Why do prices "bite"?

Baku/31.05.22/Turan: Despite the end of May, prices for seasonal fruits and vegetables in agricultural markets do not fall. A kilogram of cucumbers costs 1.4-1.9 manats, tomatoes 1.7-3.5 manats, eggplants 2-3.5 manats, cabbage 1-1.2 manats, beans 3.5-5 manats, potatoes 1.30 -2.50 manats. Cherries cost AZN 5-9, apricots AZN 5-7, peaches AZN 7-13, strawberries AZN 2.50-4.50.

Why don't price for seasonal produce drop?

Vahid Maharramli, an expert on agricultural products, answers these and other questions in the “Difficult Question” program.

According to him, there are many reasons for the high cost. One of them is the shortage of products, since the country does not produce agricultural products in sufficient quantities to meet the needs of the population.

“As you know, the price is formed by supply and demand. If there are not enough offers, i.e. there are not enough products on the market, the prices will be high. Entrepreneurs involved in the sale of these products will abuse (use) this. And the market itself will dictate a higher price,” Maharramli said.

He noted that last year the prices for fruits and vegetables were by  3-4 times lower than this year. “Why has there been such a sharp jump in prices? Obviously, the rise in prices for agricultural products is influenced by the rise in price of diesel fuel and utilities. But not so much! Therefore, the reason for the sharp rise in prices is the insufficient production of agricultural products,” the expert is sure.

Maharramli noted that large amounts of financial resources are allocated from the state budget under the pretext of developing agriculture. But what these financial resources are spent on is not clear.

According to him, the soil and climatic conditions of Azerbaijan allow creating an abundance of fruits and vegetables all year round.

“There are all possibilities for this in the country. However, the agrarian policy pursued by the government does not allow this.

Manufacturers have certain problems that must be solved. Look - Every year it is said that the need of farmers for irrigation water is not met. Now in the Kura the water level has risen extremely and there is plenty of water. However, in a month, they will say that the Kura has become shallow and we have no water.

We say, when water is in abundance, when it rains, it must be collected in reserve in barns in order to use it later as needed. This is not some kind of innovation, not our know-how. This was done 50-60 years ago, even under the Soviets. But now it is not being done. Nobody does this. They hope that it will rain at the right time or water will appear from somewhere, and then the farmers will be able to use it,” says Maharramli.

The expert noted that to prevent the rise in prices for products, one should not allow the rise in the cost of means of production. He strongly doubts the advisability of raising the price of diesel fuel.

“What was the need to raise the price of diesel fuel?” he wonders. Maharramli also noted that the fruit and vegetable market of the country is so monopolized that it slows down production.

“Monopolism dictates high prices. With a low standard of living of the population, this does not contribute to the growth of purchasing power. Accordingly, effective demand is reduced. This, in turn, leads to a reduction in production,” he stressed.

“Azerbaijan is capable of not only fully satisfying its needs for agricultural products, but also exporting them through domestic production. To do this, the government of Azerbaijan needs to review its agrarian policy,” the expert concluded.