Ministerial Meeting: Cotton Industry Crisis

Azerbaijan's Minister of Agriculture, Majnun Mammadov, met with the leadership of the Azerbaijan Cotton Producers Association on August 19 in an attempt to address the pressing issues facing the country’s cotton sector. The meeting, which included senior officials from the ministry, served as a platform for dialogue on the current state of cotton farming, a key agricultural sector with deeply rooted traditions in the republic.

Mammadov emphasized the importance of cotton farming, highlighting it as one of the most labor-intensive branches of agriculture with significant export potential. He stressed that cotton cultivation continues to have a positive impact on rural employment and farmers' incomes, while reiterating the state's commitment to supporting this vital industry. The minister pointed to government development mechanisms that have sparked renewed interest in cotton farming, particularly with the introduction of modern irrigation systems and the potential for differentiated subsidies for farmers adopting these technologies.

“State support for cotton farming is not only aimed at preserving traditions but also at enhancing productivity through modern agricultural techniques,” Mammadov said, hinting at the broader goal of making cotton farming more sustainable and profitable.

Farid Firudinov, Chairman of the Azerbaijan Cotton Producers Association, added that the association’s main goal is to improve farmers’ welfare by boosting productivity and improving the quality of cotton. He called for greater integration of scientific and technological innovations to advance the industry, stressing the importance of cooperation among companies in the cotton supply and processing chain.

Despite these efforts, the challenges facing Azerbaijan’s cotton sector are growing, as noted in a study by Turan News Agency. According to the State Statistics Committee (SSC), cotton production in 2023 amounted to 276.1 thousand tons, a 14.4% decrease compared to the previous year. This figure represents the lowest level in the past five years, reflecting broader difficulties in the sector.

The decline is far from the targets set by the "State Program for the Development of Cotton Growing in the Republic of Azerbaijan for 2017-2022," which aimed for production levels of 500 thousand tons by 2022. However, only 322.4 thousand tons were harvested that year, 35.5% below the government’s forecast. The downward trend continued into 2023, with yields per hectare falling by 1.9 centners compared to 2022 and by 4.6 centners compared to 2020.

The cotton export market has also faced setbacks. In 2023, Azerbaijan exported 70.2 thousand tons of cotton fiber and cotton yarn worth $31.2 million. However, despite the increase in export volumes, the value per ton of exports dropped significantly. The average price per ton of cotton fiber fell by 22.7% compared to the previous year, leading to a decline in total export revenue. Cotton exporters earned $49.8 million less in 2023 than in 2022, a 23.3% year-on-year drop.

Meanwhile, cotton imports into the country rose by 9.7%, adding pressure on local producers.

These declines in production and revenue come against a backdrop of rising costs for cotton producers. Service fees for agrotechnical work sharply increased in 2023, with the cost of machinery work per hectare rising by 37.9% compared to 2022. Additionally, production costs surged due to higher prices for pesticides and increased reliance on water pumps for irrigation, exacerbated by persistent water shortages.

Farmers reported that the cost of cultivating one hectare of cotton land rose by 20% in 2023, with additional irrigation costs amounting to approximately 750 manats per hectare. Access to financial resources has also become a critical issue, with many rural farmers unable to secure the necessary funds to support their operations. Moreover, insurance claims related to damage from adverse weather conditions have been widely rejected, adding to the financial strain on the sector.

As discussions at the meeting concluded, stakeholders shared their proposals, which included suggestions for improving pest control measures, enhancing the quality of cotton supplies, and expanding Azerbaijan’s participation in the Better Cotton Initiative. These proposals were formally recorded, and the Ministry pledged to evaluate them in the coming months.

While Azerbaijan’s cotton sector remains a vital part of its agricultural landscape, the figures from 2023 indicate that the industry is facing significant hurdles. With production levels down and export revenues declining, the path forward will require careful management of both domestic and global challenges.