Azerbaijan, agriculture awards Made in Italy machinery
The economy in Azerbaijan has been steadily growing as of 2003 also thanks to the exploitation of gas and oil fields. Agriculture plays a crucial role and is supported by subsidies and tax breaks. A boom in the export of Italian agricultural machinery has been registered for the year 2013
Azerbaijan, agriculture awards Made in Italy machinery
The economy in Azerbaijan has been steadily growing as of 2003 also thanks to the exploitation of gas and oil fields. Agriculture plays a crucial role and is supported by subsidies and tax breaks. A boom in the export of Italian agricultural machinery has been registered for the year 2013
by Giovanni M. Losavio
In view of the 2014 edition of AGRIHORT, the main agricultural fair for the Caspian Sea region – set to take place from 22 to 24 May in Baku, Azerbaijan – a seminar organized by FederUnacoma was held March 19 dedicated to trade opportunities in the former Soviet Republic. The meeting, at which important representatives of financial bodies took part (Banco Popolare and Simest), the Italian export insurance agency (SACE) and the Italy-Azerbaijan Trade Institute (Itarzercom), looked at the opportunities Azerbaijan offers Italian firms to invest in the area of agricultural mechanization and dealt with the most important means for internationalization, naming credit insurance and loans at subsidized interest rates.
Rocketing growth
Having overcome, though not completely forgotten, difficult socio-economic conditions brought on by the Nagorno-Karabakh war (1992-1994), following which Azerbaijan lost control of about one sixth of its territory, as of 2003 the economy of the country has undergone a period of intense expansion. For instance nominal GDP more or less surged tenfold between 2003 and 2011 (going from 7.3 to 63.4 million USD) while during the four year period 2010-2013 real GDP increased steadily (+2,7% last year). In the same period GDP per capita (purchasing power being equal) has continued to grow to reach 6,400 USD in 2013. According to data provided by Itazercom in the course of the seminar, such marked growth of the country's economy is the result of fiscal policies that encourage investments and most importantly of exploitation and export of raw materials, such as gas and oil, of which Azerbaijan is rich. During World War II in fact petroleum extracted in this country was decisive for the military operations carried out by the Soviet Union, and, at the time, accounted for 80% of the total amount brought up in the whole of the Soviet Union.
Tax subsidies and climatic variability: the leading role of agriculture in Azerbaijan
However oil and gas are not the only resources the economy in Azerbaijan can count on. The primary sector plays an important role and accounts for 40% of the local workforce employed and 47% of the population resides in rural areas. Azerbaijan disposes in fact of arable land that is, according to the World Bank, 57.7% of the total land area. Also the country profits from a variety of climatic zones compatible with different kinds of crops. Wheat, 64.1% of the total output at about 1.8 tons grown annually is the first product of agriculture in Azerbaijan. Other crops have become important, such as potatoes, which increased by 2.5% in 2013, and fruit up 5.3%, sugar cane ahead 3,2%, and grapes plus 2,1%.
On the whole gross agricultural production in 2013 registered an increase of 4,9% compared to the previous year. The development of the sector is in fact among the goals set by the government of Azerbaijan which promoted two important operating instruments in 2008: the State Programme on Reliable Food Supply to the Population 2008-2015, followed by the State Program on Development of Viticulture in the Republic of Azerbaijan for 2012-2020. Alongside these more structured measures, agriculture in Azerbaijan also profits from important incentives (such as national funds for the economic support of small businesses, low interest loans, financial services for small and medium-size enterprises) and a favourable tax regime. So much that payments of taxes (except taxes on land ownership) and of customs are not required. In addition VAT on imported products or specific equipment, such as machinery, seeds, equipment for processing milk and poultry, is not required.
Mechanization: a boom for Italian exports
The fiscal measures implemented by the government in Azerbaijan clearly indicate that among the priorities there is the goal of making the agricultural system more productive and functional, also promoting renewal of machinery, plant and equipment. In this task the companies in Azerbaijan can count on the support of Agroleasing, a firm that purchases agricultural machinery and equipment with state funds and then sells or leases to private workers with a 20% deposit on the full price (that is then paid in installments over the next ten years). According to data provided by Itazarcom, up to 2012 Agroleasing financed the purchase of 9,452 items of machinery. On the whole the 2012 machinery inventory was composed of 21,000 tractors and more than 1,700 combine harvesters, more than 3,000 ploughs, about 900 cultivators and 1,867 seeders.
Interestingly, in the last twenty years the productivity of the machinery employed in the fields in Azerbaijan has increased both for self-propelled machines – in 1990 one tractors was able to work a land area of 39 hectares, in 2012 the surface was of 78 hectares – and for equipment. This seems to indicate a progressive renewal of the technologies employed in the primary sector, making this country a market for Italian suppliers. In fact although Italian exports of agricultural machinery to the Caucasic country still represent a very small fraction of the exported goods in this sector, it is also true that in 2013 exports of Italian manufacturers to the regions of the Caspian Sea registered a boom, surpassing the record of 7.5 million euros, according to figures provided from FederUnacoma on the basis on Istat data. This is the highest figure reached in Azerbaijan in a period of ten years for Made in Italy brands after the downturn experienced in 2012, a decline of about -50% compared to 2011. The forthcoming edition of AgriHort could be an occasion to consolidate and improve this record. To highlight the presence of Italian businesses in Azerbaijan FederUnacoma will realize, in collaboration with Itazercom, a collective exhibit that will last throughout the three days in Baku.
