Lost Opportunities and Hundreds of Millions ...

Recently, there has been a serious increase in imports of grocery goods and agricultural products. It proceeds from the fact that Azerbaijan does not produce all of this in the required amount. According to the State Statistics Committee (SSC), in January-November this year, food was imported in the amount of 1 billion 486.6 million dollars (Figure 1). In the history of Azerbaijan, never before has so much food been imported. It should be noted that over 11 months, food imports increased by 21% compared to the same period in 2018, and by 69.7% compared to 2015.

Figure 1. Import of food products (January-November), in millions of US dollars. Source: SSC

Along with other products, a significant increase is observed in the import of livestock products. Over the past 4 years, meat imports in value terms grew 4.2 times, milk imports - 2.5 times, and butter imports - 3 times. The cost of imports mainly for slaughter of meat over the past 4 years amounted to 6.4 million dollars. So, in January-November 2015, the cost of import of live cattle amounted to $ 46.3 million, for the same period in 2018 - $ 51.9 million, and to $ 11.7 million in 11 months of 2019. It should be noted that although there has been a slight increase in meat production, this has become possible due to livestock imported for slaughter.

In January-November this year, 46.2 thousand tons of meat worth $ 71.6 million were imported into the country, which is $ 8 million more in price terms and 3,000 tons more in physical weight in comparison with the same period in 2018.

It should be noted that in January-November 2015, meat worth 17 million dollars was imported into the country, that is, 4.2 times less than the current index.

In 2016, the Cabinet of Ministers established a customs duty on import into Azerbaijan of domestic chicken meat (fresh, cooled and frozen) and products made from it in the amount of 1 US dollar per 1 kg. Customs rates were valid until November 1, 2018. Then, the proposal of the National Confederation of Organizations of Entrepreneurs (Employers) of Azerbaijan was taken into account and in accordance with the decision of the Cabinet of Ministers No. 476 dated November 7, 2018, the validity period of specific duties applied to the import of poultry was extended until December 15, 2019. The purpose of increasing customs duties on imports is to develop entrepreneurship in the country and improve the business environment, expand the activities of local entrepreneurs, and protect local production.

However, in reality, poultry meat imports have increased over this period (Table 1). As it can be seen from the table, the high customs duties applied to poultry meat not only did not reduce the import of products of the same name, but rather, in comparison with 2015, in 2018, poultry meat imports increased by 33,668 tons, i.e., 24.9 times. In production, over this period, growth amounted to only 11.9 thousand tons.

Table 1. Production and import of beef and poultry, in tons. Source: SSC

In Table 1 we observe a serious increase in meat imports compared with its production.

It should be noted that, starting in 2016, the decline in cattle continues. Over the past 3 years, the number of cattle in the republic has decreased by 49,500 animals. It is possible that the slaughter of so many cattle caused the meat production to increase over that period.

However, it will not be possible to increase milk production without increasing productivity in animal husbandry. Serious growth is also observed in the import of dairy products. So, in January-November 2019, 12.64 thousand tons of butter and other oils made from milk were imported worth $ 63.6 million.

Compared with the same period in 2018, this is 18% or 1,860 tons in physical weight (in terms of milk - about 42,780 tons) more. In addition, over the 11 months of this year, importers spent $ 1.6 million more in comparison with the previous year for importing butter and other milk-made oils into the country. It should be noted that the import of butter and other oils made from milk in value terms increased 3 times in comparison with the same period of 2015.

According to the State Statistics Committee, in recent years, in stocks, use and production of butter, there has been a serious decrease (Table 2). So, in 2014, stocks of butter from 53.6 thousand tons fell in 2018 to 35.3 thousand tons, and as use as food from 44.4 thousand tons to 32 thousand tons. In 2016, the production of butter amounted to 25.6 thousand tons, and two years later in 2018, production, having decreased by 2 thousand tons, amounted to 23.6 thousand tons.

Table 2. Stocks and use of butter, in tons. Source: SSC

Compared to January-November of the previous year, milk imports amounted to the same volume (8 thousand tons), but in price terms it increased by $ 2 million. So, during the 11 months of 2018, milk was imported into the country in the amount of 11 million USD, and for the same period of 2019 in the amount of 13 million dollars.

It should be noted that Azerbaijan produces up to 52 percent of the required milk and dairy products and up to 42 percent of the required meat and meat products.

According to the WHO standards, meat consumption per person should be 78 kg per year, while Azerbaijan consumes 33 kg per year per person. That is, up to 42 percent of the demand is produced. Together with the import of meat and meat products, only 51% of the demand is provided. So, in 2018, 39.8 kg of meat and meat products were consumed per person in the country.

In Azerbaijan, milk production is much lower than demand. Thus, according to the WHO standards, per year, the consumption of milk and dairy products per person should be 405 kg. In 2018, 212 kg were produced per person per year.

Produced milk and dairy products provided the needs of the population by only 52%. Together with imported milk and dairy products, the consumption of dairy products per person in 2018 amounted to 240.2 kg, which is up to 59% of total consumption. In the past year, compared with 2014-2015, the consumption of milk and dairy products per person decreased by 6 kg.

Paradoxically, with the low purchasing power of the population, import of meat and dairy products is growing every year. Looking through the statistical data on imports, it seems that the republic’s need for food is made dependent on imports. In accordance with the interests of monopolists, this dependence is increasingly growing. Local products that cannot find their place in the domestic market are being squeezed out of it. For this reason, agricultural production is declining year after year. If it is possible for local farmers to make good profits, unfortunately, this opportunity is missed.

For the import of meat and dairy products, dollars are exported annually from the country, although not much funds are required for the production of livestock products. Azerbaijan can satisfy its needs for livestock products through domestic production, and for this, important work needs to be done. Basically, this is an improvement in the breeding composition of animals, the creation of a solid forage base, as well as the training of specialists in this field.