Income Decreases, Expenses Increase

According to the information provided by the State Customs Committee (SCC), our calculations showed that in January-February of this year, the cost of food products imported to Azerbaijan was 4.9% more than in the same period last year. So, in the first two months of 2020, food products were imported into the country in the amount of $ 227 million 267 thousand, which is $ 10 million 673 thousand more than in the same period last year. In January-February of this year, the share of food products in the country's total imports amounted to 14.3%. Let me remind you that for the same period last year this figure was 12.1%.

In January-February this year, we observe a significant increase in the value of imports of a number of food products, in contrast to the indicators of previous years. For example, in comparison with the two months of 2019 for the same period of 2021, the import value of 1 ton of milk imported into the country increased by 18.75%, vegetable fats - by 66.9%, wheat - by 14.4%, fruits and vegetables - by 3.4%. It should be noted that the Food and Agriculture Organization of the United Nations (FAO) recorded an increase in food prices in January this year by 4.3% compared to December 2020. According to FAO, prices for vegetable oils, dairy products, including butter, have increased in the world. The decline in production and growing demand led to a 6.4% increase in sugar prices. Cereals in February were up 1.2 percent on average compared to January, and meat prices increased by 0.6%.

In Azerbaijan, in January-February 2021, compared to the same period in 2020, there was a decrease in imports of meat, butter, tea and wheat (Table 1). But, as mentioned above, total food imports increased by 4.9 percent. The increase in imports of fruits and vegetables in physical terms amounted to 12.8%, in value terms - 24.7%, imports of rice in physical terms - 22.8%, and in terms of value 39.1%, imports of vegetable and animal fats - 3.7% in value terms, milk imports - 0.2% in value terms.

Table 1. Imports of food products for January-February 2020 and 2021 (quantity (Q) in tons, value (V) in thousand USD). Source: State Customs Committee

It should be noted that during the two months of this year there has been a significant decline in wheat imports. Although wheat production in 2020 fell sharply (by 311,000 tons). Wheat imports are likely to rise in the coming months as well. I should also note that in February of this year, due to the increase in the volume of barley and corn imported into the country, the State Customs Committee included these products in the group of “main imports”. So, according to the State Customs Committee, in February of this year the country imported 1,843 tons of barley worth 9 million 211 thousand dollars and 3,173 tons of corn worth 10 million 762 thousand dollars.

In the first two months of this year, exports of fruits and vegetables, the main export product in the country's non-oil sector, increased by 5.9 percent in physical terms, but decreased by 6.7 percent in value terms (Table 2). So, in January-February, 3,774 tons more fruits and vegetables were exported than in the same period last year, and revenues from imports of the same name products decreased by more than $ 5 million. During this time, the decrease in the export of apples was 2.1 times in physical weight and 2.3 times in value terms, the export of tomatoes was 28.5% in physical weight and 42.4% in value terms, and the export of hazelnuts was 17.2%. in physical weight and 14.6% in value terms. Despite the fact that the export of persimmons doubled in physical weight, the total income from the export of fruits and vegetables, as noted above, decreased by more than $ 5 million compared to the same period last year. In January-February of this year, tea exports decreased by 12.7% in physical terms and by 4.4% in value terms.

Table 2. Export of agricultural products in January-February 2020 and 2021 (number of tons, cost thousand dollars). Source: State Customs Committee

In value terms, in January-February 2021 compared to the same period in 2020, imports of dairy products; bird eggs; natural honey and other food products of animal origin increased by 6.9%, vegetables and some edible root crops, mushrooms and tubers - by 26.7%, edible fruits, hazelnuts and nuts - by 6.5%, fats and oils of animal or vegetable origin - by 3.7%, imports of finished products from grain, flour, starch or milk increased by 17.4%, various food products - by 44.2%, sugar and sugar confectionery - 2.2 times, rice - by 39.1. (Table 3).

Table 3. Imports by product groups in January-February 2020-2021 (thousand dollars). Source: State Customs Committee

Thus, while the cost of importing food products is growing, unfortunately, the income from export products continues to decline. So, in the first two months of 2021, the export of vegetables and fruits decreased by 6.7%, including the export of forest hazelnuts - by 14.6%, tomatoes - by 42%, apples - by 2.3 times. At the same time, in January-February of this year, compared to the same period last year, the import cost of fruits and vegetables increased by 1.4%, the import cost of wheat - by 15.4%, the import cost of rice - by 13.2%, the import cost of fats vegetable and animal origin - by 44.1%, the import cost of milk - by 2.2%. That is, import entrepreneurs had to spend more foreign currency on the import of each ton of the above-mentioned products than in previous years.

The rise in prices for foodstuffs and agricultural products imported into the country, in turn, led to an increase in prices in the markets. In general, since February this year, there has been a significant increase in prices for basic food products. The State Statistics Committee noted that in February this year, compared with the previous month, there was an increase in prices for a number of food products and agricultural products. A few days ago, the Committee said in a statement that flour, semolina and buckwheat, pasta, biscuits, waffles, chicken, fresh and frozen fish, milk, yogurt, sour cream, cottage cheese, cheese, eggs, butter and oil, lemons, oranges, tangerines, bananas, apples, pears, quinces, pomegranates, dates, nuts, chestnuts, cabbages, cucumbers, tomatoes, pumpkins, peppers, eggplants, potatoes, onions, and garlics have risen in price, as well as sugar and powdered sugar, chocolate products , tea, drinks, cola, fruit juices and vodka. Of course, the rise in prices was also influenced by the increase in prices for diesel fuel by 33%, and for gasoline - by 11%.

Because the cost of transporting food and agricultural products has increased. Thus, the transportation of food products and agricultural products from warehouses to models, markets is carried out by trucks, the engines of which also run on diesel fuel and gasoline. Transport costs, in turn, increase the cost of goods and products. And entrepreneurs engaged in trade compensate for their increased costs by raising prices for goods and products that they sell.

I regret to note that, taking advantage of the situation in connection with the pandemic, most countries have sharply increased prices for export products. Prices for vegetable oils, meat, dairy products, including butter, sugar, cereals, have risen all over the world, the Food and Agriculture Organization of the United Nations said in a statement. At the beginning of last year, we warned the Azerbaijani government that the situation could develop in this way. On the ASTNA.biz website, in an article titled “Pandemic requires a revision of agricultural policy,” we noted that the situation that has developed in connection with the pandemic will force a number of countries to reconsider their foreign trade relations in accordance with their interests. In this sense, the Azerbaijani government should revise its agrarian policy. The most important task facing the government should be the maximum satisfaction of the population's needs for food and agricultural products through domestic production. Azerbaijan has all the resources to fully provide the population with food through domestic production.

Vahid Magerramov