Tomatoes are one of the main export products of Azerbaijan’s non-oil sector. In January-November last year, Azerbaijan exported tomatoes worth 140.5 million US dollars. This was reported in the December issue of “Export Review” of the Center for Analysis and Communication of Economic Reforms. According to the overview, this figure is 10.3 million US dollars or 6.83 percent less than in 11 months of 2022. What is the reason for this decrease? What steps can be taken to further increase exports and stimulate entrepreneurs?
The cost of the product has increased
Azer Badamov, a member of the Agrarian Policy Committee of the Milli Majlis, listed the factors behind the decrease in tomato exports: “The first reason is that the increase in the cost of growing tomatoes in greenhouses increases the cost of the produced product. This reduces the competitiveness of marketed tomatoes. Another reason is the depreciation of the Russian ruble. The main market of our tomato exports is Russia. The decrease in the value of the ruble against foreign currencies sharply reduces the income of farmers from the sale of exported agricultural products. This leads to a decrease in interest in tomato production.
There are not enough manufacturing enterprises
According to the deputy, one of the main ways to increase exports is to develop the processing industry: “It is not profitable to direct agricultural products grown in greenhouse conditions to the processing industry. The processing industry should operate mainly with products supplied during the season. But there are not enough processing industry enterprises in the regions. The development of the processing industry leads to year-round export of non-oil products. This also means creating opportunities for opening new jobs in the country. The development of the processing industry will create conditions for the loss-free supply of agricultural products produced during the season.”
Entrepreneurs should create, not the state
According to A. Badamov, the development of the processing industry is one of the issues that entrepreneurs are responsible for: “It is precisely as a result of the insufficient development of the processing industry that the prices of agricultural products are very low during the season. Farmers face huge losses as they are unable to supply on time. The state should not implement the creation of processing industry. Entrepreneurs should do this work. The state provides sufficient support for the development of entrepreneurship. But unfortunately, for some reason, entrepreneurs are not very interested in developing the processing industry.”
Economist Jafar İbrahimli stated that our tomato exports have not actually decreased as much as it appears in statistics: “In terms of monetary value, there is a decrease in exports. But there is not so much reduction in quantity value. This decrease is close to 2.5 percent. This situation is observed especially in recent years. Russia’s Federal Service for Veterinary and Phytosanitary Control “Rosselkhoznadzor” decided to send some goods back. “Problems in certification issues and dangerous norms related to food affected the decrease of exports.”
It is necessary to evaluate the opportunities
J.Ibrahimli thinks that it is necessary to evaluate the opportunities to further increase the export of tomatoes to Russia: “Russian officials announced that they exempted the most exported products, as well as tomatoes, from customs tax. Most likely, the demand for this product in Russia is expected to increase. This is probably due to the restriction of trade relations with many countries. If this step is taken for the long-term perspective, then there is a demand for this product in Russia and its import will continue. Entrepreneurs can take advantage of these opportunities and increase production volumes. Sufficient concessions and subsidies have been allocated by the state to the issues of agriculture, especially tomato production and processing.
Diseases destroyed greenhouses?
Entrepreneur Eldar Huseynov clarified the decrease in exports: “The first reason for the decrease is the loss of value of the Russian ruble. The second reason is that Russia still had its own goods and the demand was too low. A disease was detected in our products. The virus was present in the seeds brought to the country. These diseases also destroyed greenhouses. Therefore, the products exported from the country decreased compared to last year.
In 3-4 years we will not be able to export tomatoes to Russia
According to E. Huseynov, there is a need to grow more different varieties: “The Russian government has allocated a lot of funds and they are already starting to produce tomatoes themselves. They are building large greenhouses of 1000 hectares in Iran, in Crimea, on the shores of the Black Sea and the Caspian Sea. In other words, Russia will not need export products in the next five years. They will be able to produce it themselves. For this reason, our farmers must grow varieties that are not available in Russia. In the coming years, if subsidies are not given to greenhouses in Azerbaijan, if the planting segment is not changed, we will not be able to export tomatoes to Russia in 3-4 years.”
Products are no longer purchased from the market
Our interviewer also touched on the issue of entrepreneurs’ lack of interest in exporting. He said that the domestic market is more profitable because the payment arrives late during export: “The problem is that Russia has already switched to market trading. Whoever has a contract with markets can sell his goods. Whoever does not have a relationship sells it in the market. Even then, the unsold product is destroyed and thrown away. The main issue is payment. The entrepreneur needs money so that he can pay the employee’s salary, fertilizer and gas. “Because the payment of goods exported to Russia is delayed, in some cases entrepreneurs prefer to sell their products in the domestic market.” (“Kaspi” newspaper)
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