (poultry, pedigree cattle farms) and meat production (broiler farms)
  • Aquaculture and salt production
  • Cultivation and processing of specialised crops (tea, medicinal plants, saffron)
  • Cereals (wheat, rice) and grains (hazelnuts), milling, bakery and floury products, sunflower oil
  • Milk and dairy products, beekeeping and honey processing, chocolate oil from hazelnuts, confectionary
  • Production and packaging of mineral and natural water, wine, brandy and Champagne
  • Production of cotton (1 ton/y during the USSR, less than 100/y now) and silk (silkworm breeding farms)
  • Floriculture and ornamental plant production
  • Packaging (canned food, frozen food) and labelling
  • Supply of agricultural machinery and agro-services (modern fertilisers, veterinary services, etc.)

List of concrete opportunities in Azpromo’s catalogue of investment projects

Some success stories

DHT Holding (Turkey) is a conglomerate which holds a 19.78% stake in local seed producer and distributor Azertokhum and other stakes in AzerAgro, the first and biggest agricultural enterprise in Azerbaijan (with about 10,000 hectare of cultivated land), and in Azeryem, the leading livestock feed producer.

Intersun Holding (UAE) is a trading company specialising in agriculture and commodity products. Established in Baku in 1991 as a local subsidiary, Azersun is now the country’s largest food producer and exporter.

TAJ (Azerbaijan) was established in 1997 and rapidly gained a leading position in the beverage domestic market with its 2 major brands: “Aquavita” (spring water) and “Gulustan” (soft drinks) “Gulustan”. In 2011, the company obtained a USD 2.5 million credit from EBRD to purchase new equipments for the production of plastic bottles. It will allow TAJ to double its soft drink production.

Agstafasud was established in Agstafa within the State Program on Socio-Economic Development of Regions 2009-13. The project includes a 2,700 hectare dairy complex and an agro-service centre and is developed by RAO Agro Milk (Germany), with the Azerbaijan Investment Company as co-investor.

HiPP (UK) is a baby food producer. In 2010, it received financial support from ANFES to develop a baby food production plant with a 2,000 ton capacity in the Absheron region, in partnership with local entrepreneurs. The overall cost of the project was estimated at AZN 13 million.

Werner & Pfleiderer (Germany) won the construction contract for a EUR 13.6 million bread factory in Sumgayit, with a production capacity of 122 tonnes of bread and bakery products per day.

Baltika-Baku Brewery (Azerbaijan) is a leading brewery, which was established in Khirdalan (10 km away from Baku) in 1969. In 1997, the brewery was purchased by Castel (France). In 2008, the latter sold it to Baltika Breweries (Russia). Baltika-Baku Brewery’s production represents 70% of the domestic beer market.

This publication has been produced with the financial assistance of the European Union. The contents of this publication are the sole responsibility of EUROCHAMBRES and can in no way be taken to reflect the views of the European Union.

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