Azerbaijan's Grain Sector: Modest Production Growth Masks Declining Productivity

Azerbaijan's agricultural sector faces a critical moment as modest growth in grain production fails to offset a troubling decline in productivity. Data from the State Statistics Committee shows that total grain and legume production grew by 0.7% year-on-year, reaching 3.2 million tons by November 1, 2024. However, this growth is overshadowed by a sharp 6.2% drop in yield, highlighting structural inefficiencies in the sector.

The broader context paints a sobering picture. Grain production remains 10% below levels from five years ago, reflecting persistent challenges in scaling up output. The wheat sector, the cornerstone of Azerbaijan's agricultural economy, has been hit particularly hard. From January to October 2024, wheat production declined by 8% to 1.69 million tons, a deficit of 148,100 tons compared to the previous year.

Wheat yields fell by 8.5%, dropping to 30.9 quintals per hectare from 33.8 quintals a year earlier. This decline not only hampers Azerbaijan's ability to meet domestic demand but also jeopardizes its position as a player in regional grain markets.

The repercussions of these trends extend beyond the agricultural sector. Azerbaijan's reliance on wheat imports remains high: 1.175 million tons were imported in 2023, down 9.1% from the previous year. According to customs data, imports from January to October 2024 totaled 948,820 tons, remaining nearly unchanged from the same period in 2023.

Declining domestic production and productivity risk increasing dependence on external markets, exposing the economy to currency volatility and inflationary pressures amid global food price instability. Policymakers may face growing pressure to expand imports, potentially undermining efforts to stabilize food security and balance the trade deficit.

Analysts attribute the sector's struggles to outdated farming practices, insufficient investment in irrigation, and limited adoption of high-yield crop varieties. While an increase in sown areas and favorable weather conditions have contributed to some production growth, these factors are insufficient to counter systemic inefficiencies.

The challenges facing the wheat sector highlight a broader need for reform. "The government and private sector in Azerbaijan must prioritize modernizing farming practices, improving rural infrastructure, and promoting innovations in crop management. Without these measures, Azerbaijan's agricultural sector risks falling further behind, leaving it increasingly vulnerable to climate variability and disruptions in global supply chains," said agricultural expert Vahid Magerramov.